Advertising & Marketing 2021

Last Updated October 07, 2021

India

Law and Practice

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Anand and Anand is one of India's leading law firms, with offices in four of India’s major cities: New Delhi, Noida, Chennai and Mumbai. The firm represents clients on a large number of the most complex and high-value matters across the globe and its key practices are highly regarded in their fields. Anand and Anand understands the different challenges faced by its clients in the contemporary business environment as a result of technological changes, evolving government regulations, and competitive pressures in the marketplace. It believes that the combination of the firm’s culture, the depth of its experience, the wide range of its lawyers' expertise and the quality and energy of its lawyers allows it to offer a level of client service that is unique not only in the Indian legal market but around the world. The firm's lawyers are trained to take a commercial perspective regarding their clients' issues and face the same with a solution-oriented approach. They provide seamless, resourceful and integrated service across a broad spectrum of practice areas.

In India, the Advertising Standards Council of India (ASCI), a voluntary, self-regulatory council was established in 1985 to promote responsible advertising and to safeguard the public interest from misleading claims. This in turn led to enhanced consumer confidence. It seeks to ensure that all advertisements in India conform to its Code for Self-Regulation.

Coupled with the initiatives of the self-regulatory watchdog, there are several other statutory provisions regulating the advertisement regime in the country, such as:

  • the Drugs and Magic Remedies Act 1954;
  • the Emblems and Names Act 1950;
  • the Trade Marks Act 1999;
  • the Copyright Act 1957;
  • the Patents Act 1970;
  • the Consumer Protection Act 2019;
  • the Code for Commercial Advertising on Doordarshan and All India Radio;
  • the Food Safety and Standards Act 2006;
  • the Cable Television Network Amendment Act 2011;
  • the Drugs and Cosmetics Act 1940;
  • the Prize Competitions Act 1955;
  • the Press Council Act 1978;
  • the Cable Television Network Rules 1994;
  • the Indian Penal Code, 1860;
  • the Information Technology Act 2000;
  • the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002;
  • the Indecent Representation of Women Act 1986;
  • the Bar Council of India Rules formulated under the Advocates Act 1961; and
  • the Cigarettes and other Tobacco Products Act 2003.

In addition, every state has its own set of legislation for gambling and betting. For the sake of convenience, all these pieces of legislation are not being mentioned here but must be taken into consideration.

While the above is not an exhaustive list, it does cover some of the significant initiatives regulating contravening advertisements in the country.

At present, there is no uniform legislation regulating the advertising industry. The Indian advertising market as a whole is regulated and controlled by the ASCI, which is further complemented by the Indian laws governing specific goods/services, media, populations, etc, listed in 1.1 Source of Regulations.

Consequently, the lack of any uniform integrated legislation, makes it necessary for advertisers to be in compliance and sync with all local and national advertising laws.

As regards the mechanisms of redress available, there are three types of complaints handled by the ASCI:

  • complaints from the general public, including government officials, consumer groups, etc;
  • suo motu complaints from members of the ASCI Board, the Consumer Complaints Council or the Secretariat; and
  • intra-industry complaints (ie, complaints by one advertiser against another).

Such complaints can be filed against the manufacturer, service provider, advertiser, brand endorser, social media influencer, amongst others, for deceptive and misleading advertising. It is pertinent to note that the ASCI does not accept and process complaints against political and non-commercial government advertising.

The Consumer Complaints Council (CCC) of the ASCI functions as its examining body which considers complaints raised as well as the response of the advertiser, prior to giving its recommendations as to whether the advertisement in question violates the provisions of the Code.

The ASCI is a voluntary self-regulatory council established in 1985 to promote responsible advertising and to enhance public confidence in advertisements. The council's primary objectives are to:

  • ensure accuracy and honesty in the claims made in advertisements;
  • ensure that the advertisements are not violative or offensive in any manner or contrary to the accepted public decency standards of the country;
  • safeguard society from promotion of any products regarded as hazardous to society or to individuals; and
  • maintain fairness in competition and uphold consumer interest in the market.

In regard to a private right of action against misleading advertising practices, both the general public and an advertiser’s competitors have an equal right to expect the content of advertisements to be presented fairly, intelligibly and responsibly.

In addition to the ASCI, a deceived or cheated consumer can "knock on a court’s door" on issues of consumer interest, false/misleading claims, IP violations, disparagement, or even moral grounds. Courts having a judicial role, based upon the merits of a case, and can pass orders that are binding.

As a result, such binding orders complement the ASCI, while the ASCI Code allows it to operate more like a regulator that can recommend alterations/amendments to, or the removal of, adverts, but does not give it the authority, per se, to pass any injunctive relief or damages or rendition of accounts.

Furthermore, in a recent move, the Indian Ministry of Consumer Affairs, Food and Public Distribution made the new Consumer Protection Act, 2019 (CPA 2019) effective, which replaced the erstwhile Consumer Protection Act, 1986 in entirety. The CPA 2019 broadly covers the same ground as the ASCI guidelines. The ASCI Code is advisory in nature, but these are now a part of the CPA 2019 and are therefore enforceable and have statutory backing, making it an effective mechanism to ensure the curbing of unfair trade practices.

When it comes to private relief, one of the key features of the CPA 2019 is the concept of product liability. Under product liability law, the consumers are provided with the legal recourse for any injuries suffered from a defective product, with specific responsibilities and liabilities placed on a "product manufacturer", "product service provider" or "product seller", of any product or service, to compensate for any harm caused to a consumer by such a defective product manufactured or sold, or by a deficiency in services relating thereto.

