Advertising & Marketing 2020

Last Updated October 09, 2020

Brazil

Law and Practice

Author



Magalhães e Dias is considered one of Brazil's most established boutique firms. With a highly specialised team and offices in São Paulo and Brasília, Magalhães e Dias has at least six lawyers dedicated to advertising and marketing law (advisory and litigation). The firm works on complex cases of unfair competition, direct actions challenging unconstitutionality, public consultations and draft bills, as well as in various discussions (administrative, judicial and self-regulatory) about advertising campaigns, labelling claims and promotions. Among the firm's clients are Ambev (Anheuser-Busch/InBev), the Brazilian Advertisers Association (ABA), the Brazilian Food Industry Association (ABIA), HASBRO, IPIRANGA, JBS, PepsiCo, PHILIPS and UNILEVER. Recent work includes Unilever v Química Amparo (around advertising that claimed to be able to eliminate the COVID-19 virus), CONAR v Ambev (around advertising actions during singers' live shows), and Abia and ABA v Anvisa (around public consultation on the new legal framework for food labelling).

General Rule: The Consumer Defence Code

The main law that governs advertising practices in Brazil is the Consumer Defence Code (CDC) (Law 8078/90), in particular, its Sections 36 to 38. This is the general rule applicable to all sectors and products. Broadly speaking, the CDC prohibits deceptive advertising (ie, advertising of any type that misleads the consumer regarding the nature, characteristics, quality, quantity, properties, origin, price or any other aspect of a product or service (Section 37 (1) and (3)).

It also prohibits abusive advertising, understood, among other things, as discriminatory messages that exploit fear or superstition, violate environmental rules or abuse children’s less developed judgement and naivety (Section 37 (2), CDC).

The CDC also requires that all advertising be immediately and easily identified as such (principle of identification), hidden advertising is forbidden (head provision of Section 36). Furthermore, it establishes that the supplier must keep any factual, technical and scientific data that supports its messages (Section 36, sole paragraph) and that the burden of proof is always on the advertiser. The supplier is always liable for proving the veracity and accuracy of its advertising message (Section 38).

Specific Sectors

In addition to the general rules of the CDC, there are certain sectors that are governed by specific regulations, for instance:

  • Medicine, tobacco, pesticide and alcoholic beverage advertising is governed by Law No 9294/1996, which imposes specific airing times and warnings; for tobacco, the restriction is even stricter under Law No 12546/2011 and Decree No 8262/2014, which have finally prohibited any cigarette advertising.
  • Advertising for Childcare products (teats, pacifiers and bottles) and infant formula for children under one year of age is prohibited by Law No 11265/2006 and Decree No 9579/2018.
  • Products subject to health surveillance (ANVISA) or to the Ministry of Agriculture, Livestock and Supply (MAPA) must also observe specific regulatory rules for label claims.

Clean City Law

In the City of São Paulo and some other municipalities, there are advertising bans on billboards, rooftops and buildings sides, in addition to cars, buses, motorcycles and bicycles (Law No 14223/2006 and Decree No 47950/2006). Advertisements in or on urban properties, despite being permitted, must follow restrictive regulations. This law was enacted to reduce visual pollution and became known as the “Clean City Law”.

Economic Freedom Act (LLE)

After important debates in the Brazilian Congress, on 20 September 2019, Law 13874 (Economic Freedom Act) was enacted, which, in the wake of Brazil's Federal Constitution, upholds the importance of the individual and their freedom of choice, right to self-determination and entrepreneurship to the detriment of an interventionist and ruling state.

It is worth emphasising Section 4 of the LLE, which expressly deters so-called “abuse of regulation” by the state, particularly stressing its Item VII within the advertising scope, aimed at preventing the abuse of advertising restrictions on any economic sector, except for the cases expressly regulated by federal law.

Therefore, reinforcing the constitutional guarantees of free initiative and freedom of commercial expression (Sections 5, 170 and 220 of the Federal Constitution), it is indisputable that, as per the LLE, only a federal law may apply new restrictions on advertising, whatever the sector involved.

Self-Regulation (CONAR)

Finally, there is the Brazilian Advertising Self-Regulation Code (CBARP), edited and applied by the Brazilian Advertising Self-Regulation Council (CONAR), which details advertising limits, including for the different economic sectors.

In Brazil, advertising supervision is concurrent and may be performed either by federal, state or local administrative bodies (Sections 55 and 82 of the CDC and Decree 2181/97).

Considering the sanctioning purview, the National Consumer Secretariat (SENACON), subordinate to the Ministry of Justice and Public Security, is the federal administrative body that co-ordinates the National Consumer Protection System (SNDC), but it does not have hierarchical authority over state or local agencies, called PROCONs, which also have administrative sanctioning authority.

