Q&A: misleading advertising practices in South Africa

Misleading advertising

How is editorial content differentiated from advertising?

Editorial material is expressly excluded from the Code of Advertising Practice’s (the Code) definition of an ‘advertisement’ and accordingly will not fall within the remit of the Advertising Regulatory Board (ARB). However, editorial material will fall within the Code's definition of an advertisement if it has been paid for by an advertiser. The Code defines an advertisement as:

any visual or aural communication, representation reference or notification of any kind –which is intended to promote the sale, leasing or use of any goods or services; orwhich appeals for or promotes the support of any cause.

There is no specific requirement for editorial content creators to disclose that the content has been paid for or otherwise influenced by advertisers but it will fall within the remit of the ARB if the advertiser has paid consideration for it. In addition, section IV of the Code provides some guidelines for publishers of print advertising in particular to clearly distinguish advertisements from editorial matter. These include:

• printing the word ‘Advertisement’ at the head of any single print advertisement that occupies a whole page or part of a page (clause 2.1 of section IV); and
• boxing in advertisements that occupy less than half a page, or separating advertisements that occupy half a page or more from adjacent matter by a distinct border (clause 2.2 of section IV).

How does your law distinguish between ‘puffery’ and advertising claims that require support?

The Code generally requires advertising that is legal, informative, factual, decent and honest. The Code accordingly requires advertisers to have in their possession the documentary evidence that supports all claims made in an advertisement to the extent that the statement is capable of objective substantiation (clause 4.1 of section II). That is to say, advertisers must be able to substantiate any claims that are stated as fact.

The Code does, however, permit advertisements in which advertisers make value judgments, express opinions or make subjective assessments on products or services as long as the advertisement clearly and unambiguously communicates to the reasonable hypothetical consumer that the promotional statements that are made in the advertisement are not expressions of fact.

What are the general rules regarding misleading advertising? Must all material information be disclosed? Are disclaimers and footnotes permissible?

The Code generally prohibits advertisements that are likely to directly or indirectly mislead the consumer by commission or omission. However, the Code permits puffery and hyperbole in advertisements to the extent that it is clear in both cases that the promotional claims made in the advertisement are not to be taken as fact. The Code specifically prohibits the use of misleading headlines in advertising and allows for disclaimers to the extent that they are visible and can be easily read by the reasonable hypothetical consumer.

The Code also has specific prohibitions against advertisements that mislead consumers as to the actual value of goods by exaggeration or unrealistic comparisons (clause 4.3 of section II), advertising products as ‘free’ where there are actual costs to consumers other than delivery costs (clause 4.4 of section II) and through the use of misleading ‘up to’ and ‘from’ claims (clause 4.5 of section II).

Must an advertiser have proof of the claims it makes in advertising before publishing? Are there recognised standards for the type of proof necessary to substantiate claims?

The Code requires advertisers to have in their possession the documentary evidence that supports all claims made in an advertisement to the extent that the claim is capable of objective substantiation (clause 4.1 of section II). That is to say, advertisers must be able to substantiate any claims that are stated as fact.

The substantiating evidence must be up to date, current and have market relevance. To the extent that the substantiating evidence is in the form of market survey data:

• the survey data must be conducted by a market research firm that is accredited by the Southern African Marketing Research Association (SAMRA) or another firm acceptable to SAMRA; and
• the accuracy of the claims that are based on the survey data must be confirmed by a SAMRA-accredited market research firm or another entity acceptable to SAMRA.

To the extent that the substantiating evidence is not in the form of a survey, it must be produced by or evaluated by a credible independent party, which must also be an expert in the relevant field to which the substantiated claims relate. Advertising claims based on research conducted by publications should clearly state the source.

Are there specific requirements for advertising claims based on the results of surveys?

To the extent that an advertiser seeks to substantiate advertising claims with survey data:

• the survey data must be conducted by a market research firm that is accredited by SAMRA or another firm acceptable to SAMRA; and
• the accuracy of the claims that are based on the survey data must be confirmed by a SAMRA accredited market research firm or another entity acceptable to SAMRA.

What are the rules for comparisons with competitors? Is it permissible to identify a competitor by name?