There are different codes for different industries depending upon the nature of the product or service. Some of the key industry codes are discussed below.

The Pharmaceutical Industry

The advertising of medicines is controlled by the code of ethics framed by the Indian Board of Alternative Medicines under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, issued under the Indian Medical Council Act, 1956.

At the outset, no practitioners are allowed to advertise their services in any form or manner of advertising through any mode, as soliciting of patients directly or indirectly, by a physician, by a group of physicians, or by institutions or organisations is unethical. There are certain exceptional circumstances and scenarios to this, which are duly detailed under the Regulations.

The Bar Council of India

In accordance with the Bar Council of India Rules, Indian law firms and lawyers are not allowed to advertise their practice in the market. In other words, this means that an advocate in India cannot solicit work or advertise, either directly or indirectly by circulars, advertisements, personal communications or interviews, or by furnishing or inspiring newspaper comments or producing photographs to be published in connection with their cases.

Similarly, professionals such as company secretaries, chartered accountants, and cost accountants also face certain prohibitions when it comes to advertising and soliciting for business.

ASCI Guidelines for Specific Categories of Advertisement

Furthermore, the ASCI also has specific guidelines for specific categories of ads, detailed below.

Advertisements depicting automotive vehicles

The ASCI Code states that advertising within the automobile industry must not portray violations of the Traffic Rules; show at-speed manoeuvres in a manner that encourages unsafe or reckless driving, which could harm the driver, passengers or the general public; or show stunts or actions, which require professional driving skills, in normal traffic conditions that, in any case, should carry a readable cautionary notice.

Advertising of educational institutions and programmes

In relation to advertisements of educational institutions and programmes, the Code briefly outlines that the educational advertisements must be in consonance with the ASCI guidelines, wherein educational institutions must not be able to promise jobs, admissions, job promotions, salary increases, etc, without substantiating such claims and also assuming full responsibility in the same advertisement.

Other regulated categories of advertising

These include:

  • advertising of foods and beverages;
  • advertising for skin lightening or fairness improvement products;
  • the use of celebrities in advertising;
  • adverts for online gaming for real money prizes; and
  • influencer advertising guidelines.

If an advertisement is not in accordance with these regulations the ASCI may take action in the manner prescribed by the Code.

Readers should note that the above is not an exhaustive list but only gives a brief idea regarding some of the existing industry-wide advertising guidelines.

As per the latest ASCI press release, a total of 789 complaints were upheld during the January–March 2021 period. The reports indicate that the highest number of violations were found in relation to adverts in the COVID-19, education, and online gaming sectors, followed by healthcare, and food and beverages categories.

In healthcare, 250 complaints against ads were processed, and most of them stemmed from fake COVID-19 claims of cures/prevention.

Since brands are in the midst of adapting and surviving the global pandemic, they have also been figuring out ways to promote their products and services.

A review by the ASCI discovered that as many as 320 advertisements made unsubstantiated claims related to COVID-19 and its prevention, out of which only 12 ads were found to be scientifically correct.

In such trying times, it is especially necessary to put the right brand message across. Claims of edible products, medicines, recipes improving health etc, should especially be avoided. Other claims which are not true should also be avoided as they may cause bias and affect consumer sentiment as most people are nervous about the pandemic. Clear communication is key. As brand owners, it may be the best time for advertising, but choosing the right method and platform to engage with existing and potential customers should be done carefully.

In its endeavour to protect consumer interests, the government has always been vigilant and ensures that adequate steps are taken. For instance, the Ministry of Health and Family Welfare has finalised an amendment which will ban advertisements promoting fairness creams, health drinks claiming improvement to the height of children and products promoting anti-ageing remedies – with potential jail time for offenders.

Moreover, in their endeavours to curb the impact of the pandemic, government agencies are closely monitoring potential unfair and deceptive business practices to protect vulnerable consumers, monitor aggressive marketing campaigns and preventing any sort of potential scams.

Advertising is seen as misleading if it involves false, misleading or deceptive information that is likely to cause the average consumer to act in a way they might otherwise not. 

The CPA 2019 defines “misleading advertisements” as those that:

  • falsely describe a product or service; or
  • give false guarantees or are likely to mislead consumers as to quality of a product or service; or
  • convey a representation that would constitute an unfair trade practice; or
  • deliberately conceal important information.

The new Act also empowers the Central Consumer Protection Authority (CCPA) to conduct an investigation into whether any advertisement is false or misleading or prejudicial to consumer interests.

The CPA 2019, under its provisions, state that an advertisement, subject to the provisions of the guidelines set under the Act, may make a claim in the nature of obvious exaggeration, that a reasonable consumer is unlikely to take literally or factually.

Going forward, the Act also states that puffery is allowed provided that any objective claim that is made in the advertisement is supported by evidence, can be substantiated and a clear aspect of the good/service that is claimed to be superior to another is disclosed.

Different substantiation material could be required based upon the nature of the claim made, for instance, where advertising claims are expressly stated to be based on or supported by independent research or assessment, or the results of a survey, the source and date of this should be indicated in the advertisement under the ASCI Code.

Similarly, in cases of usage of awards/rankings in advertisements by brands, to validate their claims in advertisements, brands and services need to ensure that the accrediting bodies involved in disseminating or presenting awards or rankings are authentic and credible. The guidelines are applicable to all advertisers and would be particularly relevant for healthcare services and the educational sector which tend to use such superiority or leadership claims.

