Endorsement Know-hows: Guidelines released by the Ministry of Consumer Affairs, Food and Public Distribution

The Central Consumer Protection Authority Published Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022, on June 9, 2022, by way of notification bearing no. F. No. J-25/4/2020-CCPA (Reg), in accordance with the authority granted by Section 18 of the Consumer Protection Act of 2019, with the aim of reducing misleading advertising and safeguarding consumers who may be taken advantage of or harmed by such advertisements. As the reach of digital platforms and social media amongst consumers at large has increased manifolds, the main aim of issuing the guidelines is to ensure that the audience or the consumers are not misled when the product or the services are endorsed.  The criteria for valid advertisements are outlined in these guidelines, as are the responsibilities of manufacturers, service providers, advertisers, and advertising agencies. These guidelines also addressed celebrities and endorsers. It states that misleading advertising in any form, format, or medium is illegal. In accordance with these Guidelines, an endorser is someone endorsing any commodities, products, or services in an advertisement whose opinion, belief, finding, or experience appears to mirror the message of the commercial.

Rule 13 of these Guidelines states that due diligence is required for the endorsement of advertisements such that any endorsement in an advertisement must reflect the genuine, reasonably current opinion of the individual, group, or organisation making such representation and must be based on adequate information about, or experience with, the identified goods, product or service and must not otherwise be deceptive. It clarifies that where, Indian professionals, whether resident in India or otherwise, are barred under any law for the time being in force from making an endorsement in any advertisement pertaining to any profession, then, foreign professionals of such profession shall also be not permitted to make an endorsement in such advertisement.

In case of false or misleading advertisement, as per section 21(2) of the Consumer Protection Act, 2019, CCPA may impose fines on the manufacturer or endorser up to Rs. 10 lakhs or Rs 50 lakhs in case of repeated violations.

As per Section 2(28) of the Consumer Protection Act, 2019, ‘misleading advertisement’ has been defined as any advertisement that may be a false description of the product or service or gives a false guarantee pertaining to the nature, substance, quantity or quality of such product or service thus making it possible to mislead consumers, or contains a representation which would constitute to be an unfair trade practice or deliberately conceals material information.

Recently, on 20^th January 2023, the Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution released “Endorsements Know-hows! guidelines”[1]that influencers and celebrities are required to adhere to for endorsements on social media. These guidelines are in addition to the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022, released on 9^th June 2022.[2]

The guidelines deal broadly with 4 topics:

• Who should disclose?
• When to disclose?
• How to disclose?
• Due Diligence

Understanding the Guidelines

Who should disclose?

The guidelines are majorly applicable to individuals or groups who have access to an audience and also have such recognition and power that can affect the decisions of the audience, i.e., a consumer. The decisions involve purchasing decisions, and opinions about products, brands, services, etc., which are likely to be influenced by the position, knowledge, authority, or relationship of the endorser, i.e., the celebrity or influencer with the audience.

The guidelines recognize three categories of people who should be involved in such disclosures:

• Celebrities: This category includes famous personalities from different industries like entertainment, sports, etc., having enough authority and power to influence the decisions of their audience.
• Influencers: This includes creators advertising products and services having a strong influence on the decisions of their audience.
• Virtual Influencers: Progressively enough, this category includes fictional computer-generated ‘people’ or commonly known avatars with realistic features and personalities, performing and functioning like influencers.

When to disclose?

This section highlights the concept of “material connection” between the advertiser and the celebrity or influencer. Such a connection has the power to affect the credibility of the advertisement or endorsement being made by a celebrity or influencer. The guidelines provide a list of what could mean material connection, which includes, but is not limited to, the following:

• Monetary or other compensation
• Free products with or without conditions, such as discounts, gifts, etc.
• Contest and sweepstakes entries
• Trips or hotel stays
• Media barters
• Coverage and awards
• Any other relationship like family, personal, or employment

How to disclose?

The guidelines lay down certain points to be complied with while making such disclosures:

• Hard to Miss: The disclosure should be clear, prominent, and hard to miss. It should not be mixed with a group of hashtags or links.
• Endorsement in a Picture: It should be superimposed over a picture for the audience to notice.
• Endorsement in a Video: It should be placed in the video and not only in the description, both in a video and audio format.
• Endorsement in a Live Stream: It should be displayed continuously and prominently in a live stream.
• Simple and Clear: The language should be simple and clear. Recognizing different platforms with limited space, such as Twitter, the guidelines give an example of terms such as “XYZAmbassador” as also being acceptable.
• Terms Allowed: Restrictively, the only terms allowed to be used are ‘advertisement’ or ‘ad’, ‘sponsored, ‘paid promotion’, or ‘paid’.
• Language: Both the disclosure and the endorsements should be in the same language, which may give rise to a loophole.
• Platform tool: Separate disclosures are required, apart from the disclosure tools of the respective platform.

Due Diligence

The guidelines put a further onus on the celebrities or influencers while advising them to review and confirm for themselves that the claims made by the advertiser are likely to be substantiated by them. It further recommends that the celebrity or influencer endorsing a product or service must have used such a product or service.

Conclusion

The guidelines also provide an illustration of an endorsement by an eCommerce Entity to explain how and what material connection and its disclosure is necessary for the consumers to be able to make an informed decision. Finally, there is also a warning given concerning failure to disclose any material information or non-compliance with the Consumer Protection Act 2019 and its Rules. Such failure or non-compliance is liable for strict action under the law.

These guidelines are in consonance with the Consumer Protection Act, 2019 which was enacted to protect consumers from unfair trade practices and deceptive advertisements. Now the celebrity or influencer will not be able to endorse any product or service that has not been thoroughly researched by them or that they have not personally used or experienced.

[1]https://consumeraffairs.nic.in/sites/default/files/filefield_paths/Endorsement_Know-Hows.pdf.

[2]https://consumeraffairs.nic.in/sites/default/files/file-uploads/latestnews/CCPA%20Notification.pdf.