As the System co-ordinating agent, SENACON may issue ordinances and rules of construction concerning CDC enforcement, including with regard to advertising, although advertising regulation by means of a rule other than provided under a federal law is always controversial (Section 220 (3) and (4) of the Federal Constitution).

In the civil sphere, the Federal and State Public Prosecutor's Office, the Public Defender's Office and the legally constituted and authorised consumer protection associations are also empowered to enforce the CDC (Section 82, CDC), and, by filing public-interest civil actions, may seek to redress moral and material damages eventually generated by deceptive advertising aimed at a community of consumers.

Liability for Deceptive or Abusive Advertising

When considering the scope of possible liability for unlawful advertising (ie, advertising agencies and vehicles, and celebrities) different positions arise from different constructions of the CDC sections.

Initially, the case law implied that only the advertiser was directly liable for the messages – under Section 38 combined with Section 36, sole paragraph, of the CDC, which provides that the advertiser has the burden of proof when showing the veracity and accuracy of the advertising message. This understanding was stated by the Superior Court of Justice (STJ) in the Special Appeal (REsp 604.172). More recently, advertising agencies have started to appear as defendants in public-interest civil actions or even claims for damages for unfair competition resulting from unlawful comparative advertising, and have been prosecuted jointly with the advertiser (Special Appeal REsp 1.676.750). Then again, there are those who argue that all the agents in the chain should be strictly and jointly answerable, pursuant to Section 7, sole paragraph, combined with Section 25 (1) of the CDC.

Therefore, the advertiser and the advertising agency are jointly liable. This understanding is also in line with CONAR rules, which, despite being merely a code of ethics, reproduce the advertising market direction (Section 45(b), CPABR). The case law of the courts has followed this line.

With regard to individuals, the punishment will be personalised in the case of a criminal offence, as provided in Sections 67 to 69 of the CDC, which establish the necessary requirements for the advertising to be found deceiving and/or abusive.

Misleading Offer

The advertising agency, however, should not answer for misleading offers since is it not liable for defective products or services, nor can it be compelled to meet the offer made to the consumer, or even deliver an equivalent product.

Communication Vehicles

The media, in turn, do not participate in the advertising creative process. They cannot control overall message content or accurately examine technical and scientific data. Therefore, in principle, their liability is not strict, although they may be eventually liable for wilful intent or gross negligence.

Celebrities

Celebrities lend their image, voice and prestige to promote advertisers’ products. They do not participate in the advertising creative process, so, as a rule, they receive the advertiser’s pre-defined text. They cannot be held strictly liable. Furthermore, celebrities (and, currently, influencers) are considered independent contractors who, under Section 14 (4) of the CDC, only answer subjectively upon evidence of wilful intent or gross negligence. Greater care is required in testimonial advertising, but still, these professionals are not strictly and jointly liable with the advertiser.

Self-Regulation

All those who participated in the advertising creative process are regularly held liable for it at the level of industry self-regulation (both agencies and influencers), receiving CONAR guidance according to their liability.

Brazilian Advertising Self-Regulation Council (CONAR)

CONAR is the self-regulatory body responsible for the supervision of advertising compliance under the Brazilian Advertising Self-Regulation Code (CBARP).

Self-regulatory rules, despite not being enforceable as law, bind all CONAR signatories, besides being a subsidiary source of construction for judicial and administrative cases, since they consolidate the uses and customs of the advertising market (there are 50 sections and 22 specific annexes).

CONAR is divided into three bodies: the Superior Council, the Executive Board and the Ethics Council. The Superior Council is the normative body and is also responsible for the election of the Executive Board. The Executive Board manages CONAR. The Ethics Council is the supervisory, adjudicative and deliberative body regulating compliance with the CBARP. It is composed of advertising professionals (advertisers, agencies and vehicles) and members of the civil society, organised in six trial chambers. The collegiate decision on the merits is rendered, on average, within 60 days, with the possibility of a preliminary injunction being granted, which will be immediately and spontaneously enforced by vehicles and advertisers.

Proceedings and Processing

The proceedings can be initiated either at CONAR’s own initiative, by its president or executive director (autonomous supervision) or also through the complaints channel (made by companies or consumers).

Once the representation, which may include a request for a provisional remedy, is instituted the case is judged by one of the Ethics Council Chambers. Regardless of the result, a so-called ordinary appeal may be filed to the Special Appeal Chamber by the parties, by the president of the Chamber or by CONAR’s executive director.

A so-called extraordinary appeal, in turn, is admitted only exceptionally, and may be filed by the losing party if (i) the decision rendered in the ordinary appeal was not unanimous (divergence), or (ii) it was based on an error resulting from procedural acts and documents.