Moreover, awards/rankings based on surveys done in one area (say, a city or state) cannot be extrapolated to include a larger territory (say, India, Asia or the world). Institutions cannot extrapolate data to substantiate their claims. Additionally, awards/rankings given in one category cannot be used to promote an institution in another category.

While there are no set standards for testing conducted to support advertising, surveys should be conducted by a reliable source so as to be credible and should be backed by evidence to prove their authenticity.

Advertisements that may carry content which a reasonable consumer might interpret as health or nutritional claim must meet the requirement of the basic food standards laid down under the Food Safety Standards Act and Rules, wherever applicable, and must be supported with appropriate scientific evidence.

Drug or cosmetic advertisements are prohibited from using reports of tests or analysis of the Central Drugs Laboratory or by a government analyst under the Drugs and Cosmetic Act, 1940.

Free and Special Price Claims

Under the advertising regime in India, sales promotions have to meet the requirements of the ASCI Code.

  • No advertisement should contain any exaggerated claim that could lead to grave or widespread disappointment in the minds of consumers.
  • No product must be represented as "free" if there is any direct or underlying cost to the consumer other than the actual cost of any delivery, freight or postage.
  • Where a claim is made that if a product is purchased another product will be provided "free", the advertiser is required to show, as and when called to do so by the ASCI, that the price paid by the consumer for the product offered for purchase with the advertised incentive is no more than the price of the product without the advertised incentive.

The ASCI also lays down the validity and duration of claims that a product is "new and improved" as follows:

  • if the advertisement claims a product/service to be new or improved, the words "new" and "improved" must specify what aspect of the product or service is new or improved, regarding the product’s function, utility, package design, etc; and
  • the “new” and “improved” claims can only be depicted in advertisements for a period of one year from the time the new or improved product or service was launched onto the market, and cannot be carried beyond that period.

While comparative advertising is legal in India, there is a fine line between commercial disparagement and comparative advertising. A trader is entitled to compare their goods with the goods of another trader and to establish the superiority of their goods over that of others, but the courts in India have upheld that, while doing so, the advertiser cannot say that the goods of the competitor are inferior, bad or undesirable. If any such statement is made, it would be an act constituting "product disparagement", which is not allowed.

Trade Marks Act

Section 29(8) of the Trade Marks Act states that a registered trade mark is infringed by any advertising of that trade mark if such advertising:

  • takes unfair advantage of and is contrary to honest practices in industrial or commercial matters;
  • is detrimental to its distinctive character; or
  • is against the reputation of the trade mark.

However, Section 30(1) creates an exception to such infringement, namely that a trade mark is not infringed where the use of the mark is in accordance with honest practices in industrial or commercial matters or the use is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trade mark.

The ASCI Code

As stated under Chapter IV, Fairness in Competition, Clause 4.1 of the ASCI Code, advertisements containing comparisons with other manufacturers or suppliers or with other products, including those where a competitor is named, are permissible in the interests of vigorous competition and public enlightenment, provided: it is clear what aspects of the advertiser’s product are being compared with what aspects of the competitor’s product;

  • the subject matter of comparison is not chosen in such a way as to confer an artificial advantage upon the advertiser or so as to suggest that a better bargain is offered than is truly the case;
  • the comparisons are factual, accurate and capable of substantiation;
  • there is no likelihood of the consumer being misled as a result of the comparison, whether about the product advertised or that with which it is compared; and
  • the advertisement does not unfairly denigrate, attack or discredit other products, advertisers or advertisements directly or by implication.

These guidelines have also been backed by the CCPA, by having an explicit mention of permissible comparative advertisements.

In short, the foundation of any comparative advertisement lies in its factual accuracy and capability of being backed by proper evidence.

In addition to the ASCI guidelines for comparative advertising discussed in 3.1 General Requirements, an advertiser must also be mindful of other conditions stipulated for consumer protection. Such as Section 6 of the CCPA's Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements Guidelines, 2020. Under these, in order for a comparative advertisement to be to be considered permissible, it:

  • shall be factual, accurate and capable of substantiation; and
  • shall not present a good or service as an imitation or replica of a good or service with a protected trade mark or trade name; and

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;
  • the subject matter of the comparison is not of such a nature so as to confer an artificial or unjustifiable advantage upon the advertiser; and
  • the nature of comparisons is such that they are factual, accurate and capable of being substantiated.

The consequences of commercial disparagement are similar to those issued in a civil suit – ie, one can file a claim for an injunction of damages in the court of law.

There are various precedents wherein the courts have analysed the fine line between permissible limits of comparative advertising and disparagement. One such case was witnessed in the early months of the pandemic, wherein, two well-known brands locked horns over their germ-fighting products.

Hindustan Ltd. (HUL) approached the court against Reckitt Benckiser (India) (RB) claiming the latter had advertised its product, Dettol, in a way that made fun of Lifebuoy’s utility by showcasing a doctor advising consumers to choose an effective hand-wash over a soap, which closely resembled the shape, colour, look and feel of HUL’s product, thus bringing out the disparaging intent of RB.

Subsequently, both the parties entered into an out-of-court settlement.

As influencers continue to take over the world of marketing, the advertising watchdog, has unveiled the Guidelines for Influencer Advertising in Digital Media. The guidelines came into effect on 14 June 2021.