The Code generally cautions against advertisements that seek to disparage competing products and services or those of other advertisers (clause 6 of section II) and provides that the guiding principle for advertisers should be to advertise or promote their products on their own merits.

However, the Code permits advertisements that make factual comparisons and, among other things:

• do not constitute trademark infringements;
• use only facts that are capable of substantiation and objective verification;
• are not misleading;
• do not constitute advertising goodwill infringements;
• are not disparaging;
• use fairly chosen facts or criteria;
• compare products or services that have the same or similar characteristics and are intended for the same purpose; and
• strictly limit the contextual implication to the facts of that advertisement (clause 7.1. of section II).

Do claims suggesting tests and studies prove a product’s superiority require higher or special degrees or types of proof?

The Code's provisions in respect of comparative advertising provide that advertisers should obtain the ‘express consent as to the accuracy and scope’ of advertising claims from the relevant research body, where the advertiser makes comparative advertising claims based on substantiated research (clause 7.1.10 of section II).

Are there special rules for advertising depicting or demonstrating product performance?

The Code does not prescribe any special rules or restrictions for advertising depicting or demonstrating products. Those advertisements must comply with the rules applicable to all other advertisements.

Are there special rules for endorsements or testimonials by third parties, including statements of opinions, belief or experience?

The Code has restrictions against advertisements that refer to testimonials or endorsements that are not genuine or not related to the personal experience of the person giving the endorsement or testimonial over a reasonable period. The Code accordingly prohibits testimonials or endorsements that are ‘obsolete or otherwise no longer applicable’, such as where there has been a significant change in the product formulation (clause 10.1 of section II). In addition, advertisers are required to have signed and dated copies of any testimonials or endorsements from the person giving that testimonial or endorsement, confirming the authenticity of what is said in the advertisement.

The testimonial or endorsement itself should not make any claims or indirectly imply anything that contravenes the provisions of the Code (clause 10.2 of section II). In addition, testimonials should not make any efficacy claims that cannot be justifiably attributed to the advertised product or service and where they make reference to any specific or measurable results, these should be fairly presented (clause 10.3 of section II). Of course, the advertiser should also have in its possession the documentary evidence that supports objectively verifiable claims or claims capable of substantiation in accordance with clause 4.1 of section II of the Code. ‘Before’ and ‘after’ claims should also be capable of substantiation and expressed or illustrated in such a way as to permit a fair comparison.

The Code also prohibits the publication of advertisements with testimonials from persons who are not resident in South Africa unless their address or country of residence is given on the advertisement (irrespective of the medium of advertisement), or provided to the ARB, which may decide whether the address should be used in the advertisement (clause 10.5 of section II). The Code also cautions against advertisements based on fictitious characters that create the impression that those fictitious characters are real, or contain testimonials or endorsements from any such fictitious characters.

Are there special rules for advertising guarantees?

The rules in respect of guarantees in advertisements are set out in clause 15 of section II of the Code. Under this provision, advertisements should not contain any reference to ‘guarantees’ or ‘warranties’ that diminish the consumer's rights, purport to do so or that may be understood by the consumer as doing so. In addition, any advertiser that expressly advertises a guarantee or warranty in respect of any product or service should make the full terms of any such guarantee or warranty available for the consumer to inspect and to retain before he or she commits to a purchase. ‘Money back’ guarantees will be assumed to refer to a full refund of the purchase price for any product or service if the consumer is dissatisfied with the product or service throughout the reasonably anticipated life of the product or service or any period as clearly stipulated in an advertisement.

Are there special rules for claims about a product’s impact on the environment?

The rules in respect of advertising containing claims in respect of a product's environmental impact are set out in Appendix G of the Code. Appendix G is not a self-contained code, but supplements the general provisions of the Code. Accordingly, advertising claims in respect of a product's environmental impact should conform to the general provisions of the Code, in addition to Appendix G. This includes the requirement for claims in respect of environmental impact to be accurate and meaningful to the consumer and be based on recognised scientific standards.