Remedies

Should any advertisement be found in breach of CBARP rules, the Ethics Council may apply the following sanctions:

  • a warning to the advertiser and its agency, or even to a celebrity or influencer who has been hired;
  • an amendment of, or change to, the advertisement;
  • the cessation of the advertising campaign, and the subpoenaing of communication vehicles to discontinue the advert's display for better enforcement of the remedy; and
  • finally, although this is unusual, the disclosure of CONAR's position to the public (through the media) regarding the advertiser, agency and vehicle, in the case of a failure to enforce the recommended remedies and actions.

These actions may be cumulative.

Advertising practices may be challenged by either lawful consumer defence bodies (Public Attorney’s Office, PROCONs, SENACON) – on behalf of society as a whole – or by individual consumers.

The civil liability that arises from deceptive or abusive advertising is a strict one, based on the enterprise risk theory. Despite being strict, the duty to repair is not automatic, and the individual consumer must prove the causation between the advertisement and the alleged damage, which must be concrete (and not potential, as with collective actions).

As a rule, individual property damage will be held to have resulted from deceptive advertising, given that this offence is related to the consumer's economic choice of products and services, notwithstanding the possibility of moral damages being claimed as well, depending on the specific case.

Regulated Sectors and Products

There are specific sectors and products which, besides observing the general rules of the Consumer Defence Code, are subject to specific laws and regulations.

Advertising for medicine, tobacco, pesticides and alcoholic beverages is governed by Law No 9294/1996, which imposes specific airing times and warnings. For instance, alcoholic beverages exceeding 13% ABV (spirits in general), may only be advertised between 9pm and 6am. Alcoholic beverages of this type must follow the CBARP rules of Annex A.

Beers, which have a lower alcohol content are not subject to such time restrictions; however, they are subject to warning clauses, as well as the rules CBARP of Appendix P and, therefore must:

  • comply with the mostly adult audience criteria to broadcast their advertising, whatever the medium;
  • have an age gate on all their own websites or channels, preventing minors from accessing them; and
  • observe the compulsory issuance of a responsible consumption warning.

For tobacco, the restrictions are even stricter, and any advertising is prohibited, including at point of sale, under Law No 12546/2011 and Decree No 8262/2014. Only the display of cigarette packs is authorised, provided they have warnings about the health conditions caused by smoking, and any advertising communication on the displays is prohibited.

Advertising for childcare products (teats, pacifiers and bottles), and infant formula for children under one year of age, is prohibited by Law 11265/2006 and its Decree 9579/2018, whatever the medium.

Products subject to health surveillance (ANVISA) or to the Ministry of Agriculture, Livestock and Supply (MAPA) must also observe specific regulatory rules for labelling claims.

The food sector is heavily regulated. Any complementary nutritional information claim on packaged food must comply with ANVISA rules (Collegiate Board Resolution RDC No 54/12, among others), which establish strict criteria. It also regulates ANVISA claims on lactose (RDC 136/2017) and obligations regarding allergens (RDC 26/2015) and gluten (Law 10674/03).

Beer labelling claims must comply with MAPA provisions (eg, the gluten-free or alcohol-free claim criteria).

There are also functional claims, depending on the sector, which must be previously approved by the regulatory body before being printed on the labels (eg, sanitising products claiming sanitising or germicidal features).

Regulatory Trends

Among the regulatory trends in Brazil, it is worth noting:

  • the ongoing public consultation that will establish a new regulatory food framework, requiring the food industry to include a warning seal (on the front of the pack) highlighting to consumers if the food is rich in sodium, fat or added sugar; and
  • increased advertising restrictions aimed at children and teenagers, especially “gift with purchase” promotions with gifts or collectible products.

Leading Cases During COVID-19

During the pandemic, the leading Brazilian cases worth mentioning are:

  • self-regulatory proceedings concerning singers' lives with advertising broadcasted without, allegedly, due respect for the laws in force (accordingly, see CONAR v Gusttavo Lima, CONAR v Jorge and Mateus, among others); and
  • the process, with both administrative and judicial repercussions, involving the launch of TIXAN-YPÊ (a laundry detergent) claiming “it eliminates the virus”, without prior registration and supporting evidence for its effectiveness against SARS-CoV-2.

The scope of what is considered advertising in Brazil is extremely broad. The deceitfulness control falls not only on so-called traditional advertising, but also on any type “advertising information” which includes, among others, sales promotions, point-of-sale materials, tasting and sampling in retail, labelling and slogans, “sponsored” messages on blogs, product placement, etc.

Misleading Advertising

Misleading advertising is defined in Section 37 (1) and (3) of the CDC. It may be summarised as a message able to deceive consumers as to the features of the advertised product or service, either by deceit, omission or any other means (eg, ambiguity and/or inaccuracy).

The CDC defines advertising deceitfulness by omission as when the advert fails to inform consumers of “essential data” related to the advertised product or service. Considering the open concept of the rule, essential information is that which may alter the terms of the offer, or the conditions or constraints of enjoyment of the good or service, or else, may burden the consumer..

