By Shivanand Pandit
The Central Consumer Protection Authority (CCPA) under the Department of Consumer Affairs has notified “Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022”. This aims to curtail misforming advertisements and endorsers by prohibiting surrogate adverts.
While publishing the guidelines, consumer affairs secretary Rohit Kumar Singh said that although under the CCPA Act there were several provisions to tackle misforming advertisements influencing consumers’ rights, to make them more precise and clear to the industry, the government has come out with new guidelines .
As per these guidelines, advertisements aimed at children shall not feature any celebrities from the field of sports, music or cinema for products that under any law require health advice or cannot be purchased by children. It has also prescribed due diligence to be observed while backing advertisements. The guidelines have enforced stringent rules for those advertisements that seek to tempt consumers by proposing discounts and free entitlements. A free claims advertisement shall not label any goods, products, or service to be “free”, “without charge” or use such terms if the consumer has to pay for anything.
The guidelines ban surrogate advertising. This is when a seller endorses a product whose advertisement is not permitted and masks it as another product. Liquor ads usually indulge in such ads under the guise of selling soda, CDs and even holiday packages. The guidelines prescribe terms and conditions to be obeyed while broadcasting bait advertisements. Bait advertisements are those where the goods, products, or service are offered for sale at a low price to attract consumers. The guidelines prohibit the exclusion of relevant information, thereby making the advertisements misleading by hiding their commercial objective. The guidelines debar Indian citizens living abroad from endorsing advertisements that have been banned for Indian professionals living in the country.
The guidelines will be applicable to advertisements broadcast on all platforms like print, television and online and have come into force with instant effect. They also require a disclaimer to be published in the same language as the claim made in the advertisement and the font used must be the same as that used in the claim.
In addition, penalties for breaching the guidelines have been clearly defined. The CCPA can levy a penalty of up to Rs 10 lakh on manufacturers, advertisers and endorsers for misleading advertisements. For successive violations, the authority may levy a penalty of up to Rs 50 lakh. It can forbid the endorser of a misleading advertisement from making any advertisement for up to one year and for subsequent contravention, the ban can extend up to three years.
These penalties have been linked to the definition of such violations and the penal actions provided under Section 2 (28) of the Consumer Protection Act. Overall, the guidelines aim to safeguard consumers’ welfare by bringing in more transparency and simplicity in the manner advertisements are broadcasted so that they are able to make knowledgeable choices based on facts rather than false descriptions and overstatements.
Although the government speaks big about heavy penalties for such violators, the vagueness in the guidelines may permit brands and influencers to elude punishment. The new rules have many gray areas and offer a long rope to advertisers and celebrities who bring out deceptive and surrogate advertisements. The ambiguities are mainly in three vital advertising spheres—surrogate advertisement, junk food advertisement for kids and influencer marketing.
Firstly, while the guidelines ban surrogate advertising, both direct and indirect, it fails to mention “brand extension”. This is used by several sellers to broadcast a different product utilising a brand name that is otherwise not permitted to advertise, like in the case of tobacco and liquor.
The Advertising Standards Council of India (ASCI) defines brand extension and states that such a product or service should be registered with the appropriate government authority and must obey other conditions such as
Rs 20 lakh revenue or presence in the market for two years. With this gap in the government notification, if a brand sells tobacco, for example, it can employ the same brand name to endorse an airline or a clothing range without observing any standards. Moreover, liquor brand extensions are unlawful as per the Cigarettes and Other Tobacco Products Act.
Secondly, although the notification prohibits an advertisement for junk foods comprising chips, carbonated drinks and such other snacks and drinks during a program meant for children or on a channel meant solely for children, it does not clarify what is junk food. Not only are chips and carbonated beverages junk, most processed foodstuff from biscuits to instant noodles to cakes fall under this group. Therefore, there must be a clear-cut description of junk food.
Moreover, children watch other channels also, so prohibiting junk food endorsements only on children’s programs and channels is an eye wash. Anyone can find these gaps and abuse them.
Remarkably, during the Covid-19 pandemic, there was a noticeable rise in the number of grievances against food and beverage advertisements. In 2020-21, ASCI processed 284 complaints, compared to 175 during 2019-20. This shows that junk food transparency will appear only when consumer complaints get filed and CCPA rulings follow.
Thirdly, the guidelines state that celebrity endorsers need to unveil their material interest in the products they endorse. But how and where they should disclose this has not been clarified. This should be tackled on a priority basis.
ASCI rules on the other hand, clearly ask influencers to disclose their material connection with the brand. As per the rule, influencers’ accounts must carry a disclosure label that clearly identifies it as an advertisement or partnership while listing out the methods of disclosure on all platforms. For example, a 15-second video must cover disclosure for at least three seconds, and for videos longer than two minutes, disclosure should be for the entire length of the video.
The CCPA, which was formed in 2020, is accountable for regulating fake and misleading advertisements and penalising lawbreakers. These are the tasks that the ASCI used to execute. The CCPA has an investigation wing, led by a director-general, and it trusts not only individual consumer complaints, but also reports from district authorities. This significantly broadens the catchment zone for tracing misleading advertising.
Tracking advertising in India’s more than 10,000 print publications and over 850 TV channels in various languages is tough enough. But the major problem today is the circulation of online advertising, not all of it originating in India. This will require a large organization to track them efficiently. Therefore, it would also make sense for the CCPA to work closely with other similar authorities to regulate claims on health and personal product packaging and include health warnings as is done on tobacco products.
—The writer is a financial and tax specialist, author and public speaker based in Margao, Goa