The Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022, issued by the Central Consumer Protection Authority (“Authority") (“CCPA Guidelines”), published on 9th June 2022, apply to all advertisements regardless of form, format, or medium.
As per the CCPA Guidelines, an “Endorser” has been defined to include an individual or a group, or an institution making an endorsement of any goods, product, or service in an advertisement whose opinion, belief, finding, or experience is the message which such advertisement appears to reflect. It is pertinent to note that an endorser can be any individual who makes an endorsement, including celebrities, cricketers, and social media influencers. The definition itself necessitates an endorser to understand the reasoning behind any advertisement that it is associated with, due to the fact that, the advertisement appears to ‘reflect’ such a person’s opinion, finding, belief or experience, etc.
Another important definition is “bait advertisement” which means an advertisement in which goods, product, or service is offered for sale at a low price to attract consumers. The CCPA Guidelines also put a bar on “surrogate advertisements” for goods otherwise prohibited to be advertised. Further, the CCPA Guidelines clearly provide the conditions for a “Free claims advertisement” that need to be adhered by an advertiser.
Valid and Non-Misleading Advertisement
The CCPA Guidelines also define what constitutes a “valid and non-misleading advertisement” as one which contains (i) truthful and honest representation; (ii) does not mislead consumers by exaggerating the accuracy, scientific validity or practical usefulness or capability or performance or service of the goods or product; (iii) does not present rights conferred on consumers by any law as a distinctive feature of advertiser’s offer; (iv) it does not suggest that the claims made in such advertisement are universally accepted if there is a significant division of informed or scientific opinion pertaining to such claims; (v) does not mislead about the nature or extent of the risk to consumers’ personal security, or that of their family if they fail to purchase the advertised goods, product or service; (vi) it ensures that the claims that have not been independently substantiated but are based merely on the content of a publication do not mislead consumers; (vii) it complies with the provisions contained in any other sector specific law and the rules and regulations made thereunder.
However, in case of an occasional and unintentional lapse in the fulfilment of the advertised promise or if a claim occurs, it may not invalidate the advertisement if (a) Such promise or claim is capable of fulfilment by a typical specimen of the product advertised; (b) the proportion of product failures is within the generally acceptable limits; (c) the advertiser has taken prompt action to make good the deficiency to the consumer.
Advertisements targeting children
An endorser, advertiser to adhere to the following conditions prescribed under the CCPA Guidelines when the advertisement are children targeted. An endorser to ensure that an advertisement that addresses or targets or uses children shall not (i) take advantage of children's inexperience, credulity or sense of loyalty, (ii) claim any health or nutritional claims or benefits without being adequately and scientifically substantiated by a recognized body, (iii) claim that consumption of a product advertised shall have an effect on enhancing intelligence or physical ability or bring exceptional recognition without any valid substantiation or adequate scientific evidence, etc.
When it comes to Disclaimers in advertisements, the CCPA Guidelines has prescribed specific conditions that a disclaimer shall not attempt to hide material information with respect to any claim made in such advertisement, the omission or absence of which is likely to make the advertisement deceptive or conceal its commercial intent and shall not attempt to correct a misleading claim made in an advertisement. The CCPA Guidelines has also provided the manner, format in which a disclaimer is to be made such as fonts, language, etc.
Due diligence requirement
The CCPA Guidelines lay down the duties of every manufacturer, service provider, advertiser, or advertising agency to conduct due diligence before endorsing and to substantiate any facts they are providing in the advertisement. The aim is to protect consumer’s interests and to make advertisements more transparent and genuine by providing various conditions to be followed before publishing the advertisement. With the help of the CCPA Guidelines, the Authority aims at assisting, helping consumers make informed decisions based on substantiated facts rather than false claims and baits.
Prohibition on foreign nationals
The CCPA Guidelines also prohibit foreign professionals from endorsements in areas where Indian Professionals are barred from making endorsements pertaining to any profession.
Disclosure of connection
Where there exists a connection between the endorser and the trader, manufacturer, or advertiser of the endorsed product that might materially affect the value or credibility of the endorsement and the connection is not reasonably expected by the audience, such connection shall be fully disclosed in making the endorsement. However, there is no mention of how these disclaimers are to be made and whether these guidelines cover advertisements made on social media platforms by influencers.
The CCPA Guidelines do not separately set out any penalties for non-compliance with the provisions but by reading the CCPA Guidelines with the Consumer Protection Act, 2019 (“Act”), penalties can be stipulated including the imposition of fines ranging from INR 10 to 50 lakhs by the CCPA. Similarly, in spite of there being no enforcement mechanism under the CCPA Guidelines, the CCPA can exercise powers for investigation and enforcement including those as laid down under section 18 of the Act.
EFFECT ON THE INDUSTRY
Pursuant to these CCPA Guidelines, celebrities have to start doing their own due-diligence and have to hire professional legal help due to the fact that they have become easier targets now. One such example is that of Amitabh Bachchan who made it public on leading social platforms that he has been given notices due to his promotions and there are strict rules on what can be endorsed now.
Endorsers are also asked to disclose any material connection they have with the brand or the advertiser and any profit sharing thereunder. While these guidelines protect consumers against fake promises and hidden agendas, they make it difficult for celebrities to enter into brand deals without prior knowledge of the product, advertiser, and the schemes that they aim to provide.
Prior to these CCPA Guidelines, the Advertising Standards Council of India (“ASCI”) had already set similar guidelines, Code for celebrity-led endorsements. The ASCI Guidelines, Code mandated disclosures of any material connection between the advertiser and the influencer and the manner in which disclosure is to be made was also stated. The ASCI guidelines were based on the premise that “With Great Influence, Comes Great Responsibility”.
According to an ASCI report, a majority of crypto-based advertising violations were committed by leading celebrities between January to May and the report also named various well-known actors and influencers to be violators of its advertising code as they failed to comply with the guidelines and represented brands that infringed the guidelines.
Pursuant to both the ASCI guidelines, Code and the new CCPA Guidelines, it is pertinent to note that the onus now lies on the celebrities and influencers to prove that they have conducted due diligence before entering into a brand deal and are therefore responsible for any action taken against them in relation to such endorsement.