Misleading Advertising Assessment Criteria

Upon examining the deceptive potential of the message, the lawfulness of the advertising must be analysed based on the consumer as the construction criterion. The deceptive potential of an advertising message must be accurately examined and measured with a view to the impression such advertising actually causes (or may cause) in its target consumers. Besides the target audience, the communication vehicles that are used and the time and space constraints must be always taken into account, as well as the nature and features of the advertised products or services.

In Brazil, the research and investigation of the target market was not taken into account for decades, and the tendency was to regard the deceit as affecting consumer in general under the principle of consumer vulnerability. Gradually, the courts have accepted the investigation of the target audience criterion, including analysing different media features that were used and sectors that were involved.

Regulation of deceptive advertising is not restricted to the content, and may fall on its form of presentation. Advertisements that mask or conceal their commercial nature, suggesting they are spontaneous manifestations, may be declared misleading due to breach of the principle of identification of the advertising message (Section 36, CDC).

The Brazilian Consumer Defence Code does not regulate specific claims, whether express or implicit. There are certain sectors subject to specific regulations (see 1.6 Regulated Industries) and, therefore, certain attributes must follow specific regulations to be claimed. What is not prohibited or regulated (and is not deceitful) is allowed under the principles of free initiative and free competition.

Puffery Versus a Message of Exclusion

The use of the advertising technique of exaggerated praise (puffery), or the resort to fantasy or emotional appeals, are common advertising techniques to draw the attention of the target audience. Such messages cannot be considered deceitful simply because they convey unreal or clearly exaggerated situations, which are recognised as such by consumers.

These advertising techniques are accepted in Brazil and widely analysed by CONAR and the case law of Brazilian courts.

The puffery must be assessed by examining the concrete case, checking whether the advertising exaggeration actually consists of an exaggerated manifestation of the quality of the product, without requiring factual or scientific proof, one not taken seriously by consumers, or, otherwise, whether the expression is likely to be misleading.

Furthermore, it must be ascertained if the message is just an exaggeration, not measurable, or whether its content is exclusionary. For example, the use of words such as "only", "exclusive", "unique" or "the most" in advertising, whenever related to the exclusivity or the superiority of the advertised product or service, might configure a message of exclusion subject to substantiation, on penalty of being found misleading.

When an advertisement claims that a certain product or service features, among other things, a specific attribute, a quality differentiating it from its competitors, special functionality, the best price on the market, or special performance, these (functional) claims must be preceded by technical support.

This same rule is provided in Section 27 (1) of the CBARP, and compels advertisers and agencies to provide factual, technical or scientific evidence regarding any comparisons or descriptions, whenever requested.

This is provided in Section 36, sole paragraph, of the CDC, which establishes the principle of transparency of the substantiation, and requires suppliers, upon the advertising their products or services, to keep supporting factual, technical and scientific data. The scope of the legal requirement imposes, on suppliers, the burden of proof regarding the veracity of their claims, if they are questioned by lawful interested parties, among which would be a consumer unable to collect product data or run tests.

Neither Brazilian law nor the self-regulatory rules establish specific standards for testing to support advertising claims. This analysis is done on a case-by-case basis. What the law requires is that any advertisement that claims a specific form of effectiveness or a difference from other market competitors, must be supported by testing (prior to the campaign), and the source (survey) that supports the claim must be referenced in the advertisement, even as a footnote.

However, the more independent the research, the better the chances of success and acceptance of the veracity of the advertisement. Specifically, a survey conducted by an independent institute, using a proper methodology and representative sampling, is the right way to support the validity of advertising claims.

Furthermore, advertisers regularly use sources and research released by third parties or government agencies to support their campaigns. However, they must be grounded on objective data analysis.

Brazilian laws do not require the advertising claim to be supported by clinical human research. Frequently, a certain sector is forbidden from making specific claims by the regulatory agency because it understands that prior clinical and scientific proof is required, which, however, would only be possible by means of human research, a situation that demands a long and bureaucratic procedure in Brazil.

Despite Brazil not having specific regulations for generic claims (eg, natural, healthy, environmental, recyclable, etc), there are several restrictions on the use of such expressions, as the regulatory and consumer defence authorities understand that these are generic claims that, without support, are liable to mislead consumers.

With regard to sustainability claims, CONAR has a specific Annex that outlines criteria to avoid misleading or abusive messages. It is Annex U of the CBARP, under which advertising must reflect the advertiser's liability towards the environment and sustainability, and must be guided, among other things, by the principles of concreteness, veracity, accuracy and clarity, proof and sources, pertinence, relevance and absence of absolute claims.

