On Aug. 31, 2014, the Advertising Law of the People's Republic of China (Draft Revision) (the Draft) was released for comments. The Draft proposed certain revisions to the currently effective Advertising Law of the People’s Republic of China (the 1995 Law), which regulates the activities of advertisers, and holds advertisers responsible for the truthfulness of the contents of advertisements. The main changes introduced by the Draft are summarized below.
Heightened Regulation on the Relevant Parties to an Advertisement
- The Draft explicitly provides that advertisers are responsible for the truthfulness of their advertisements.
- The Draft provides that persons recommending or endorsing goods or services in advertisements are required to make such recommendations or endorsements based on facts, and such goods or services should have been used or accepted by themselves.
- The Draft proposes to add special provisions regarding the protection of minors. For example, the Draft prohibits advertising activities within elementary and secondary schools and kindergartens.
- The Draft defines the advertisement management responsibilities of administrators of public places, telecommunication service operators and Internet information service providers.
In the meantime, advertisement business registration is cancelled and the conditions and authority for registration of advertisement release are further defined according to the requirements of the Administrative Licensing Law.
Elements of False Advertising
Under the Draft, the following circumstances constitute false advertising:
- the advertised goods or services do not exist;
- the information regarding the advertised goods—such as the performance, functions, place of production, composition and producer—or the information regarding the advertised services—such as the content, form, quality and price—as well as promises made in connection with the goods or services are not consistent with actual conditions, materially affecting purchasing behavior;
- fabricated, forged or unverifiable information such as scientific achievement, statistical data, survey results and quotations is used as supporting materials;
- the effect of using the advertised goods or services is fabricated.
Revamped Penalty Provisions
The Draft revamped the penalty provisions of the 1995 Law to provide clearer calculations of penalties for key violations and heavier fines. Under the Draft, the punishment of offenders with more than three serious violations within two years or other serious circumstances is increased as well.
Under the Draft, if a person recommending or endorsing products or services in an advertisement knows or should have known that the advertisement is false advertising, the competent industry and commerce authority should confiscate his or her illegal gains and impose a fine of no less than one time and no more than two times of the illegal gains. Such person is also jointly and severally liable for any damages incurred by consumers.
- Advertising Law of the PRC (Draft Revision for Comments)
- Issuing authority: Standing Committee of the National People's Congress
- Date of issuance: Aug. 31, 2014