Relevance: GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Key Phrases: Misleading ads, Guidelines on Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements 2022, Advertising agencies, Consumers, Central Consumer Protection Authority, Surrogate Advertising, Bait Advertisements, Bars Deceptive Advertisements.

Why in News?

• Recently Government has come out with a new Guidelines on Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements 2022.
• The new guidelines on misleading ads are welcome as they act as a deterrent against their production.

Context:

• Though the new Guidelines on Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements 2022 seeks the Centre appears keen to signal to advertisers, advertising agencies, and consumers alike that sometimes the problem can lie not only in how you say it, but also in what you say, and to whom you say it.
• For the longest time, the practice of misleading ads continued unabated in India. Nevertheless, of late, India has been playing catch up with global trends towards strengthening the regulatory framework governing advertisements.

Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022:

• 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’ with an objective to curb misleading advertisements and protect the consumers, who may be exploited or affected by such advertisements.
• The guidelines provide for regulation of bait, free claims and children-targeted advertisements and prohibits surrogate advertisements.
• The extant guidelines place emphasis on three Cs:
  • children;
  • celebrities; and
  • conditions precedent for valid advertisements.

Key provisions of the guidelines:

• Advertisements targeting children shall not feature any personalities from the field of sports, music or cinema for products that under any law require a health warning or cannot be purchased by children.
• Prohibits Surrogate Advertising:
  • It bans surrogate advertising, a practice where a seller promotes a product whose advertisement is not allowed by disguising it as another product.
  • Liquor ads commonly indulge in such practices — under the guise of selling soda, CDs, and even holiday packages.
• Free claims advertisements: A free claims advertisement shall not describe any goods, products, or service to be ‘free’, ‘without charge’, or use such other terms if the consumer has to pay anything.
• Bait Advertisements: The guidelines lay down conditions to be complied with while issuing bait advertisements. Bait advertisement means an advertisement in which goods, products, or service is offered for sale at a low price to attract consumers.
• Bars Deceptive Advertisements: The guidelines bar the omission of material information that makes advertisements deceptive and helps conceal their commercial intent.
• The guidelines bars Indian citizens living abroad from endorsing such advertisements that have been barred for Indian professionals living in the country.

How these guidelines would be more effective than Consumer Protection Act 2019?

• The guidelines read with ASCI’s Code for Self-Regulation of Advertising Content in India specify certain ‘due diligence’ and ‘disclosure’ requirements, thereby holding endorsers accountable for what they endorse in advertisements.
  • According to the due diligence requirements, endorsers will now need to satisfy themselves that the advertiser is in a position to substantiate the description, claims and comparisons made in the promotion.
  • The assumption herein is that endorsers are in a better position to overcome the information asymmetry faced by the average consumer who might not always have access to the latest scientific research and assessments of the product/service offered.
  • The aforementioned due diligence requirements for domestic endorsers also squarely apply to foreign professionals.
• The mandatory declaration of material interest of the endorser in the endorsed product/service is also a salubrious development.
  • It will ensure that unsuspecting consumers are not misled by unscrupulous endorsers and will lend to informed decision-making by the consumer.
  • Such material disclosures are routine affairs. For example, for securities trading in India, SEBI requires listed entities to furnish all material events or information a reasonable investor would consider important in making investment decisions.
• Section 2(28) of the Consumer Protection Act 2019 exhaustively defines ‘misleading advertisements’, but the primary Act did not provide much guidance on what is and what is not to be considered a ‘valid’ advertisement.
  • Guideline 4 fills this legal vacuum by listing out seven criteria to consider while adjudging whether an advertisement is valid and not misleading.
  • Put more simply, an advertisement not meeting the criteria set out in the guidelines may be considered to be misleading. Hence, the inclusion of these criteria provides a uniform standard for understanding the scope and ambit of valid advertisement.

Conclusion:

• Overall, the guidelines are an important milestone in the legal and regulatory regime governing advertisements.
• Industry stakeholders who were till recently operating in a grey area now have a black-and-white framework of rights and duties for avoiding involvement in misleading ads even by mistake.
• The abiding value of these guidelines lies in its intended deterrent effect against errant elements under the threat of effective legally enforceable financial penalty, prohibition and monetary compensation obligations.
• This is a fundamental shift from the erstwhile voluntary compliance regimes under most self-regulatory codes like ASCI Code, CFBP’s Code of Fair Business Practices, FICCI’s Norms of Business Ethics, etc., which suffered from want of legally enforceable sanctions.
• Thus, the real value of the guidelines lies in ex-ante preventing the production of misleading and patently false ads rather than reprimanding wrongdoers post-facto.
• For a nation struggling to curb misleading advertisements, the guidelines hold immense promise if implemented in letter and spirit.

Source: The Hindu BL

Mains Question:

Q. Discuss the significance of Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022.