Companies should advertise only pertinent and relevant benefits vis-à-vis the global impact of their activities, and avoid conveying absolute advantages, since it is impossible to fully annul environmental impacts.

General Requirements of Comparative Advertising

The CDC does not expressly mention comparative advertising and this advertising technique is not prohibited. CONAR, however, has opted to expressly regulate comparative advertising, recognising it as customary market practice (Section 32, CBARP).

Comparative advertising should be applied to goods and services that belong to same type or nature. CONAR further reinforces that the main purpose of comparative advertising should be consumer information. Therefore, with regard to comparison parameters, it requires:

  • Objectivity – the comparison should be based only on objective and provable data; the advertiser’s mere personal opinions or value judgements are subjective and groundless guidelines.
  • Certain essential elements – the comparison must fall on one or more essential elements of the comparative product or service, thus contributing to consumer's increased information.

Identifying Competitors by Name

Therefore, insofar as the comparison is true, objective and verifiable regarding one or more essential elements of the products or services, it is authorised to expressly identify the competing brand in the advertisement. We highlight the direct comparative campaign between Rayovac and Duracell batteries. The advertisement stressing Rayovac batteries’ durability and lower price was judged to be in the consumer's interest by the Superior Court of Justice - STJ (Special Appeal-REsp No 1.668.550).

Comparative advertising, however, cannot denigrate the competitor's brand or image – which happens, for example, when the advertiser alludes to a competitor's personal circumstances, unrelated to the compared products or services, or uses offensive expressions or images.

Finally, it is worth noting that this applies even to comic situations, when used to refer to the competitor's brand without making any objective comparison to an element of its product or service. In these cases, the trend in Brazil is to prohibit such advertising on the grounds that it involves the improper use of someone else's brand or, otherwise, an attack on the brand. Classic (and more recent) cases in Brazil were those involving Burger King and McDonald’s chains.

Comparative advertising is not subject to additional standards regarding the minimum requirements for standard advertising to be valid, which are that advertising must be truthful (not deceitful) and grounded on reports or market research (claim substantiation).

Consequently, advertising campaigns that praise special product features and qualities must be supported by prior technical data, this same requirement is applicable to comparative advertising, perhaps even more strictly, because it is subject to immediate challenge by the competitor.

Specific and differentiated requirements of this practice require the comparison to be:

  • always objective and verifiable;
  • not aimed at causing confusion between brands;
  • not denigrating the competing product or brand; and
  • not taking undue advantage of another company’s brand (parasitism).

The standards used to determine whether comparative advertising is truthful are:

  • whether the comparison falls on goods and services of same category (a criterion that is highly required in, for example, automobile comparisons);
  • whether the market research made by an independent institute properly compared competing products, with the necessary exemptions, proper methodology and representative sampling;
  • whether the element being compared admits of objective analysis (eg, price or composition); and
  • whether the comparisons were subjective (eg, better tasting) and, thus, not capable of substantiation.

Competitors may challenge the content of comparative advertising both in CONAR and before the courts; in the latter case by filing unfair competition lawsuits (Law 9279/96). The remedies regularly claimed are the cessation of the advertising and a claim for damages for trademark infringement, both moral and material damages. More rare and controversial would be the filing of a counter-advertising claim.

One of the most recent leading cases in the Brazilian food industry is about misleading and comparative advertising displayed at one of the world's largest processed food fairs, and the discussion has expanded to digital media. The advertisement in question compared the new Heinz mayonnaise to the market leader (Hellmann's, owned by Unilever), alleging a superior production process ("100% cold process") that would grant a fresher and creamier product (compared to other processed mayonnaises). The lawsuit is based on Heinz’s failure to substantiate its claims of a 100% cold process and that this process delivers a fresher and creamier mayonnaise. This is a leading case that will establish important precedents with regard to directly and indirectly comparative and misleading advertising.

Brazil has not yet detailed any special rules for advertising on social networks. The same principles are applicable to both traditional media and digital advertising, namely:

  • the principle of identification of the advertising message – requires the advertisement to be immediately and easily identified as such by consumers;
  • the principle of veracity – that messages are truthful and verifiable, whenever such proof is required (ie, that offers are accurate and met as advertised); and
  • the principle of non-abuse – that messages respect the constitutional social values and their target audience, especially with regard to children, where the rules are more restrictive and merchandising is prohibited.

Considering that Brazil does not have specific regulation for social media advertising, the major legal challenges for advertising professionals regard creating advertising that is interesting without violating the general rules and avoiding hidden advertising, which might result in potential loss of consumer confidence and credibility.

The correct choice of influencers is another important topic, because the wrong post may create unwanted trouble. This situation is exacerbated by the fact that social media platforms do not have strict editorial control.

CONAR has been working on a specific guide regarding influencers but it has not been published yet.

