Misleading advertising

Editorial and advertising

How is editorial content differentiated from advertising?

The principal legislation governing advertising content, whether editorial or substantive, is the Trade Descriptions Ordinance (the TDO). However, the TDO does not contain specific requirements for advertisers to disclose the influential content of editorial.

The Broadcast Codes require that advertising material should be clearly identifiable and distinguishable as such and should be recognisably separate from relevant broadcast programmes and any advertisement adopting a programme style must be carefully assessed, to ensure that there is no risk of confusion with the programme material and that any advertisement adopting a programme style must be flagged as such by superimposing a caption stating ‘advertisement’ or ‘advertising magazine’, in a clearly legible manner for the entire duration of the programme.

Advertising matter should be presented with courtesy and good taste in harmony with the programme with which it appears. No advertisement may contain any descriptions, claims or illustrations that expressly or by implication depart from truth or mislead about the product or service advertised or about its suitability for the purpose recommended.

Advertisements should not be permitted to imitate the name or advertising slogans of competitors and advertisements should not unduly play on fear.

If a licensee did not know and had no reason to suspect that the claims made in an advertisement were false or misleading and could not with reasonable diligence have been ascertained as false or misleading, the licensee is discharged from responsibility for it.

Advertising that requires substantiation

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

‘Puffery’, which must clearly communicate self-promotion in an honest and innocent way, is not culpable. However, the lines between ‘puffery’ and the mandatory support of advertising claims must be carefully drawn. Generally speaking, exaggerated claims made in common advertising practice are legitimate, provided that:

  • the statements are not meant to be taken literally; and
  • the average consumer would be unlikely to take literally the meaning of these obvious exaggerations or puffery.

The general principle being that in the ordinary course of commercial dealings, a certain degree of ‘puffing’ or embellishment is expected and it is clear that any such ‘puffing’ should steer clear of any absolute statement capable of being regarded as objective assessment or comparative claim that is clearly not fanciful or non-comparative.

Rules on misleading advertising

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

The Broadcast Codes prohibit any misleading claim or implication that the product or service being advertised or any ingredient of it has some special feature or composition that is incapable of being established. Care should be taken to not mislead viewers or listeners and to present results of research surveys or tests relating to the advertised product or service. Irrelevant data and scientific jargon should not be used to make claims appear to have a scientific basis that they do not possess.

Particular reference is made requiring that any pricing element or comparison must be accurate and not misleading by undue emphasis or distortion.

The TDO provides that a false trade description (which can include an oral statement), whether applied to goods or communicated in respect of the provision of services, ‘means a trade description that is false to a material degree, or a trade description which, though not false, is misleading, that is to say, likely to be taken for a trade description of a kind that would be false to a material degree’. For example, a cream that contains synthetic materials, such as preservatives, should not be described as ‘100 per cent natural’, and a beauty consultant should not tell a consumer that a slimming product has been acquired by a celebrity for his or her personal use with good results if that celebrity has never acquired or agreed to acquire the product.

The following factors can be used to help to identity a possible false trade description:

  • form and content;
  • time;
  • place;
  • manner; and
  • frequency of publication and all other relevant matters.

Misleading omissions can be as likely to constitute a false trade description as a misleading positive statement if the result does not give consumers sufficient material information about the goods or services that is necessary for them to make a fully informed transactional decision.

Examples of misleading omissions can be seen as:

  • the use of small fine print to state the unit of quantity of the goods (even if the price is given in a clear manner, the unit of quantity is so small that an average consumer could not read it in a readily comprehensible manner); and
  • a beauty group promotes a stem cell transfusion service stated to be performed by a medical practitioner without disclosing the risk of the medical treatment and this disclosure is omitted until after the consumer pays for the service.

The TDO further prohibits aggressive commercial practices defined as a practice that significantly impairs or is likely to significantly impair the freedom of choice of the average consumer or conduct in relation to the goods or services concerned through the use by the seller or service provider of harassment, coercion or undue influence and that therefore causes or is likely to cause a consumer to make a decision that he or she would not have made otherwise.

