Introduction
In order to keep pace with the growing demand for quality goods and services while keeping competition at bay in this fiercely-contested sector, FMCG companies have constantly been on the lookout for effective and creative techniques to gain popularity and an edge over their rivals’ products. The marketing and sales teams of such companies, often armed with data, leave no stone unturned to outwit and outsell the products of competing companies. This comes as no surprise, as with the integration of innovative digital technologies and advancements in the possible venues for advertisements, companies have levelled up their consumer interaction experiences. For example, companies have now shifted their focus from hoardings and billboard advertisements to engaging social-media influencers to review and showcase their products. Some companies have even begun digitally interacting with customers and re-sharing posts (often with the company’s product prominently visible) of happy consumers on social media.
Companies also draw attention to their products by integrating simple, consumer-friendly statements, taglines and claims on the packaging and labels of their products to cater to the needs in terms of changing environment. These statements and claims used by the companies often attempt to invoke the ethos, pathos and logos of target consumers. However, under certain instances, these statements and claims may be inaccurate or unsubstantiated and may mislead customers into buying the product. This blog post outlines the permissibility of some of the endorsements and advertisement strategies used by companies as part of their promotional activities.
Misleading advertisements under the Consumer Protection Act, 2019
The Consumer Protection Act, 2019 (“CP Act”) provides a statutory framework for matters related to consumer rights, and redressal of disputes thereof. Section 2(28) of the CP Act defines ‘misleading advertisement’ with regard to a product or services as –
“(i) falsely describes such product or service; or
(ii) gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or
(iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or
(iv) deliberately conceals important information.”
The CP Act empowers the Central Authority to issue directions and impose penalties against false or misleading advertisements and essentially makes actionable, any acts of advertising that do not have a valid legal or evidentiary basis. In this regard, the Central Consumer Protection Authority (“CCPA”) has also issued the ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’[1] (“CCPA Guidelines”) to expand the scope of the existing provisions under the CP Act by setting out detailed parameters of what is permissible and what is prohibited, with an objective to curb misleading advertisements and protect consumers who may be exploited or affected by such advertisements. The CCPA Guidelines seek to ensure that consumers are not being deceived by unsubstantiated claims, exaggerated promises, misinformation and false claims. The guidelines also define ‘bait advertisement’[2], ‘surrogate advertisement’[3] and clearly provide what constitutes as ‘free claim advertisements’[4]. In addition, the CP Act also allows consumers to claim compensation from manufacturers, service providers and product sellers in case there is a deficiency in the service provided/ defect in the product sold to the consumer.
Restrictions on Medical Practitioners from Endorsing Products
The Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (“Ethics Regulations”) place significant restrictions on physicians by not permitting them to engage in activities that seem to promote any product. The underlying objective is to ensure that the practice of medicine by doctors is free from all extraneous considerations and influences. The scope and intent are to regulate private product endorsements that would give the impression that a physician is endorsing or recommending or creating a product in exchange for any consideration. It is crucial to note that:
- The Ethics Regulations places a restriction on physicians endorsing products[5].
- The Ethics Regulations elaborates upon the disciplinary action that can be taken against medical practitioners upon occurrence of an event of professional misconduct[6].
- The Ethics Regulations elaborates upon instances wherein a medical practitioner may whilst not engaging in activities related to advertising, contribute to scholarly articles, give interviews, etc., in relation to diseases, public health, treatment, hygienic living and so on[7].
Advertising Standards: Code for Self-Regulation of Advertising Content in India, by the Advertisement Standards Council of India (“ASCI Code”)
The ASCI Code controls advertisement content in India (whether read, heard or viewed in India). ASCI Code prohibits advertisements that are in breach of law or omit anything which is mandated by law. Notably, the responsibility for adherence to the ASCI Code is upon all who commission, create, place or publish any advertisement or assist in the creation or publishing of any advertisement.
However, it must be emphasised that the ASCI Code is a code for self-regulation and if a complaint is made under the same for non-compliance, the ASCI can provide suggestions for rectification of the same. Further, the ASCI Code does not permit any act of advertising (or promotion) that is in violation of any applicable law.
Regulating Misleading Advertisements in the Food Industry
The primary watchdog of the food industry in India namely, the Food Safety and Standards Authority of India (“FSSAI”) has been tasked with undertaking a tri-fold mission: (i) to set globally benchmarked standards of food; (ii) to encourage and ensure that food businesses in India are compliant with such standards; and (iii) to enable the citizens of India to consume balanced, safe and unadulterated food products. A cornerstone of this regulatory regime is to eliminate the occurrence of misleading advertisements and unverified claims found on the packaging and labels of food products manufactured, imported and sold in India, along with audio-visual publicity. Such advertisements and claims are commonly placed by over-enthusiastic marketing and sales teams of food business operators (“FBO”) who desire to drive up consumer demand and ultimately, the sale of their products. For example, during the COVID-19 pandemic, it was seen that a number of food products, including health supplements and nutraceuticals, marketed to consumers often included claims on their labels and packaging such as “immunity boosters included” and “immunity enhancer”.
The FSSAI has taken cognizance of such activities being undertaken by FBOs in India and in 2018, had published the Food Safety and Standards (Advertising and Claims) Regulations, 2018 (“Regulations”), which sought to inter alia mandate FBOs to make clearer disclosures on food packets and hold them responsible for advertisements and claims on labels. Consequently, FSSAI further published 2 (two) amendments – dated August 30, 2022 (“First Amendment”) and December 13, 2022 (“Second Amendment”) to the Regulations, leading to further clarity on the scope and compliances required in terms of the Regulations.