The advertiser's liability for content posted by third parties on the brand website or social network depends on the relationship established between them. There is a somewhat settled understanding, at least within CONAR, that not only the payment, but also the delivery of gifts, products, trips, concert tickets, or any other benefit, even if indirect, characterises paid advertising.

And if there is paid advertising, the advertiser is, directly or indirectly, liable for the posted content.

The major problem from a legal standpoint is when there is no such relationship (ie, when the influencer or the consumer does not have any direct or indirect relationship with the brand) and, sometimes, the company is erroneously held liable for exclusive third-party content.

In principle, the same disclosure requirements that apply to traditional media apply to social media as well, according to the specificities of each medium. On television, except for restrictions on advertising to children, advertisements are easily identified as such, due to the time bands (breaks) in which they are shown. In radio, newspapers and magazines, advertising spaces are also easily visible and delimited, and if advertising is posted in a journalistic format, there should be by an “advertorial” indicator.

On social media, the same rules are applicable but, considering that it is a fluid space, without breaks, making it difficult to distinguish the advertisement from the rest of the editorial content, these rules apply even more strictly. Written disclosure is recommended using the proper indicators provided by the platforms, and also by the user, by using hashtags. When the advert is placed in media for children, this should be also done orally.

Law 12965/2014, also known as the Civil Rights Framework for the Internet, has provided general rules for the platforms, concerning keeping connection records and removing third parties' improperly stated content. Accordingly, the internet application provider should:

  • keep confidential connection records to internet applications in a controlled environment for a period of six months; and
  • be held civilly liable for third-party content only in cases of non-compliance with a court order to remove content identified as an infringement of rights.

Besides this regulation, the General Data Protection Law (LGPD), which has been in force since 17 September 2020, will be applicable to social media platforms, without prejudice to the applicability of the CDC, and of the criminal law against libel and torts in connection with defamatory or slanderous messages and fake news.

Native advertising (ie, advertising that resemble editorial content) must follow overall CDC and CONAR rules and principles, and cannot hide its advertising or paid nature.

It must disclose this nature through its own indicators, on penalty of being declared deceitful under their presentation format (hidden advertising).

The use of marketing by hiring influencers is increasingly bound up with the spontaneity that this form of advertising must assume, likewise the risks inherent to legal discussions regarding the clarity of the advertising information. The marketing takes the form of publiposts, unboxing videos, tutorials, sponsored videos, marked photos, etc.

During the COVID-19 pandemic, Brazil introduced live broadcasts of singers and artists, as a way to keep people indoors and provide them free and "interactive" entertainment.

This innovative format, which featured several advertising actions, generated significant self-regulatory discussion, since the live broadcasts consisted of live shows, which clearly granted the performers involved considerable freedom of expression, and prevented editorial control or company direction regarding their behaviour.

Brazil has not yet detailed any special rules for influencers. The same principles are applicable both to traditional media and advertisements, with the guidelines provided by CONAR in its decisions involving marketing actions by influencers.

The principle of identification of the advertising message must be stressed, which requires that any action pursued by a hired influencer must be immediately and easily identified as such by consumers. The use of specific indicators on the various social media platforms and/or the use of hashtags such as #publi, #advertising, #publipost, #sponsored and #paid partnership is recommended.

CONAR has already indicated that there must be disclosure even in actions involving indirect benefits, such as product delivery.

Furthermore, the messages must be appropriate for the target audience, especially regarding children, whose critical capacity is lower.

Besides, where posts advertising products subject to stricter regulation (eg, spirits) are made, the influencer must also post the warning clause on their page and, depending on the situation, include an age gate to access the page. The advertiser is liable for guiding and supervising compliance with these rules.

The advertiser may always be held liable for the content posted by the influencer. If a specific agreement was made for the posted content, the liability is unequivocal. If an influencer is strongly connected with a brand (its "poster boy/girl" or "brand ambassador"), then even if the content was not specifically paid for or hired, the advertiser is answerable for that content, given the connection of the influencer to the brand.

The main legal problem is when such a relationship does not exist (ie, when the influencer does not have any direct or indirect relationship with the brand) and, sometimes, the company ends up being liable for the third-party’s exclusive content. This is often the case where YouTubers are involved, because they use brands or products to make their videos, including unboxings.

Recent cases in Brazil have led to discussion of this topic, and CONAR's case law has swayed, sometimes holding the brand liable for improper third-party content, and sometimes exempting it. Therefore, despite there being no legal duty to “monitor the network”, there are situations where CONAR has ruled that a supplier should act to protect its good name, even though the content in question was produced by third parties with no direct or indirect relationship with the brand.

No specific rule is applicable to email marketing. However, general consumer protection rules that prohibit abusive marketing are applicable (Section 6(IV) and Section 39(IV), CDC).

