This blog post is a continuation of Part I for CCPA Guidelines for Misleading Advertisements and Endorsements, 2022. The first part describes the prescriptions of the guidelines and do’s and don’ts for advertisers and owners of brands. This second part deals with the duties and obligations of various stakeholders.

Duties of manufacturer, service provider, advertiser, and advertising agency

Here are the guidelines, duties, and requirements applicable to manufacturers, service providers, advertisers, and advertising agencies:

Objective Substantiation

It is the duty of every manufacturer, service provider, advertiser, or advertising agency is to ensure that all descriptions, claims, and comparisons in an advertisement that relate to matters of objectively ascertainable facts shall be capable of substantiation and produce such substantiation if required by the CCPA. This means that any claim made in an advertisement must be true and backed by relevant data. For instance, if an advertisement claims that a product has a certain benefit or feature, the manufacturer must have evidence to back up that claim. This was relevant under the old regime as well. Clear reports were needed to substantiate claims. 

Independent Research or Assessment

The advertisement must also indicate the source and date of independent research or assessment in cases where claims in the advertisement are expressly stated to be based on or supported by such research or assessments. For example, if an advertisement claims that a product has been clinically tested, the advertisement must specify the source and date of the clinical testing and number of data subjects.

Use of References

The Guidelines also state that an advertisement cannot use or refer to the name or image of a celebrity or well-known person without their permission. For example, if a skincare product claims that it is used by a famous actress to promote the product, the advertisement must have obtained permission from the actress to use her name or image.

Misleading Claims

Advertisements cannot contain statements or visual presentations that directly, by implication, by omission, by ambiguity, or by exaggeration are likely to mislead consumers about the product advertised, the advertiser, or any other product or advertiser. An advertisement cannot make false or exaggerated claims about the product or service being advertised. For instance, an advertisement cannot claim that a weight loss pill will help you lose 10 kg in one week if it does not have any scientific backing for such a claim.

Framing of advertisements

The advertisement should not be framed as to abusing the trust of consumers or exploiting their lack of experience or knowledge. It should indicate a fixed period of guarantee of the product or a fixed price at which the product is being offered. 

Permissible exaggerations: If any advertisements invite the public to take part in lotteries or prize competitions permitted under any law for the time being in force or hold out the prospect of gifts, it shall set out all pertinent material terms and conditions to enable consumers to obtain a true and fair view of their prospects in such activities. An advertisement cannot make false promises or use tactics to mislead consumers into making a purchase. For instance, if an advertisement claims that a product is being offered at a discounted price, it must mention the original price and the discounted price.

Obvious untruths or exaggerations that are intended to amuse or catch the eye of consumers are permissible, provided they are seen as humorous or hyperbolic and not likely to be understood as making literal or misleading claims for the advertised product. For example, an advertisement for a car that claims to be “faster than a rocket” can be considered a permissible exaggeration as it is clearly intended to be humorous and not likely to be taken literally by consumers.

In Sum

The CCPA Guidelines represent a positive development in the effort to curb unfair trade practices and safeguard consumer rights. By clarifying what constitutes a valid advertisement and providing dos and don’ts for manufacturers, service providers, advertisers, and agencies, these Guidelines aim to prevent consumer friendly behaviour. However, there is room for improvement in areas such as surrogate advertising and the standards for endorsers. 

-Archana Balasubramanian, Partner with Shrutika Barabde, Associate

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