One of the most significant changes brought about by the Second Amendment includes the substitution in regulation 4(7) of the Regulations[8]. This amendment has mandated that FBOs must insert a prominent disclaimer on the front of the label of the food product that the adjectives including “natural”, “fresh”, “pure”, “original”, “traditional”, “authentic”, “genuine”, “real” used in the labelling, presentation or advertisements in relation to the food does not represent the true nature of the food product. However, in terms of the directions issued by the FSSAI dated July 5, 2023, FSSAI has considered the fresh representations received from the food industry, along with obligation to ensure sustainable practices for food business operations, FSSAI has extended the date for enforcement of regulation 4(7) of the Regulations for a period of six months from June 13, 2023. The effectiveness of such restrictions on reducing the growing number of unsubstantiated and unverified claims commonly printed on the packaging and labels of food products remains to be seen.
Concluding Thoughts
Based on the above, it may be prudent for companies to ensure that they have appropriate disclaimers in their advertisements and promotions, which play a pivotal role from the consumer perspective, to limit potential liabilities. Any tagline or statements used in their marketing/ promotional material, which is not substantiated with adequate data (through scientific studies, research, etc.), may be construed as false guarantee, or likely to mislead consumers on the nature, substance, quantity or quality of such product – thus coming under the ambit of ‘misleading advertisement’ as defined under the CP Act. In the absence of adequate scientific evidence, data, statements alluding to recommendations by physicians – data of physicians prescribing and not approving/ recommending; the companies may be exposing themselves to future liability by using such unsubstantiated claims in the promotion of their products.
Disclaimers should not attempt to hide material information with respect to any claim made in such advertisements, the omission or absence of which is likely to make the advertisement deceptive or conceal its commercial intent and neither should it attempt to directly or indirectly make misleading claims in an advertisement. In addition, companies must adopt standard operating procedures and practice guidelines, which enforce due diligence measures for endorsement of advertisements to reflect that the advertisements are genuine and not deceptive. Advertisement and promotional material should, ideally, be subject to a thorough vetting process, before being put out.
For further information, please contact:
Biplab Lenin, Partner, Cyril Amarchand Mangaldas
biplab.lenin@cyrilshroff.com
[1] https://consumeraffairs.nic.in/sites/default/files/CCPA_Notification.pdf
[2]“bait advertisement” means an advertisement in which goods, product or service is offered for sale at a low price to attract consumers.
[3]“surrogate advertisement” means an advertisement for goods, product or service, whose advertising is otherwise prohibited or restricted by law, by circumventing such prohibition or restriction and portraying it to be an advertisement for other goods, product or service, the advertising of which is not prohibited or restricted by law.
[4] A free claims advertisement shall inter alia not describe any goods, product or service to be ‘free’, ‘without charge’ or use such other terms if the consumer has to pay anything other than the unavoidable cost of responding to such advertisement and collecting or paying for the delivery of such item.
[5] “ A physician shall not make use of him/her (or his/her name) as subject of any form or manner of advertising or publicity through any mode either alone or in conjunction with others which is of such a character as to invite attention to him or to his professional position, skill, qualification, achievements, attainments, specialities, appointments, associations, affiliations or honours and/or of such character as would ordinarily result in his self-aggrandisement. A physician shall not give to any person, whether for compensation or otherwise, any approval, recommendation, endorsement, certificate, report or statement with respect of any drug, medicine, nostrum remedy, surgical, or therapeutic article, apparatus or appliance or any commercial product or article with respect of any property, quality or use thereof or any test, demonstration or trial thereof, for use in connection with his name, signature, or photograph in any form or manner of advertising through any mode nor shall he boast of cases, operations, cures or remedies or permit the publication of report thereof through any mode…”
[6] “It is made clear that any complaint with regard to professional misconduct can he brought before the appropriate Medical Council for Disciplinary action. Upon receipt of any complaint of professional misconduct, the appropriate Medical Council would hold an enquiry and give opportunity to the registered medical practitioner to be heard in person or by pleader. If the medical practitioner is found to be guilty of committing professional misconduct, the appropriate Medical Council may award such punishment as deemed necessary or may direct the removal altogether or for a specified period, from the register of the name of the delinquent registered practitioner. Deletion from the Register shall be widely publicized in local press as well as in the publications of different Medical Associations/Societies/Bodies.”
[7] “A physician should not contribute to the lay press articles and give interviews regarding diseases and treatments which may have the effect of advertising himself or soliciting practices; but is open to write to the lay press under his own name on matters of public health, hygienic living or to deliver public lectures, give talks on the radio/TV/internet chat for the same purpose and send announcement of the same to lay press.”
[8] “Where the meaning of a trade mark, brand name or fancy name containing adjectives such as “natural”, “fresh”, “pure”, “original”, “traditional”, “authentic”, “genuine”, “real”, appearing in the labelling, presentation or advertising of a food is such that it is likely to mislead the consumer as to the nature of the food, in such cases a disclaimer shall be mentioned prominently on the front of pack of the label stating that – “*This is only a brand name or trademark, or fancy name and does not represent its true nature; (relevant one may be chosen as applicable).”