Thus, email addresses may only be collected for marketing purposes with the consumer’s explicit consent, and upon providing them with an opt-out option. Besides, their addresses cannot be shared with third parties without prior consent. The liability for any violations under the current rules follows the overall civil and consumer liability regime. The criteria for personal data use and processing, as well as the liability regime for unlawful acts, will be increased by the General Data Protection Law, which recently came into force.

Self-Regulation

In light of the constant abuses verified in Brazil regarding the indiscriminate use of this practice, which has been adopted by companies without the consumer's prior consent, in 2019, the telephone sector committed to implementing measures to mitigate the practice and provide opt-out options.

Under the self-regulation scope, telecommunications companies, jointly with ANATEL (the regulatory agency), launched the Não Me Perturbe (Don’t Disturb Me) programme; an initiative that allows consumers (via a website) to exclude their number from land and mobile telephony, TV and internet service providers’ databases.

Specific Laws

At the federal level, ANATEL Resolution No 632, of 7 March 2014, establishes that consumers of telephone, pay TV and internet services are entitled not to receive advertising messages on their mobile stations, except upon prior, free and express consent. However, there is no legal ban of other categories of services or products.

At state level, several laws provide for telephone number registration to block product or service telemarketing calls. As a rule, such registration is managed by state PROCONs.

Finally, with the LGPD coming into force, the obligations regarding consent, conditions for data processing and liability resulting from data processing failures will significantly increase.

Text messages sent to consumers are governed by the CDC principle that prohibits abusive marketing to consumers (Section 6(IV) and Section 39(IV), CDC).

So, the collection of consumer telephone numbers for the purpose of sending text messages with advertising content may only be done with explicit consent, and upon providing explicit opt-out options. The liability for any violations under the current conditions follows the overall civil and consumer liability regime.

Furthermore, ANATEL Resolution No 632, of 7 March 2014, establishes that consumers of telephone, pay TV and internet services are entitled to not receive advertising messages on their mobile stations, except upon prior, free and express consent. However, there is no legal ban of other categories of services or products.

Finally, upon the LGPD coming into force, further discussions will arise about consent and the supplier’s lawful interest in data collection and processing.

In Brazil, no specific rule (legal or self-regulatory) has yet been enacted to specifically regulate targeted advertising.

General rules, both in the CDC and in the Civil Rights Framework for the internet, are applicable to the consent needed for personal data collection, storage and transfer (Section 7(IX), Law 12968/2014).

In practice, considering overall consumer protection duties against abusive practices and the obligation to procure consent for personal data collection, storage and transfer (Section 7(IX), Law 12968/2014), it is advisable to:

  • procure prior consent for consumer data collection and processing, by means of pop-up cookies on websites or by express acceptance of the terms of use for apps and software;
  • include express and visible opt-out mechanisms in advertisements directed to consumers, or even regarding data collection mechanisms for targeted advertising; and
  • avoid excessive data collection.

Upon the LGPD coming into force, further discussions will arise about consent and the supplier’s lawful interest in data collection and processing.

Marketing to children is regulated in Brazil by Section 37 (2) of the CDC, which establishes that advertising that takes advantage of children's less developed judgment and experience is abusive. Despite the CDC prohibiting only abusive advertising, there are decisions rendered by the Superior Court of Justice against “gift with purchase” promotions that grant collectible gifts (eg, plush toys) in the food sector, as these are considered to be an abuse in themselves. Therefore, in Brazil, the advertising parameters targeting children, defined by the Child and Adolescent Rights Act (ECA) as a person up to 12 years old, have significantly increased.

With regard to self-regulation, CONAR provides a very detailed list of rules and parameters so that messages aimed at children are appropriate and respect their special condition as developing persons. Besides dedicating a specific section in its Code (Articles 37 et seq of CBARP) to children and teenagers, its Annex H also provides several rules and bans concerning the marketing of food to children, which requires increased care.

Finally, regarding the collection and use of children's personal information, the LGPD (Law No 13,709/2018) provides a specific section (Section 14) under which children's personal data should be treated considering their best interests and with the specific and highlighted consent of at least one parent or legal guardian (paragraph 1). For the purposes of this law, information concerning an identified or identifiable natural person is considered personal data (Section 5(I)).

Under the principles of child protection, children's data should not be collected without parental consent, let alone to target media "that interests them" or is based on their "browsing habits".

Violation of these rules results in the penalties of Section 56 of the CDC being applied, especially a fine that may amount to BRL10 million. When the LGPD comes into force, the penalties will increase substantially, and a fine amounting to 2% of the relevant company's turnover (limited to BRL50 million) may be imposed, besides the infringement being subject to publication after its assessment and verification, among other sanctions. The applicable sanctions provided in the LGPD (Sections 52 to 54) should be enforced as of 1 August 2021 (according to Law No 14.010/2020, enacted because of the COVID-19 pandemic).

