Around a year ago, China passed the draft amendments to its ‘Advertising Law’, which came into effect six months ago. The ‘Amended Law’ represents the first major revision since the Advertising Law got introduced in 1995 and brings significant changes to the regulatory regime for advertising activities in China. Undeniable the ‘Amended Law’ sends out a signal that China is keen to strengthen consumer protection by clamping down on undesirable advertising activities.
The legal expert firm Hogan Lovells listed spot on the major changes, which include:
• Prohibition of “misleading advertising”: The ‘Amended Law’ broadens the definition of “false advertising” by expressly prohibiting both false and misleading advertising contents.
• Unsubscribe facility: In addition to the prohibition on sending advertisements to home addresses or in electronic format without the recipient’s consent or request, the ‘Amended Law’ also requires that advertisements sent in electronic format must display the sender’s real identity and contact details, together with information about how the recipient can unsubscribe from further advertisements. Violations of these rules are punishable by a fine of up to RMB 30,000.
• Increased enforcement powers: It is noteworthy that the ‘Amended Law’ also provides that any entity or individual may report suspected false advertising activities to the Administration for Industry and Commerce (AIC), which will be required under the law to handle the case and notify both parties within 7 working days. In addition, the China Consumers’ Association and other consumer protection organizations will also be empowered under the law to monitor false advertising activities which compromise consumer interests. The AIC will furthermore be required to keep records of false advertising activities and will have the power to publish them.
• 3-year ban for engaging endorsers who fall foul of the ‘Amended Law’: One major change is that celebrities or other endorsers recommending a product or service may be held liable if they know, or ought to know, that the advertisement amounts to false advertising. In addition, the ‘Amended Law’ imposes a ban on further engaging endorsers who were held liable of recommending false advertising for a 3-year period.
• Restrictions on advertising healthcare food and breast milk substitutes: The ‘Amended Law’ prohibits the advertising of healthcare food, pharmaceutical products, medical equipment and the like under the disguise of “health information” programs or columns on radio or TV stations, printed media or on the Internet. It also introduces a ban on advertisements on mass media and public premises for baby dairy products, drinks and other baby food which claim to serve as a substitute for breast milk.
“It has a wide scope, and it is expected that further implementing measures or interpretations may be issued in the future to give further guidance on the application of the new law. In the meantime, it is advisable for brand owners to review their advertising practices in China to ensure compliance, especially in light of the potential surge of regulatory enforcement and consumer complaints. That said, false advertising is not solely about legal liabilities or monetary compensation; very often it is the reputational and publicity issues which really matter”, Hogan Lovell concludes.