Appendix G provides that advertising claims containing unqualified claims about environmental matters will be understood ‘to mean 100%’ and be subject to the principles around the substantiation of claims (clause 2.1 of Appendix G). The same interpretation and principles will be applied to claims that products are ‘free of’ any components, or that products ‘contain no’ or do not contain any components. Advertisements making any such claims should be clear on whether the claims relate to the products themselves or the product packaging, failing which the claims will be interpreted to refer to both (clause 2.3 of Appendix G). Appendix G also prohibits the use of statements such as ‘environmentally friendly’, ‘ozone friendly’ or ‘green’, or the use of graphics or symbols that purport to convey similar messages unless they are suitably qualified by a description of the actual benefit conferred by the product, such as a claim that a product is ‘ozone friendly – free from CFCs’ (clause 2.4 of Appendix G). Any ‘environmentally friendly’ signs should also indicate their source and should avoid implying official approval.

The Code prohibits the use of the Mobius Loop in advertisements or to claim in any other way that products are recyclable unless facilities exist that are reasonably accessible for the collection or recycling of that product (clause 3 of Appendix G). The Code also prohibits claims in respect of the degradability of packaging material unless those claims can be substantiated, and, insofar as they relate to products that are disposed of through sewage systems, only if the by-products of any such products do not contain substances that are known to be damaging to the environment or sewage collection and treatment facilities.

The Code also prohibits claims that a product or product packaging is ‘ozone friendly’ if, at any point in the manufacturing process, the product or packaging's use or degradation is likely to emit chlorofluorocarbons (clause 5.1 of Appendix G). Clause 5.2 of Appendix G provides that advertisements that claim to indicate in any other way that products do not contain substances that have adverse effects on the ozone layer will only be acceptable if the ARB can be satisfied that the products fall within a class of product:

• for which chlorofluorocarbons are or have in the past commonly been used as inert dispensing agents or as solvents or refrigerants; or
• that is generally perceived by the consumer public as being a product that contains such substances.

Are there special rules for describing something as free or a free trial or for special price or savings claims?

The Code prohibits the description of any products or services as ‘free’ where the consumer will be required to pay any costs other than delivery, freight or postage costs to receive the product or service. The requirement to pay any of these costs should also be clearly communicated to the consumer (4.4 of section II). To the extent that an advertiser claims that the purchase of one product will result in the provision of another ‘free’ product, the advertiser is expected to be able to show, if required, that it will not immediately and directly recover the costs of the allegedly free product whether in whole or in part from the purchasing consumer. Advertisers are also explicitly required to clearly indicate where ‘free’ goods offerings are subject to the purchase of other goods (clause 4.4.5 of section II).

Advertisers are cautioned in particular against attempts to recover the cost of providing any allegedly free products through charges such as handling charges, inflated delivery charges, increases in the usual price per unit of the product that is not free or a deterioration in the quality of the free product (clause 4.4.3 of section II). Advertisers may advertise trial products or services as ‘free’ even if consumers are required to return the product at their own cost at the end of the trial but this must be made clear to consumers (clause 4.4.4 of section II).

Are there special rules for claiming a product is new or improved?

The Code does not prohibit the use of the word ‘new’ on any advertising medium if the advertisement relates to an entirely new product or service that is marketed or sold during a given 12-month period. Advertisers may also use the word ‘new’ to advertise any change or improvement to a product or service in respect of which material change or improvements have been made and that can be substantiated and defined (clause 17.2 of section II). The Code does, however, limit the maximum period of use of the word ‘new’ in the allowable contexts to a maximum of 12 months from the date of proven first usage of the word in an advertisement in respect of a product, albeit that the period can be extended upon request to the ARB (clause 17.3 of section II). The 12-month usage limit is applied as follows:

• Electronic, print and outdoor media: the ‘new’ message must first be exposed no later than 90 days after ‘date of proven first usage’ of the product to which the advertisement applies. The advertisement may then be exposed continuously or intermittently for a period not exceeding 12 months from the ‘date of proven first usage’ of the product or service.
• Product packaging: the ‘new’ advertisement should be applied to the package from the ‘date of proven first usage’ and can be used continuously for a period not exceeding 12 months from the ‘date of proven first usage’ of the product.

Are there special rules for claiming where a product is made (such as country of origin)?

The Code does not prescribe any special rules or restrictions for advertising in which claims in respect of the origin of a product or service are made. Those advertisements must comply with the rules applicable to all other advertisements. The Code does, however, prohibit advertisements that claim that products have been imported when they have in fact been manufactured in South Africa and vice versa.