The internet, on-demand platforms, mobile broadcast, digital TV and other similar platforms where an influencer can reach out to the public all qualify as digital media.

All advertisements published on influencer accounts by the social media influencers or their representatives, must carry a disclosure label that clearly identifies and bifurcates them as advertisements. The guidelines further oblige influencers to do their due diligence on any products or services before advertising the same.

With lines between content and advertisements becoming increasingly blurry, the intention of the Guidelines discussed in 4.1 General Requirements is to differentiate between content-based videos and promotional videos made by influencers for commercial gain. Consumers may view such messages without realising the commercial intent of these, and that becomes inherently misleading which is against the very basic foundation of what the ASCI stands for.

With influencer marketing becoming mainstream, consumers should be able to recognise sponsored content over non-sponsored. Thus, these Guidelines will bring a greater transparency to influencer marketing.

As stated in the ASCI Guidelines, if the advertisement is directly uploaded by the influencer, the onus is on the publishing account – ie, the influencer who is publishing the video –to ensure that the ad will not make them liable. On the other hand, if an advertiser uses a virtual influencer and posts the video directly through its own account, the onus shifts onto the advertiser.

The ASCI will issue a notice to both the brand owner and influencer for violation of any Guidelines. Consumers can send screenshots to the ASCI in the case of disappearing posts that violate the Guidelines.

The advertiser is given two weeks to comply with the ASCI’s decision. Details of non-compliant advertisements are published in the ASCI’s media quarterly release throughout India.

The ASCI code provides the following set of requirements for the disclosures on social media platforms (Source: ASCI Guidelines).

  • The disclosure label must be upfront and suitable for all devices; it has to be in English or in the language of the advertisement, and made in a manner that is well understood by an average consumer.
  • If the advertisement is only a picture or video post without accompanying text, the discloser label needs to be superimposed over the picture/video and it should be ensured that the average consumer is able to see it clearly.
  • In live streams, the disclosure label should be announced at the beginning and the end of the broadcast.
  • In the case of audio media, the disclosure must be clearly announced at the beginning and at the end of the audio, and before and after every break that is taken in between.
  • The following is the permitted list of disclosure labels:
    1. advertisement;
    2. ad;
    3. sponsored;
    4. collaboration;
    5. partnership;
    6. employee; and
    7. free gift.
  • A virtual influencer must additionally disclose to consumers that they are not interacting with a real human being; this disclosure must be upfront and prominent.

There are no unique or separate rules for individual social media platforms, rather these are based on the content type. The social media influencer/advertiser must comply with the given set of disclosures coupled with basic due diligence done at their end.

The general social media advertising rules respective to each social media platform must also be adhered to, as is the case globally.

In the Indian context, "native advertising" could comprise of a wide range of content such as product placement, sponsorship, branding, in-feed ads, and sponsored posts/articles/blogs.

While there is no explicit mention of the term “native advertising” in any of the existing laws in India,, the norms for Journalist Conduct issued by the Press Council of India, Cable Television Network Rules, 1994 and the Advertising Code of Doordarshan, do create a distinction of such content from traditional advertising by requiring advertisements to be clearly distinguishable from news content carried in the newspaper.

Moreover, considering that such advertising has also transitioning into the digital regime, the disclosure requirements such as endorsement labels, hashtags, adequate disclosure or disclaimer as to the sponsor of news content; and finally, the general principles of ensuring honesty and truthfulness of representation and free and fair journalism, should be followed to avoid any misleading and violating claims.

Influencer marketing is one notch above word-of-mouth marketing. It reaches a large audience in a “seemingly” trustworthy and honest review of brands. Influencer marketing goes hand in hand with two other types of marketing: social media marketing and content marketing.

Current Indian influencer marketing has seen massive success and an influx of upcoming trends ranging from fashion and beauty to fitness influencers. There is an increasing success rate seen in short-form video, reels, vlogs, video tutorials, box opening, workout videos and much more.

The advertising watchdog has unveiled the Guidelines for Influencer Advertising in Digital Media, with effect from 14 June 2021.

According to the Guidelines, advertisements published by social media influencers, must carry a disclosure label that clearly identifies them as advertisements and influencers are also advised to do the basic due diligence on their end, before promoting a product/service.

Responsibility for the disclosure of material connection and also of the content of an advertisement is upon the advertiser for whose product or service the advertisement is, and also upon the influencer.

In other words, the advertiser’s responsibility is to ensure that the posted influencer advertisement is in line with the ASCI Code and its Guidelines for Influencer Advertising in Digital Media, wherever the advertiser has a material connection with the influencer. Similarly, even the influencer must ensure that necessary disclosures are made in compliance with the guidelines.

In this endeavour, the advertiser, when needed, shall call upon the influencer to delete or edit an advertisement or the disclosure label to adhere to the ASCI Code and Guidelines.

India per se, has no specific law governing marketing through email or fax, and primarily "electronic marketing" is covered by the Telecom Commercial Communication Customer Preference Regulations set out by the Telecom Regulatory Authority of India (TRAI).

Consumers can register to receive certain categories of information, including information regarding: banking, insurance, real estate; education; health; consumer goods and automobiles; communication, entertainment tourism, et al. Consumers also get an option to get their numbers on a do-not-call registry.

In India, the telemarketing industry employs various marketing methods such as telephone calls, SMSs, etc.

