Centre notifies guidelines to curb misleading ads; mandates due diligence for endorsers

Brand ambassadors will now need to ensure they do due diligence of claims made in advertisements they endorse and make a disclosure of their “material connection” with the brand in terms of shareholding or ownership. This is part of the guidelines notified by the Centre on Friday to prevent misleading ads, under the Consumer Protection Act, that also tightens standards for ads targetted at children, bait ads and free claim ads.

The guidelines also prohibit surrogate ads, which are indirect endorsement of regulated products, and aim to ensure transparency in terms of disclaimers and claims used by brands. From actors like Deepika Padukone to cricketers like Virat Kohli either have picked up stakes in start-ups they endorse or have their own product lines. Experts pointed out that sometimes start-ups give equity in return for endorsements to celebrities as part of the contract.

Disclosure needed

“Any endorsement must reflect the endorser’s genuine and reasonably current opinion and should be based on adequate information. They must give a disclosure if they have any material relationship in the form of shareholding or ownership of the brand,” said Nidhi Khare, Additional Secretary, Consumer Affairs.

The guidelines also specify that brands should not falsely describe a product or service, give false guarantees, mislead the consumers about the nature, quantity or quality of product, conceal information or make unsubstantiated or exaggerated claims.

Consumer Affairs Secretary, Rohit Kumar Singh said the Act has provisions to tackle misleading ads along with penalties for violations. “Now, these guidelines make the Act’s provisions clear and explicit and give a framework to industry stakeholders for prevention of misleading ads and unfair trade practices,” he added.

Other stipulations

Nearly 19 provisions of the guidelines focus on advertisements that target or use children. Such ads cannot encourage practices that are detrimental to children’s health or well-being or exaggerate what is attainable by an ordinary child by buying a product. They also cannot claim that consumption of a product will enhance intelligence or physical ability, make unsubstantiated health or nutritional claims, promote illogical consumerism and negative body image.

In terms of “bait ads” that offer products or services at low prices to woo consumers, the guidelines state that brands will need to ensure that they have adequate supply of goods and disclose if stocks are limited. They cannot entice consumers to purchase the product without a “reasonable prospect” of selling at the offered price. In terms of free claim ads, brands cannot claim that a product is free if consumers have to make any payments for packaging etc., which are beyond the unavoidable costs of paying for delivery of the product.

The guidelines also stipulate that disclaimers should not hide any material information with respect to the claim or contradict the information given in the claim. Disclaimers also need to be in the same language and font as the claim and should be clear, legible and prominent.

Mixed views

The guidelines have evinced mixed views from industry observers and branding experts. N Chandramouli, CEO, TRA Research, said the guidelines are much needed to protect consumer interests and give them more confidence in the purchase journey.

Lloyd Mathias, Business Strategist and Independent Director, said since ads are subjective in nature it remains to be seen how these guidelines get interpreted and enforced.

COMMENT NOW