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Legal opinion to be considered as due diligence for brand endorsements

Legal opinion to be considered as due diligence for brand endorsements

he Central Consumer Protection Authority has issued draft guidelines for the prevention of false or misleading advertisements and the due diligence to be carried out for endorsements.

These guidelines will be called the Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 2020.

These guidelines cover all advertising/marketing communications regardless of form, format or medium. They are applicable to the manufacturer/service provider whose products/services are subjects of the advertising/marketing communications, as well as to advertisement agency and endorser (wherever applicable) of the product/service.

The guidelines said that an endorsement is required to take legal opinion or opinion from an advertising self-regulatory organisation which would be considered as "due diligence".

Every endorser endorsing a product or service shall take due care to ensure that all descriptions, claims and comparisons that they endorse are capable of being objectively ascertained and are capable of substantiation.

Every endorser endorsing a product or service shall take due care to ensure that their endorsement does not convey any express or implied representations that would be false, misleading or deceptive if made by the trader or manufacturer or advertiser of the relevant product or service.

"Any endorser who obtains advertising advice from an advertising self-regulatory organisation or a legal opinion from an independent legal practitioner regarding the honesty of statements in their endorsement and its compliance with these guidelines and the Act may be considered to have carried out due diligence for the purposes of his liability under the Act," the guidelines said.

Also, disclosure of material connection has to be made. "Where there exists a connection between the endorser and the trader, manufacturer or advertiser of the endorsed product that might materially affect the weight 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," the guidelines said.

The caveat is that "provided that no such advice or opinion may be considered adequate if it is otherwise found that the endorser had knowledge that the endorsement would be false, misleading or deceptive, or that its falsity or is leading or deceptive nature was apparent given the circumstances".

The conditions for a valid advertisement have also been stipulated. In order to be considered valid, an advertisement shall contain truthful and honest representations; not mislead consumers by exaggerating the capability or performance or service of the product; not present rights given to consumers by virtue of law as a distinctive feature of the advertiser's offer; not suggest that the claims made in it are universally accepted of there is a significant division of informed or scientific opinion pertaining to such claims.

The advertisement cannot mislead about the nature or extent of the risk to consumers' personal security, or that of their families if they fail to purchase the advertised product or service.

"While carrying out mass manufacture and distribution of goods and services, if an occasional, unintentional lapse in the fulfillment of an advertised promise or claim occurs, then such unintentional lapse may not invalidate the advertisement in terms of these guidelines," the guidelines clarified.

The norms of non-imitation of advertisements say that the ads should not mislead. "An advertisement shall not be so similar in general layout, copy, slogans, visual presentation, music or sound effects to other advertisements or promotions so as to be likely to mislead or confuse the consumer," the guidelines said.

Comparative advertising norms have also been clarified. In order for a comparative advertisement to be considered permissible, it shall be factual, accurate and capable of substantiation. It shall not present a good or service as an imitation or replica of a good or service with a protected trademark or trade name.

Advertisements containing comparisons with other manufacturers suppliers, producers or with other products, including where a competitor is named, shall be permitted in the interest of promoting competition, where the features of the competitor's product being compared to the features of the advertiser's products are specified clearly within the advertisement and the subject matter of the comparison is not of such nature so as to confer an artificial or unjustifiable advantage upon the advertiser.

On bait advertising, the norms say that an advertisement shall not seek to entice consumers to purchase a good or service without a reasonable prospect of selling the advertised good or service at the price offered.

On the duties of a manufacturer, service provider and advertising agency, the guidelines said that advertisers shall exercise special care and restraint while publishing advertisements directed at health issues or any real or perceived inadequacy of any physical attributes such as height, body weight, impotence, infertility, baldness and the like, to ensure that claims or representations made directly or by implication, do not exceed what is considered prudent by generally accepted standards of medical practice and the actual efficacy of the product.

In addition, products shall not be described as "free" where there is any direct cost to the consumer other than the actual cost of any delivery, freight, or postage. Where such costs are payable by the consumer, a clear statement that this is the case shall be made in the advertisement.

The guidelines also said that where a claim is made that if one product is purchased, another product will be provided "free", the advertiser may be required to show, as and when called upon by the Central authority, that the price paid by the consumer for the product which is offered for purchase with the advertised incentive is no more than the prevailing price of the product without the advertised incentive.

The guidelines also said that advertisers may not make claims which use expressions such as "up to five years' guarantee" or "Prices from as low as Rs Y" if there is a likelihood of the consumer being misled either as to the extent of the availability of the product or as to the applicability of the benefits offered..