The Reserve Bank of India (RBI) issued a notification in 2007 (Telemarketing Notification) in respect of unsolicited commercial calls, whereby the RBI made it compulsory for every such telemarketer making unsolicited calls to register themselves as a registered telemarketer.

Furthermore, the TRAI governs telemarketing practices in India and any person/legal entity engaging in the activity of telemarketing is required to register itself with TRAI. Such registration is the necessary permission to engage in the business of telemarketing.

In short, the telemarketers that make marketing calls or messages must:

  • be registered with the TRAI;
  • synchronise their databases with the do-not-call registry regularly; and
  • obtain separate telecoms resources specifically for engaging in telemarketing and for sending transactional messages.

The law also requires telecom service providers to have back-end integration with the do-not-call registry.

The Telecom Commercial Communication Customer Preference Regulations (TCCCPR), also known as the "SMS scrubbing norms", were introduced in July 2018 to “effectively deal with the nuisance of spam", and prohibit unregistered entities from sending commercial messages.

The TRAI, under these regulations, oversees bulk SMS and keeps updating senders from time to time on the rules for transactional SMS, promotional SMS, DND scrubbing, sending time, etc. It is mandated for Indian businesses using SMS to register entities, sender IDs and SMS templates in a centralised distributed ledger technology (DLT) portal, which basically means that registered promotional/transactional messages have a standard template in place.

At present, India does not have an explicit legislation enacted principally for data protection. India’s present regulatory mechanism for data protection and privacy is the Information Technology Act, 2000 (IT Act) and its corresponding Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (IT Rules).

However, on 11 December 2019, the Personal Data Protection (PDP) Bill was introduced to Parliament, though it has not been officially notified yet and is still under consideration. The formalised version of the Bill is anticipated to be out soon and hence, it has become imperative that the privacy concerns are addressed from the proposed PDP Bill’s perspective as well.

The current IT Rules governing data protection in India are silent on any specific age limit when it comes to personal data processing. The Rules only state that due diligence is to be observed by the intermediary while discharging their duties. In India, an agreement by a minor, even if consent is given, is void.

Nevertheless, the proposed PDP Bill provides for a broad requirement that data fiduciaries must process personal data of children in a manner that protects the child’s rights, and is in the best interests of the child. The Bill considers any person below the age of 18 a minor/child as also advised under the Indian Majority Act, 1875.

Parental or guardian’s consent is required for processing of any personal data of children. The Bill under its ambit regulates three categories of data, namely personal data, sensitive personal data, and critical personal data.

Personal data has been defined as the data “relating to a natural person who is directly or indirectly identifiable, having regard to any characteristic, trait, attribute or any other feature of the identity of such natural person, whether online or offline, or any combination of such features with any other information, and shall include any inference drawn from such data for the purpose of profiling.”

Under the proposed PDP Bill, any violation to this could result in a penalty up to INR150 million (approximately USD2 million), or 4% of the worldwide turnover of the data fiduciary for the preceding financial year (whichever is higher).

Broadly speaking, sweepstakes fall under the ambit of gambling. Betting and gambling regulation can be found in part II of the State list of the Indian Constitution, which basically allows state governments to regulate gambling practices in their jurisdiction by formulating state-specific laws.

Under the Foreign Exchange Management Act (FEMA) in India, persons resident in India are free to buy or sell foreign exchange for any current account transaction except for those transactions for where withdrawal of foreign exchange has been prohibited by Central Government, such as any remittance for buying of a lottery tickets, football pools, sweepstakes, etc.

Furthermore, the Prize Competitions Act, 1955 controls and regulates prize competitions in certain parts of India and prohibits the advertisement of unauthorised prize competitions. Similarly, the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 prohibits advertisements relating to prize chit and money circulation schemes.

A game of skill is differentiated from a game of chance in India. “Games of skill” are those that are played on the basis of prior knowledge or experience of a person. Skills such as logical thinking, analytical decision-making, capability, training, etc, are relevant to the playing of the game. The Indian states have mostly permitted such games in their jurisdictions, subject to necessary conditions. Some instances of “games of skill” could be carrom, chess, etc.

On the other hand, “games of chance” are predominantly based upon luck or random factor of any type. Success in such games is dependent upon higher levels of chance and the players are not in control over the outcome or result of the game. Some instances of “games of chances ” could be roulette, rolling a dice, etc.

Separate state governments have the power to promote or prohibit games of chance and/or contests of skill within their territorial jurisdiction.

Based upon the nature of the game and the level of skill/chance involved, coupled with the medium through which it is sought to be promoted, licence implication may come into play.

For instance:

  • Maharashtra has prohibited gambling and considers gambling as illegal under the Bombay Prevention of Gambling Act, 1887;
  • e-gaming (games of chance) have been legalised in Sikkim and Nagaland; and
  • several Indian states such as Goa, Kerala, Arunachal Pradesh, Assam, Maharashtra, Madhya Pradesh, Mizoram, Manipur, Meghalaya, Punjab, Nagaland, West Bengal, and Sikkim have legalised lotteries.

While there are no specific rules or regulations that apply to loyalty programmes as such, brands must be mindful of such programmes from a competition perspective.

In certain scenarios, when loyalty programmes offered by dominant players in the market may result in driving existing competition out of the market or may create barriers to entry or expansion, such programmes may be seen as anti-competitive and in violation of the India’s Competition Act, 2002.

A recent case in India, M/s Fast Track Call Cab Private Limited v M/s ANI Technologies Pvt. Ltd. (Ola), addressed this aspect of discounting practices as a predatory business practice to drive competition out of a market.

