Updated: Aug 12, 2022
Vikram Jeet Singh, Kalindhi Bhatia and Prashant Daga
The Indian advertising landscape has changed substantively since 2019 when a new consumer protection law was adopted. On June 9, 2022, the CCPA issued the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 (“Guidelines”) which prohibit ‘misleading advertisements'. The Guidelines are accessible here.
New Guidelines against Misleading Advertisements
The Guidelines detail (inter alia) elements of mis-leading advertisements, bait advertisements, and regulate free-claim advertisements, children-targeted advertisements, including specifying conditions to be fulfilled for circulating bait advertisements, disclaimer requirements, and also ban surrogate advertisements.
Conditions of non-misleading advertisements: Advertisements shall be considered misleading if they are (inter alia) (i) not honest, truthful; (ii) mislead consumers with regard to specifications of the product/service advertised (e.g., quality, pricing, scientific validity, etc.); (iii) support claims in the advertisements are not capable of substantiation by independent research; (iv) undermine the level of risk associated with the product/service, etc.
Bait advertisements: These have been defined as advertisements which seek to attract consumers to a product/service by offering low prices. The Guidelines stipulate that such advertisements should only be circulated if (inter alia) there is (i) a ‘reasonable’ prospect of selling the advertised product/service; and (ii) advertiser has verified adequate inventory of such products/capability of service provider to meet foreseeable demand from consumers; (iii) advertiser affixes any reasons which they may believe might impact supply of advertised products/services (e.g., estimated demand exceeds supply, geographic restrictions on the product, etc.).
Free-claim advertisements: Products/services are not to be advertised as ‘free’, ‘without charge’, in case they involve any costs besides the costs incurred by the potential consumer for availing the free product/service by responding to such advert. Additionally, usage of the term ‘free trial’ is restricted for offers that are linked to non-refundable purchases.
Advertisements targeting children: The Guidelines lists advertising content that is not to be targeted towards children and/or broadcasted during programs exclusively for children, including a direct exhortation to purchase any goods or services. In a first, it has been specified that advertisements should not invoke negative body image in children and undermine natural or traditional foods.
Ban on surrogate advertisements: ‘Surrogate advertisements’ have been defined as circumventing the prohibition on advertisements of certain prohibited products/services by advertising other products/services which are not prohibited under the law. The Guidelines prohibit circulation of any form of surrogate or indirect advertisements and set out the test for a surrogate advertisement. However, mere usage of brand name of a company that deals in the products/services prohibited to advertised in advertisements which do not violate the Guidelines shall be permissible.
Regulation of Influencers and Endorsers: The Guidelines also list the duties of a manufacturer, service provider, advertiser, endorser, and advertising agencies in relation to advertisements, and due-diligence obligations for endorsement of advertisements. Endorsers, in particular, face new requirements to disclose material connections between the endorser and manufacturer/advertiser, that may undermine the credibility of the advertisement.
What this means: The Guidelines set out a comprehensive regulatory framework for misleading ads, and also give the regulator ‘teeth’ for enforcement. Publishing of advertisements which are assessed to be misleading shall be punishable with imprisonment up to 2 years and/or fine of INR 1,000,000 (approx. Euro 12,174) and/or non-compliances may result in initiation of inquiries/investigations for violation of consumer rights.
Online Betting Advertising Advisory
In parallel, the MIB has issued an advisory on online betting adverts on June 13, 2022 and can be viewed here.
The advisory reiterates private satellite broadcast channels’ obligation to continue to adhere to the Guidelines on Advertisement of Online Gaming issued by Advertising Standards Council of India.
Print and electronic media to refrain from publishing advertisements of online betting platforms; and
Online social media platforms, advertisement intermediaries and publishers to not display online betting platform adverts in India or targeted towards Indian audiences.
What this means: While the advisory specifically refers to online betting, it adds to the existing caveats surrounding online games of chance platforms in India. For a refresher on the regulatory framework for online gaming, see our articles covering the tug of war over online gaming in India here and here.
The developments may have far-reaching implications for the Retail sector, and their true impact will become evident in the coming days.