The TDO further prohibits bait advertising defined as an offence for a trader failing to offer specific products for supply at a specified price for a period that is, and in quantities that are, reasonable, having regard to: the nature of the market in which the trader carries on business; and the nature of the advertisement.

The TDO further prohibits ‘bait and switch’ defined as invitation to purchase a product at a specified price and then refusal to show or demonstrate that product and to demonstrate a defective example of it with the intention of promoting an actual different product.

The TDO further provides that liability under the Ordinance is attributed to certain classes of persons of a body corporate or of an unincorporated body if the offence is committed by the body corporate. The persons concerned include directors, company secretaries, principal officers or managers.

The Broadcast Codes require that any material in a licensed television or radio service designed to advance the sale of any particular product or service or to promote the interests of any organisation, commercial concern or individual must be legal, clean, honest and truthful and presented with courtesy and good taste without disparagement of competitors or competing products or services.

The Broadcast Codes require that all factual claims and best-selling claims should be capable of substantiation. Statements should not be used in respect of any products that they are ‘the best’, ‘the most successful’, ‘the safest’ or ‘the quickest’ or containing any similar use of superlative adjectives unless the truthfulness of such statements is adequately substantiated either by research or by testing based on the advertiser’s own assessment or by independently audited sales figures or probability sample surveys recognised or endorsed by an industry body or accepted under industry-wide standards of the relevant trade.

No advertisement may misleadingly claim or imply that the product advertised or any ingredient of it has some special features or composition that are incapable of being established, and information conveyed must be accurate and not misleading by concealing or failing to make clear significant facts.

Substantiating advertising claims

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 Broadcast Codes require that any best-selling claim must be substantiated by independently audited sales figures or industry recognised or endorsed body sample surveys of probability to ensure that the findings advertised are statistically significant, reliable and valid.

In particular, superlatives like ‘most popular’, ‘most preferred’, ‘most favoured’, etc, when used in a manner that clearly suggests a leading or topmost sales position, must be subject to the same standards of independent substantiation governing best-selling claims.

Survey results

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

Consistent with the general requirement of truthfulness, reliance upon and reference to any survey should be supported only by thoroughly and responsibly conducted surveys.

Comparisons with competitors

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

The Broadcast Codes require that advertising matter should contain no claims intended to disparage competitors, competing products or other industries, professions or institutions.

Test and study results

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

The Broadcast Codes require that advertising matter should not use statements in respect of any products claiming that they are ‘the best’, ‘the most successful’, ‘the safest’ or ‘the quickest’, or containing any similar use of unsupported superlative adjectives involving comparison with other products or departures from strict truth. Advertisers must be prepared to produce evidence to substantiate any descriptions, claims or illustrations (including ‘best-selling’ claims).

Demonstrating performance

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

The Broadcast Codes and the 4As Code contain specific restrictions upon advertising content for product performance.

Third-party endorsements

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

Without substantiation that professional advice or recommendation has been obtained from an acceptable organisation of the relevant profession, advertisements containing presentations of medically qualified practitioners giving the impression of professional advice or recommendations, statements giving the impression of professional advice or recommendation by those persons appearing in advertisements and presented as being qualified to give such advice or recommendation and references to the approval, acceptance or recommendation of, or preference for, the specific products or their ingredients or their use by any professional body are not acceptable.

Guarantees

Are there special rules for advertising guarantees?

The basic requirement of truthfulness and enforceability of the guarantee or related undertaking apply.

Environmental impact

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

No.

Free and special price claims

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

The Broadcast Codes require that visual and verbal presentations of advertisements indicating price, price comparisons or reductions or any pricing element must be accurate and must not be misleading by undue emphasis or distortion.

The TDO provides that, as referenced in question 17, trade descriptions are specifically prohibited if they are false and misleading representations concerning the price of goods or services. The word ‘free’ has been clearly identified for special attention as a word that should be handled with very great care and it is accordingly reasonably clear that ‘free’ from the consumer viewpoint means absolutely free of charge or cost.

New and improved

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

Under the TDO, claims of newness or improved quality must be justifiably correct and capable of substantiation.

Claims of origin

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

See the False Trade Description sanctions under the Trade Descriptions Ordinance referenced in question 26 above.