Sales promotions have to meet the specific requirements, per the ASCI Code.

  • No advertisement should contain an exaggerated claim that is likely to cause grave disappointment in the minds of consumers.
  • No product must be promoted as "free" where there is any direct or underlying cost to be incurred by the consumer (except the actual cost of any delivery, freight or postage); an explicit mention of any such charges (if they exist) must be made in the advertisement itself.
  • Where a claim is made that if a product is purchased, another product will be provided "free", the product offered for purchase with the advertised incentive should not be more than the price of the product without the advertised incentive.

While there are no specific rules or regulations covering automatic renewal/continuous service offers, it is imperative that such services are not misleading in any manner and an explicit disclaimer is given to the consumer notifying them of the automatic renewal. Moreover, an opt-in/opt-out mechanism from such a subscription model must put be in place.

Betting and gambling can be found under Part II of the State List of the Indian Constitution, which basically means that the state governments can regulate and control betting and gambling practices in their jurisdiction by formulating state-specific laws.

With specific reference to gambling, advertisements in India are highly regulated on account of specific statutory laws such as:

  • the Indian Contract Act 1872;
  • the Lotteries (Regulation) Act 1998 – the Act gives power to the concerned state government to hold lotteries subject to prescribed conditions;
  • the Public Gambling Act 1867 – the Act prohibits gambling activities in India (it does, however, permit games of mere skill subject to conditions); and
  • the Indian Penal Code 1860 – under Section 294-A of the Indian Penal Code, advertisements of a lottery unless it is in accordance with the Lotteries (Regulation) Act shall be punishable.

State governments have the power to promote or prohibit lotteries and gambling/sports betting within their territorial jurisdiction, such lotteries/gambling might be prohibited in some jurisdictions and permissible in others. For instance, horse racing is legal in India, as it involves some prior skills and therefore it is not entirely about gambling.

The ASCI under its Guidelines (Chapter III, Clause 6) prohibits indirect advertisement for gambling (gaming) services by stating that:

“Advertisements for products whose advertising is prohibited or restricted by law or by this Code must not circumvent such restrictions by purporting to be advertisements for other products the advertising of which is not prohibited or restricted by law or by this Code.”

Attention must be paid to the following factors to avoid any indirect advertising of such services:

  • the prohibited product must not be depicted in the visual content of the advertisement in any form or manner along with any other permitted product being advertised;
  • no direct or indirect reference to the prohibited/restricted products must be made in an advertisement; and
  • no advertisement should create any nuances/phrases promoting such prohibited products.

In India, the law pertaining to cryptocurrencies, as in many other jurisdictions, is a grey area. In fact, very recently the Delhi High Court issued a notice to the Centre, Securities and Exchange Board of India (SEBI) and others in a plea seeking the setting-up of guidelines or rules for domestic cryptocurrency exchange advertising.

Even the advertising industry regulator, the ASCI, is following developments in the area closely and a conclusive set of guidelines is yet to be formalised.

Anand and Anand

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Anand and Anand is one of India's leading law firms, with offices in four of India’s major cities: New Delhi, Noida, Chennai and Mumbai. The firm represents clients on a large number of the most complex and high-value matters across the globe and its key practices are highly regarded in their fields. Anand and Anand understands the different challenges faced by its clients in the contemporary business environment as a result of technological changes, evolving government regulations, and competitive pressures in the marketplace. It believes that the combination of the firm’s culture, the depth of its experience, the wide range of its lawyers' expertise and the quality and energy of its lawyers allows it to offer a level of client service that is unique not only in the Indian legal market but around the world. The firm's lawyers are trained to take a commercial perspective regarding their clients' issues and face the same with a solution-oriented approach. They provide seamless, resourceful and integrated service across a broad spectrum of practice areas.

The pandemic has impacted every sphere of human life and it has had a ripple effect on many industries. One such space is advertising, which has faced multiple hurdles, especially for advertisers, but brands with their offbeat campaigns have managed to achieve results through sheer creativity.

With the shift in advertising regimes to a greater focus on technology, there was a need for greater diligence to protect consumers from misleading and deceptive claims. In this piece we reveal existing and upcoming trends and the legal nuances around them. We also encapsulate the guidelines for smarter compliance for all stakeholders, going forward.

ASCI Initiatives

In the context of off-beat commercia campaigns, the self-regulatory advertising organisation in India, the Advertising Standards Council of India (ASCI), responsible for monitoring advertisements, has been equally and effectively active in recent months.

Misleading COVID-19 claims

In today’s world there is an influx of information from everywhere. Especially when there is mass panic, any news or information, particularly relating to health and prevention of the disease, is easily believable and can be detrimental to the health of society. Companies around the world are trying to overcome challenges posed by COVID-19.

Ads, social media posts, videos etc, seem to be overflowing, and companies, in an attempt to not lose touch with consumers, may unintentionally make claims about the disease, which can cause legal troubles as well as be detrimental to public health.

Authorities around the world have issued warnings and guidelines related to any misleading advertisements regarding cures or prevention of the disease. The ASCI is being extremely vigilant and has ordered the takedown of over 300 ads showing COVID-related misleading content in the first quarter of 2021.

Digital media influencers

With the lockdown and restricted movement, the average person's use of social media has increased as well as the demand for content. Subconsciously, social media users may be paying more attention to posts regarding brand endorsements. However, as brands are innovating with different forms of marketing to get their message across, new legal issues of which influencers need to be wary arise.

