The Department of Consumer Affairs (DoCA) has nearly finalised the detailed and elaborative surrogate advertisements and will soon release them in their entirety. While the public will soon get access to the draft for feedback and recommendations, industry observers share their expectations with Storyboard18.
Tighter implementation, heavy penalties, inclusion of digital and social media, and no ambiguity in definition, in a nutshell.
It is to be noted that both the Advertising Standards Council of India (ASCI) and Central Consumer Protection Authority (CCPA), at present, have guidelines in place to curb surrogate advertising.
In its guidelines for ‘Prevention of Misleading Advertisements’ issued in December 2022, CCPA stated that no advertisements can be made suggesting directly or indirectly that it is for goods, products, or services whose advertising is otherwise prohibited/ restricted by law.
The guidelines, however, provide an exception, whereby, a brand used for ‘prohibited’ goods/ products, services could be used for other goods so long as it does not otherwise violate the guidelines. This exemption is vague, according to the industry safeguards and it is unclear whether the prohibition on surrogate advertising is absolute or not. It is also to be noted that CCPA continues to identify and observe multiple instances where liquor brands are violating these regulations.
Gowree Gokhale, TMT Lawyer and FICCI Data Protection Committee Co-Chair, tells Storyboard18 that laws on surrogate advertising already exist under the advertisement code applicable to the television channels as well as in the misleading advertisement guidelines issued by CCPA.
“However, a need is felt to have a more elaborate guideline with possibly some examples that brings out of clear distinction between a surrogate advertisement and a genuine brand extension. Especially on the digital platform, vigilance will be necessary by relevant authorities”, she says.
Gokhale is on the committee that is working towards drafting the guidelines on surrogate advertising on behalf of CCPA.
Read more: Crackdown on surrogate ads: Government to soon issue elaborated guidelines for advertisers
The current guidelines have vague definitions of what constitutes surrogate advertising, allowing brands to exploit these grey areas. Additionally, while the guidelines exist, enforcement has been inconsistent, allowing brands to push the boundaries. Further, the current guidelines may not cover all forms of media and advertising channels, allowing brands to circumvent rules by using less-regulated platforms, especially digital.
Hence, Ambika Sharma, Founder and MD, Pulp Strategy, suggests CCPA to remove any clauses that provide undue flexibility or exceptions to brands. And more importantly make the law accessible; guidelines hidden in remote corners of the web are not in anyone’s interest.
She also suggests awareness campaigns can empower consumers to identify and report misleading ads, creating a community-driven check on violations.
“The enforcement mechanisms are weak, with penalties often insufficient to deter large liquor brands from continuing these practices. Multiple agencies like ASCI, CCPA, and state authorities have overlapping jurisdictions, leading to inconsistent application of rules and enforcement. Also, many brands circumvent the guidelines by sponsoring events and sports teams, subtly promoting their core product without direct advertising,” highlights Yasin Hamidani, Director, Media Care Brand Solutions.
Demand for stringent digital and social media guidelines
Surrogate advertising remains a concern for restricted categories. In the last three years, ASCI processed complaints against 49 ads for potential violation of ASCI Code’s Guidelines for Qualification of Valid Brand Extension. Among these, 36 ads were alcohol related, 12 ads from betting platforms and 1 Pan Masala ad that potentially violated the guidelines. Alarmingly, 98% of these processed ads required modification to align with regulatory standards. Over the last three years, ASCI has also reported 1085 cases of advertisements that were in direct violation of law to both central and state regulators. 765 of these were illegal betting ads and 320 were direct liquor advertising.
ASCI has regularly refined its guidelines particularly considering the potential harm associated with advertising of these categories. The latest update implemented in December 2023, emphasises that advertising spends for legitimate brand extension products must align with the extension’s sales turnover.
Read more: Relief for advertisers as MIB restricts SDC for ads to food and health sectors only
Hamidani remarks that the current CCPA and ASCI guidelines are less stringent for digital and social media platforms, where monitoring and regulation are challenging, allowing brands to reach consumers through influencer marketing and online promotions.
“CCPA should ensure that the upcoming guidelines cover all media platforms, including digital and social media,” Sharma adds.
Apart from expanding guidelines to cover digital platforms, including social media and influencer marketing, Yasin suggests establishing clear rules for event and sponsorship advertisements to prevent indirect promotion of restricted products.
Demand for penalty
According to the 2022 CCPA guidelines, if violated, the CCPA may impose a penalty under Section 21 of the Consumer Protection Act; it can impose a penalty of up to Rs 10 lakhs on the person found guilty of violating the guidelines. For subsequent violations, the penalty can go up to Rs 50 lakhs. The CCPA can also prohibit the endorser of a misleading advertisement from publishing any endorsement for up to 1 year. In case of repeated violations, the prohibition period can be extended up to 3 years.
However, due to the unclear definition of surrogate ads, brands often are almost never penalised.
In the proposed guidelines, while the level/extension of penalties remains unclear, the procedure to impose the penalty under Section 21, stays the same.
Penalties are essential to enforce compliance, say experts. They should be substantial enough to impact the financial bottom line of large brands and discourage repeated offenses.
The guidelines, according to experts, require setting up a robust mechanism to track, report, and penalise violations.
Imposing substantial fines and suspensions for violators will deter brands from flouting the rules. Additionally, repeat offenders should face escalating penalties, including potential bans on advertising altogether and temporary suspension of their digital platforms. According to experts, robust enforcement and significant penalties will ensure compliance and uphold the integrity of advertising standards.
Additionally, an effective implementation involves rigorous monitoring and swift action against violations. Robust infrastructure, independent bodies, and clear procedures are essential for enforcing guidelines effectively.
To strengthen surrogate advertising guidelines, Yasin suggests mandating a thorough verification of the surrogate product’s market presence and sales to ensure it’s not a facade for the core product.
Experts have also urged the committee to remove vague terms that can be exploited, ensuring the guidelines are precise and comprehensive. These elements are crucial for the guidelines to be effective, ensuring that regulations translate into real-world impact and consumer protection.