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Guidelines for Prevention of Misleading Advertisements and their Endorsements Released!

The Central Consumer Protection Authority, the body established under the Consumer Protection Act, 2019 to regulate matters relating to violation of consumer rights, unfair trade practices and false or misleading advertisements, recently issued “Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022” (the “Guidelines”). The Guidelines came into effect on June 9, 2022, with an aim to curb concerns around misleading advertisements that falsely describe a product or service; or mislead consumers as to the nature, substance, quantity or quality of such product or service; or constitute an unfair trade practice; or deliberately conceal important information. The Guidelines apply to manufacturers, service providers or traders whose goods, products or services are the subject of advertisements, advertising agencies and endorsers.

Unlike the Cable Television Networks (Regulation) Act, 1995, for instance, which has provisions for regulation of advertising on private satellite/cable television channels, or the Press Council Act, 1978, which develops a code of conduct relating to advertisements in newspapers and similar publications, the Guidelines will be applicable to any and all advertisements, irrespective of form, format or medium, including those in the digital space!

The Guidelines are, in large part, in sync with the ASCI Code and guidelines framed under it by the Advertising Standards Council of India, a self-regulatory voluntary organization of the advertising industry that aims to maintain and enhance the public’s confidence in advertising. For instance, the Guidelines state that all advertisements must be honest and should contain truthful representations, should not mislead consumers by exaggerating claims and should not mislead about the nature or extent of the risk to consumers’ personal security.

The Guidelines also have provisions pertaining to “free claims” advertisements, disclaimers in advertisements (which are akin to the disclaimer provisions in the ASCI Code), advertisements targeting or featuring children and “bait advertisements”. Specifically, advertisements offering goods/services at a low price to attract consumers shall not seek to entice consumers to avail the goods/services without a reasonable prospect of providing such advertised goods/services at the price offered.

Pertinently, the Guidelines prohibit “surrogate or indirect advertisements” for goods/services whose advertising is otherwise prohibited or restricted by law, by circumventing such prohibition or restriction, in the pretext of being an advertisement for other goods/services which are not prohibited or restricted to be advertised by law. The Guidelines, however, allow use of a brand name or company name on/in relation to goods and services whose advertising is not prohibited or restricted by law, even if the same name is applied to goods/ services which are prohibited or restricted from being advertised by law.

The Guidelines also enlist certain “duties” of the advertisers and advertising agencies that mirror the ASCI Code. For instance, advertisers must ensure that advertisements do not contain any reference to a person or institution which confer an unjustified advantage to the advertisers or ridicule such person or institution. However, a relaxation in terms of “obvious untruths” or “exaggerations” that may be clearly seen as humour or hyperbole and are not likely to be understood as making a literal or misleading claim, are permitted.

Moreover, the Guidelines compel advertisers to reflect genuine opinion of the individual or group making any representation in the advertisement and mandate due diligence for endorsement of advertisements. Celebrities endorsing products in advertisements should watch out for this provision.

Given that the Guidelines cover advertisements in all forms, formats and media, even unconventional forms of advertising will now have to adhere to the Guidelines’ provisions. The Guidelines would also play a significant role in legal actions involving comparative advertisement/ disparagement.

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