The advertising watchdog has unveiled the Guidelines for Influencer Advertising in Digital Media which came into effect on 14 June 2021. With lines between content and advertising becoming blurred, the intention of these guidelines is to differentiate between content-based videos and promotional videos made by influencers for commercial gain.

As per the guidelines, “anyone who has a position or authority to influence the purchasing decisions or opinions of an audience is an influencer.” This includes social media influencers as well. This may also comprise virtual influencers, who are fictional computer-generated “people” or avatars, who have the realistic characteristics, features and personalities of humans and behave in a manner similar to influencers.

The internet, on-demand platforms, mobile broadcast, digital TV and other similar areas where an influencer can reach out to the public, qualify as digital media.

All advertisements published by social media influencers, on their influencers’ accounts must carry a disclosure label clearly identifying it as an advertisement. The disclosure label must be upfront and suitable for all devices.

No other label is allowed to be used than the ones approved by ASCI, such as #Ad, #Sponsored, #FreeGift, #Employee #Partnership, et al, as the consumer may not be familiar with other short forms or words that can definitively suggest an advertisement.

The guidelines advise influencers as to do their due diligence on any performance or technical claims made in the advertisement. In fact, the media and internet users have already started pinpointing rule breakers. Recently the India cricket team captain, Virat Kohli, took to social media, where he has a huge following of 228 million fans, to applaud "Lovely Professional University (LPU)" and its contribution to the Olympics.

The post failed to use the paid partnership tag, violating the ASCI’s influencer marketing guidelines and social media users were quick to point out the flouting of digital media guidelines. This demonstrates that consumers are now vigilant about their rights and fleeing from violations might not be easy for influencers as well as celebrity endorsers anymore.

Surrogate advertising

One grey area is seen in the Indian Advertising Regime: "surrogate advertising", which is the dark reality of trade marks. This is a direct consequence of the ban on direct advertisements of tobacco and liquor.

The banned product rather than being projected directly to consumers is veiled behind another product, either by having the same brand name or similar practices, so that whenever there is a mention of that brand, people start associating or recalling it with its main product.

Surrogate advertising campaigns for liquor brands are escalating in India. The Ministry of Information and Broadcasting and the ASCI are not happy with this entire scenario and have come up with their own set of rules and regulations to prohibit and regulate such advertising.

Fantasy sports

There has been a substantial rise in online gaming and real money winning games in India, perhaps owing to the ease of accessibility to smart phones and the internet. The ASCI has stepped in and issued guidelines in order to keep a check on advertising surrounding gaming apps. In the current scenario, platforms offering "games of skill" are mostly allowed to operate, as opposed to "games of chance" that could comprise betting, involving real money, etc.

The inherent risk with online gaming is primarily based upon the risk of financial loss and the addictive nature of the games. To curb this risk, the ASCI requires advertisers to ensure that:

  • no such promotion glorifying minors playing an online game for real money winnings is depicted;
  • proper and suitable disclaimers accompanying such ads are in place;
  • such gaming is not portrayed as an income earning opportunity; and
  • no ad comparing success of people engaged in online real money games versus non-players may be showcased.

Say no to ambush: play by the rules

Ambush marketing, also called "parasitic", "guerrilla" or "moment" marketing, is when a brand exploits the goodwill of an event with the intent to unfairly piggyback or gain market benefits from that event, despite having no financial or official sponsorship or involvement.

Recently, multiple brands were seen engaged in ambush marketing in relation to the Tokyo Olympics 2020 event. The International Olympic Committee (IOC) has defined ambush marketing as:

“A planned attempt by a third party to associate directly or indirectly with the Olympic Games to gain the recognition and benefits with being an Olympic partner [without being an Olympic partner]…Ambush marketing is equated to cheating and causes damage to the Olympic Movement by devaluing the Olympic brand.”

What must be noted is that such advertising and association with Olympic Games is only permissible for the official sponsors of IOC. Unofficial partners need to be creative in their approach to avoid getting into trouble with the IOC’s legal department.

At the end of it, brands do not need to use the Olympic IP rights to get in the game. There are legal ways to invoke the spirit of championships and cheering without suggesting any official connection/affiliation with or sponsorship of an event. In this endeavour, non-sponsored brand, Bharat Petroleum Corporation Limited (BPCL) had launched a series of campaigns under the title Jeet Ka Padak (medal of victory), which creatively cheered for players without implying any sort of actual sponsorship with the Olympics.

This is an example of how brands can get on board and cheer for Team India and in turn generate newer IP without infringing the rights of the world’s biggest sporting event. Brands must stay away from anything that could perhaps suggest sponsorship or an official connection with the Olympics or, in a broader sense, with any third-party event without due authorisation in place. In the Olympic sense, this could include using the famous Olympic rings, the official logo, mascot or hashtags incorporating trade marked terms exclusively for the event. In fact, one must be mindful about using the word “official”.

Personality rights

In India, the right to publicity may be unlegislated, but it is not an unrecognised right. Personality rights, also known as the right to publicity or image rights, protect against the unauthorised appropriation of an individual’s persona, which would result in an unearned commercial gain for another.

It is pertinent to note that in India, personality rights have been recognised through the Right to Privacy and the Right to Publicity, the elements of which, such as name, likeness of character, and event may be protected under various statutes such as the Copyright Act 1957 and the Trade Marks Act 1999.

