The Central Consumer Protection Authority (CCPA) has stated that new rules will be drafted to stop businesses from utilising CSR campaigns to promote items such as liquor and tobacco.
The consumer protection body has stated that use of surrogate advertising must be checked and the brands must be held accountable for exploiting CSR and sponsorships to indirectly promote goods that are otherwise banned for advertisements. For this purpose, CCPA intends to release draft guidelines to lay down clear parameters for what constitutes surrogate advertising.
According to the draft seen by the news publication Mint, any promotional activity, including CSR campaigns, that suggests a connection to a prohibited product will fall under the ambit of surrogate advertising. This includes usage of brand names, logos, colour schemes and layouts typically associated with a restricted product or service.
Penalties prescribed
The publication has reported that the proposed norms prescribe penalties of up to Rs. 50 lakh for celebrities and social media influencers found promoting alcohol and tobacco through indirect means.
It is observed that, liquor companies often extend sponsorships to sporting events, cultural festivals and music concerts for subtle promotion of their brands through. They also engage in various environmental campaigns, such as tree plantation drives or water conservation, incorporating their branding into these initiatives.
Additionally, some liquor brands launch health and safety programmes that are focused on responsible drinking, while associating their product with the initiative. In addition, they also tend to sponsor community development projects like education or infrastructure, highlighting their brand alongside these social welfare activities.
The CCPA has invoked Clause 13 of the existing guidelines for the prevention of misleading advertisements and endorsements in the norms for surrogate ads.
“The draft rules for surrogate advertising are in the final stage of preparation, and once all formalities are completed, the rules will be released for public comments,” said the official sources.
“The clauses in the proposed draft have been adopted in consultation with all stakeholders, including representatives of liquor makers and consumer groups, who have expressed their agreement,” they added.
Exceptions
It has been reassured that not all brand extensions will be banned. In fact, the draft rules will allow for significant space for brand extensions, provided they are genuine.
“Advertisements for genuine brand extension products or services will not count as surrogate advertisements. To be considered genuine, the product or service must be registered with the relevant authority for that category,” according to an official.
Therefore, under the new rules, if a company sells a restricted product such as alcohol or tobacco but also launches a new, unrelated product under the same brand name like a soda or T-shirt, it can advertise the new product.
However, in order to do so legally, the company must show that this new product is genuinely available in the market, and has a valid sales record, and a clear buying trend. This will ensure that the new product isn’t just a cover to promote the restricted item indirectly.
What does it mean for CSR campaigns of such companies?
“Normally CSR activities are conducted by companies under their corporate name and not brand names, which then is not in violation of any existing rules. Exceptions would be when the company name is the same as its brand name and that would require additional markers and guidance in the rules to ensure the audience clearly understands what is really being advertised,” said Vinod Giri, Director General, Brewers Association of India (BAI).
“The underlying thought is not to limit investment and enterprise in genuine brand extensions, but prevent misuse by way of frivolous surrogates and misleading ads,” Giri said.