Under Law 5768/71 and Decree No 70951/72, any free distribution of prizes as a form of advertising that involves luck must be previously submitted to the approval of the competent government agency. Currently, this approval is centralised in the Secretariat of Public Policies Assessment, Planning, Energy and Lottery (SECAP/ME), subordinated to the Ministry of Economy.

The laws provide for the following types of commercial promotion subject to registration:

  • Raffle or raffle-like – whereby the consumer meets a certain requirement (eg, purchase of products) and receives a lucky number, which is randomly, equitably and concurrently assigned, and wins as per the results of the Federal Lottery.
  • Contest – widely used, especially in social networks, it is the form whereby the winner is defined based on their performance (eg, best photo/video) or by a competition of any nature (eg, the first ones to buy the product).
  • Contest-like – used predominantly by shopping malls, this form involves multiple participants who have correctly answered a certain question and, as a tiebreaker, the coupons printed with these answers are thrown into the air and one (or more) is caught.
  • Gift certificate – whereby the reward is instantaneous (ie, the consumer knows if they have won immediately) either because the gift is found inside the purchased product, or because it is given on presentation of the sales slip for the product.

In all of the above forms of commercial promotion the requirement of making a purchase to participate is not prohibited.

Recently, Informative Note No 11/2018 issued by SEFEL (the precursor to SECAP), introduced new criteria to promotions, such as the imposition of prior registration of “buy one, get one free” promotions subject to product availability.

Brazilian laws distinguish between contests of skill and games of chance. Whenever luck is involved, the company must procure prior authorisation.

An exception to this rule is the exclusively cultural, artistic, sporting or recreational contest; insofar as it is not subject to any type of risk or payment for competitors/participants, nor binds such competitors/participants (or the winners) to the acquisition or use of any good, right or service. Such contests, therefore, are intended to reward artistic or sporting talent, or, simply, to offer leisure, without market connotations.

Promotions that involve luck: raffles, gift certificates, contests, or similar operations must be previously authorised by SECAP.

The law includes extensive mandatory documentation and accountability procedures. In brief:

  • Authorisation must be procured online at www.scpc.sefel.fazenda.gov.br, at least 120 days before the promotion starts.
  • An inspection fee must be collected, whose amount varies according to the value of the promotion prizes.
  • After the commercial promotion ends, the company must report to SECAP within 30 days after delivering all the prizes or collecting the amount corresponding to the prizes that were not delivered, if applicable.
  • Once the accountability report is approved, the procedure is shelved.

There is no specific law or regulation applicable to loyalty programmes. However, SECAP Informative Note 11/2018 expressly states that prior authorisation is not required for loyalty programmes and incentive campaigns, as they do not correspond to commercial promotions.

Free offers like “buy one, get one free” are detailed in the Informative Note 11/2018, which establishes that prior registration is mandatory when the promotion:

  • provides for the distribution of prizes subject to stock limit;
  • provides for prizes to the first contestant to meet the participation criteria;
  • establishes a fixed number of prizes; or,
  • establishes any other criteria for the participation, besides purchasing the promoter's products or services.

However, the prior registration rules do not apply to offers made on product packaging (eg, promotional packs with free gifts or promotions like buy two, get three).

The CDC (Section 39(III)) establishes that sending or delivering products or providing services to consumers, without prior request is an abusive practice. Consequently, even if a prior contractual relationship has been established to send products or provide services continuously (for a charge), to avoid allegations of abusive practice and related penalties, the prior and express consent of the consumer should be procured for the renewal.

Magalhães e Dias

304 Armando Penteado Street
São Paulo, SP, 01242-010
Brazil

+55 11 3829 / 4411

+55 11 3825 / 8695

lm@magalhaesdias.com.br www.magalhaesdias.com.br
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Law and Practice

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Magalhães e Dias is considered one of Brazil's most established boutique firms. With a highly specialised team and offices in São Paulo and Brasília, Magalhães e Dias has at least six lawyers dedicated to advertising and marketing law (advisory and litigation). The firm works on complex cases of unfair competition, direct actions challenging unconstitutionality, public consultations and draft bills, as well as in various discussions (administrative, judicial and self-regulatory) about advertising campaigns, labelling claims and promotions. Among the firm's clients are Ambev (Anheuser-Busch/InBev), the Brazilian Advertisers Association (ABA), the Brazilian Food Industry Association (ABIA), HASBRO, IPIRANGA, JBS, PepsiCo, PHILIPS and UNILEVER. Recent work includes Unilever v Química Amparo (around advertising that claimed to be able to eliminate the COVID-19 virus), CONAR v Ambev (around advertising actions during singers' live shows), and Abia and ABA v Anvisa (around public consultation on the new legal framework for food labelling).

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