An individual’s profile can be used for the purposes of advertising or promotion only after ensuring appropriate authorisation. In a jurisprudential sense, this right allows an individual to prohibit the commercial exploitation of their likeness or some characteristics of their personality.

Very recently, the well-known badminton player PV Sindhu, besides making sports headlines, having won medals in major international tournaments including the World Championships and the Olympic Games was recently seen in news for another issue altogether: moment marketing vis-a-vis personality rights. Several third party unauthorised brands used her name/face without her consent in their moment marketing activities.

This use of moment marketing violates the ASCI provisions, which prevent brands from infringing upon the privacy of sports personalities and celebrities.

Product placement

One might recall seeing an Apple gadget in the popular television show “The Office”, or seeing IHop/7Eleven outlets in the movie “Man of Steel”, or Spiderman jumping on a Carlsberg branded truck.

These brands are usually deliberately depicted on screen, rather than there by mere chance. This attempt is called “product placement.” Product placement, also known as embedded marketing, is a technique where references to specific brands or products are incorporated into another work, such as a film or television programme, with promotional intent.

The growth of the over-the-top (OTT) media segment has further unfastened a powerful platform for promoting a range of corporate brands within famous shows and movies. While there is no specific law in India that bars or governs product placement, it becomes pertinent that the already set ASCI Code and other governing statutory regulations are taken into consideration to avoid any misleading claims or deceptive promotion.

Consumer Protection Act 2019

In 2020, with the Consumer Protection Act 2019 came into force, a noteworthy move was made in the consumer sphere directly impacting brand ambassadors, endorsers, manufacturers and service providers.

The extensive guidelines issued by India’s newly shaped Central Consumer Protection Authority (CCPA) – namely the Central Consumer Protection Authority (Prevention of the Misleading Advertisements and Necessary Due Diligence of Endorsement of Advertisements) Guidelines, 2020 – came into existence.

The CCPA panel, under its authority to oversee consumer protection, came up with the Guidelines, which comprehensively cover not only bait advertising, surrogate advertising, puffery in advertising and brand endorsers' liability, but also imitation advertising. It requires proper due diligence by brand ambassadors and endorsers, manufacturers, service providers and stipulates heavy fines and even jail terms for misleading claims.

Non-imitation of advertisements

A noteworthy section of the Guidelines effectively ensures that any advertisement shall not be “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 and shall not be similar to previous advertisements published by any other.”

This is an important move and in turn will be not only prevent consumers from being fooled by any misleading claims but also prevent the hard-earned reputation of already established brands and their brand identities. Thus, this aspect of the Guidelines will act as a double-edged sword.

Complimentary to ASCI

The ASCI Code Guidelines were previously advisory in nature, but since these are now a part of the CCPA, they are enforceable and have statutory backing, making them an effective mechanism to ensure the curbing of unfair trade practices.

The Way Forward for Stakeholders

In a country where the majority of the population is not educated to an advanced degree and information disseminated through media holds massive relevance for consumers, such Guidelines have come at a very important time.

No false advertising or loose comments can escape through the loophole of inadequate safeguarding anymore. The Guidelines embrace all the manufacturers, service providers and advertising agencies, as well as holding brand endorsers accountable for any misleading claims made. Based on these amendments, there is expected to be a much higher degree of vigilance observed by all stakeholders involved in brand advertising.

Consequently, it is recommended that both national and international brands seek legal review of their advertisements as non-compliance with the statutory regulations will not only cause severe damage to a brand's reputation, but will also involve legal implications. Moreover, a review from a local legal perspective will also ensure that advertisements are sympathetic to the local mindset.

Anand and Anand

B-41
Nizamuddin East
New Delhi
110013
India

+91 120 4059300

+91 120 4243056

safir@anandandanand.com www.anandandanand.com
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Law and Practice

Author



Anand and Anand is one of India's leading law firms, with offices in four of India’s major cities: New Delhi, Noida, Chennai and Mumbai. The firm represents clients on a large number of the most complex and high-value matters across the globe and its key practices are highly regarded in their fields. Anand and Anand understands the different challenges faced by its clients in the contemporary business environment as a result of technological changes, evolving government regulations, and competitive pressures in the marketplace. It believes that the combination of the firm’s culture, the depth of its experience, the wide range of its lawyers' expertise and the quality and energy of its lawyers allows it to offer a level of client service that is unique not only in the Indian legal market but around the world. The firm's lawyers are trained to take a commercial perspective regarding their clients' issues and face the same with a solution-oriented approach. They provide seamless, resourceful and integrated service across a broad spectrum of practice areas.

Trends and Development

Author



Anand and Anand is one of India's leading law firms, with offices in four of India’s major cities: New Delhi, Noida, Chennai and Mumbai. The firm represents clients on a large number of the most complex and high-value matters across the globe and its key practices are highly regarded in their fields. Anand and Anand understands the different challenges faced by its clients in the contemporary business environment as a result of technological changes, evolving government regulations, and competitive pressures in the marketplace. It believes that the combination of the firm’s culture, the depth of its experience, the wide range of its lawyers' expertise and the quality and energy of its lawyers allows it to offer a level of client service that is unique not only in the Indian legal market but around the world. The firm's lawyers are trained to take a commercial perspective regarding their clients' issues and face the same with a solution-oriented approach. They provide seamless, resourceful and integrated service across a broad spectrum of practice areas.

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