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The Ministry of Consumer Affairs released Draft Guidelines for Misleading Advertisements

September 14, 2020

Earlier, in the month of August 2020, the Ministry of Consumer Affairs (hereinafter referred to as ‘the Ministry’) announced that it will soon come up with draft guidelines aiming at regulating and keeping a check on misleading ads. Thereafter, the Ministry has released the draft guidelines taking its first step towards curbing misleading ads and with the aim of protecting the consumers, who may be exploited or affected by such advertisements.

The full regulation namely “Central Consumer Protection Authority (Prevention of the Misleading Advertisements and Necessary Due Diligence of Endorsement of Advertisements) Guidelines, 2020[1]” (hereinafter referred to as ‘Draft Guidelines’) has been released in the public domain for suggestions and comments. The Ministry has given a deadline September 18, 2020 for the public to send their suggestions, comments and objections to the Ministry.

About the Draft Guidelines

The aim of the Draft Guidelines is to check any misleading ads that may be harmful to the public interest. The Draft Guidelines established under the Consumer Protection Act, 2019 (hereinafter referred to as ‘Act 2019’) has set out the scope and applicability of the guidelines keeping in mind the aim of such a regulation. It states as follows:

3. Scope & Applicability. –

  • These guidelines cover all advertising/marketing communications regardless of form, format or medium.
  • These guidelines are applicable to the manufacturer/server providers whose products/services are subject of the advertising/marketing communications, as well as to advertisement agency and endorser (wherever applicable) of the product/service.”

Misleading Advertisements

A ‘misleading advertisement’ has been defined under the Act 2019 under Section 2(28 as:

“2. (28) “Misleading advertisement” in relation to any product or service, means an advertisement, which –

  1. falsely describes such product or service; or
  2. gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or
  • conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or
  1. deliberately conceals important information.”

The Draft Guidelines include that an advertisement should not be similar in terms of layout, slogans, music, visual presentation, etc., and should also be not similar to the previous advertisements that may have been published by another advertiser. Additionally, it mentions that the advertisement should not mislead the consumer about the product or service that is being advertised. Along with a list of elements for determining a valid advertisement[2], the Draft Guidelines also covers various types of advertising methods such as comparative advertising, bait advertising, and surrogate advertising, puffery in advertising. The Ministry has also made an effort at laying down duties and responsibilities of advertising players such as advertisers, advertising agencies and service providers. The guidelines not only focus on consumers in its general capacity but also focuses on consumers as children, in specific.

Provision for claiming a product to be free?

The Draft Guidelines has made an effort to focus on advertisements that may claim their product or service to be free. It clearly specifies that an advertisement may not claim its product or service to be free if the consumer has to pay any kind of amount other than the delivery cost of the product or a response to the advertisement. The guideline lays down certain circumstances that does not constitute for a product or service to be free. It states as follows;

“10. Free claims –

(3) An advertisement shall not describe a good or service as free if – :

  1. Consumers have to pay for packing, packaging, handling or administration of free good or service;
  2. The cost of response, including the price of a good or service that a consumer shall purchase to take advantage of the offer, has been increased, except where the increase results from factors that are unrelated to the cost of the promotion; or
  3. The quality or quantity of the good or service that a consumer shall purchase to take advantage of the offer has been reduced.”

In addition to this, the Ministry has also kept in mind the challenges pertaining to “your money is back” offers and has mentioned in the guidelines that advertisements shall not use terms such as “free trial” for offers that requires a non-refundable purchase.

Disclaimers[3]

The Ministry has taken due care of the disclaimers that may be attached with advertisements. As per the guidelines by the Ministry, any disclaimer that has a small font size in advertisements and comparative advertising and is not factual, will be considered to be misleading and may carry a penalty with it[4]. Moreover, disclaimers that are not easily noticeable or understandable to an ordinary consumer will also be referred to as misleading advertisements.

Endorsements

In addition to stating the essential components of a valid advertisements and defining types of advertisements, the Draft Guideline also includes provisions of endorsement of the content of the advertisement. It is stated that the honesty of statements and due diligence is to be made by an endorser in support of the advertisements[5]. This provision is more of a mandatory provision rather than directive. The Draft Guidelines has divided endorsements into three major provisions namely, honest statements by endorsers, personal use of products and consumer endorsement that also includes celebrity endorsement, and expert endorsements.

Connection between Draft Guidelines and Consumer Protection Act, 2019

The newly established Consumer Protection Act, 2019 (Act 2019) has highly emphasized upon ‘misleading advertisements’, so much so that the Act 2019 has particularly defined the term ‘misleading advertisement’. Keeping in mind the interest of the consumers, the legislation gives numerous powers to the Central Authority to investigate, search and seizes material subject to misleading ads. Therefore, to make such an offense even stricter, the Ministry has drafted the Draft Guidelines under the Act 2019 aiming to prevent unfair trade practices such as misleading claims by advertisers and that the related players such as the advertisers, endorsers, manufacturers, etc., do not exploit and violate the interests of the consumers.

The Ministry expects suggestions and objections from the public by September 18, 2020.

[1]https://consumeraffairs.nic.in/sites/default/files/file-uploads/latestnews/Draft%20guidelines%20for%20stakeholders%20consultation.pdf

[2] Guideline 4, Central Consumer Protection Authority (Prevention of the Misleading Advertisements and Necessary Due Diligence of Endorsement of Advertisements) Guidelines, 2020.

[3] Guideline 13, Central Consumer Protection Authority (Prevention of the Misleading Advertisements and Necessary Due Diligence of Endorsement of Advertisements) Guidelines, 2020.

[4] https://economictimes.indiatimes.com/industry/services/advertising/government-releases-draft-guidelines-on-advertising-to-treat-non-legible-disclaimers-as-misleading-ads/articleshow/77963604.cms?from=mdr

[5] Guideline 15, Central Consumer Protection Authority (Prevention of the Misleading Advertisements and Necessary Due Diligence of Endorsement of Advertisements) Guidelines, 2020.

 

Read more:

Consumer Protection Act, 2019 comes into force

Key Features of Consumer Protection Act, 2019

Rise in False and Misleading advertisements amidst Coronavirus Outbreak

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