In the previous two parts of this Article, we have discussed the provisions of the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 related to bait advertising, surrogate advertising, free claim advertising, advertisements targeting children, and disclaimers in advertising. In the third and final part, we shall discuss the provisions related to the duties of the manufacturer, service provider, advertiser, and advertising agency, and finally, the due diligence required for the endorsement of advertisements.

According to Section 12 of the Guidelines, it shall be the duty of the manufacturer, service provider, advertiser, and the advertising agency to ensure the following:

  1. All descriptions, claims, and comparisons in the advertisement are capable of substantiation, and if required shall provide such substantiation to the Central Authority;
  2. For advertisements that expressly state to be based on or supported by research or assessment, such advertisement shall indicate the source and date of such independent research or assessment;
  3. The advertisement shall not, with a view to confer an unjustified advantage, refer, ridicule, or disrepute any person, firm, or institution without obtaining prior permission;
  4. Advertisements shall not contain any statement or visual presentations that mislead consumers;
  5. The advertisement, instead of using expressions such as “up to five years guarantee” or “prices from as low as X”, must clearly indicate the fixed period of guarantee, or the fixed price at which the product is being offered, or, the minimum and maximum of such variables;
  6. For advertisements that invite the public to take part in lotteries, price competitions, etc (permitted under the law), the advertisement must clearly set out all terms and conditions.

Having said the above, obvious untruths or exaggerations intended to amuse or catch the eye of consumers are permissible subjects as long as they are seen as humorous or hyperbolic only and do not make literal or misleading claims.

Section 12 as substantiation above is in line with and directly correlates to Chapter 1 of the Advertising Standards Council of India (ASCI) Code which relates to Honest and Truthful Representation in advertisements.

In addition to clause (f) above for advertisements related to lotteries and price competitions, the ASCI Code provides that the advertisers for such advertisements shall make adequate provisions for the judging of such competitions, the announcement of the results, and the fair distribution of prizes or gifts according to the advertised terms and conditions within a reasonable period of time. Concerning the announcement of results, it is clarified that the advertiser’s responsibility is discharged adequately if the advertiser publicizes the main results in the media used to announce the competition, as far as is practicable and advise the individual winners by post.

Moving on, Section 13 of the Guidelines explains the due diligence required for the endorsement of advertisements. Section 13 states that all endorsements must reflect the genuine, reasonable current opinion of the entity making the representation, must be based on adequate information or experience, and must not be deceptive.

While the Guidelines do not define the entity making the endorsement, it is commonly understood to be a well-known or a famous person, such as actors or sportspersons, in other words, celebrities or influencers. The above provision is of paramount importance in today’s times when celebrity endorsements are not only popular but also influential.

Often, celebrities tend to endorse goods, products, or services without doing their due diligence, which later causes issues with the law as well as their public image. Actors Madhuri Dixit, Amitabh Bachchan, and Preity Zinta came under the radar of consumers for endorsing Nestle's Maggi noodles, which allegedly contain high levels of lead. The Uttarakhand Food and Drug Administration sent a notice to the actors and brand ambassadors, asking them to respond to the advertisements in which they claim Maggi noodles to be a healthy snack with high nutritional value. The Union government slammed Nestle for its alleged misconduct, while the former brand ambassadors got dragged to court for endorsing the 'two-minute' noodle brand.

Additional secretary in the Consumer Affairs Ministry, Nidhi Khare has stated, “An important aspect is whether celebrities endorsing products have made due diligence and inquiry about a product or a service to which they are using their celebrity status or image.” The ASCI Code further provides that the celebrity or his/her agent/manager must give a duly signed written confirmation to ASCI that the celebrity has undertaken due diligence for the claims and representations/endorsements made in a given advertisement in which the celebrity appears.

Further, subsection (2) of Section 13 of the Guidelines provides that any law for the time being in force that bars Indian professionals, whether resident in India or otherwise, from making an endorsement in any advertisement pertaining to any profession, shall apply mutatis mutandis to foreign professionals of such profession as well, and shall not permit them to make endorsements in such advertisements either. A foreign professional has been explained to mean a person who is not a citizen of India.

Furthermore, Section 14 of the Guidelines provides that 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.

According to Khare, CCPA has issued 113 notices, out of which 57 were for misleading advertisements, 47 notices related to unfair trade practices, and nine for violation of consumer rights. Consequently, 14 companies whose advertisement claimed more than 99% efficacy against COVID/ germs, have withdrawn their ads. Three companies have issued corrective advertisements, while one company has changed its refund

Please note that although the Guidelines do not prescribe any penalties for non-compliance, the Consumer Protection Act, 2019 prescribes that the CCPA can impose a penalty which may extend to ten lakh rupees on the manufacturer or endorser, and for every subsequent contravention by a manufacturer or endorser, the CCPA can impose a penalty which may extend to fifty lakh rupees. Further, the CCPA may prohibit the endorser of a false or misleading advertisement from making an endorsement of any product or service for a period which may extend to one year for the first contravention, and up to three years for the subsequent contravention. Similarly, although the Guidelines do not explain any enforcement methods, the CCPA could exercise powers for investigation and enforcement under Section 18 of the Consumer Protection Act.