New Advertising Law Takes Effect on 1 September

A clear definition of false advertising has been given for the first time in the new Advertising Law effective 1 September 2015. False advertising is the main area for rectification under the new law.

The new Advertising Law stipulates that if data or results of surveys and scientific experiments that appear in the ad are fictitious, falsified or if experimental outcomes cannot be repeated for verification are false advertising. In addition, weight loss products endorsed by actors and actresses posing as having been successful in putting off weight, fabrication of income by advertising inviting investment, claims of teeth whitening at one stroke by toothpaste ads are allegedly making false claims in the efficacy for use of goods or services and will also be considered as false advertising.

Among the cases of false advertising cited by the new law is advertisement for non-existing products or services. The common situations include, the business intending to deceive remittances by mail, etc. while it is not in the possession of the actual product, and advertising directly without having the qualifications and ability to provide services. As to claims about the product or service that do not conform to the actual situation, the common situations include claiming domestic brands as imported goods, claiming mass produced industrial goods as 100% handmade products, falsifying awards for producers or products, making claims of "unconditional return guarantee” but refusing to fulfil after-sale service commitments, etc. If the false claim carries substantive influence on the buying decision, it will be deemed as false advertising.

Although the old Advertising Law provided that advertising shall not contain false information which deceives or misleads consumers, it did not carry a definition of false advertising. In this regard, the new Advertising Law clearly stipulates that an advertising is a false one in any of the five cases. Among these are: first, the commodity or service does not exist. Second, the performance, function, place of manufacture, among others, of the product, or the content, format, quality and award-winning claim, among others, does not match the actual situation and has a substantive influence on the buying decision. Third, using fictitious, falsified, or unsubstantiated scientific research, statistics, survey, excerpt or quotation, as supporting material. Fourth, fabricating the results of using the product or service. Advertiser and advertising agent or distributor will be punished accordingly, by a maximum fine of Rmb2 million, and revocation of permits and business licences. Celebrity endorsing false advertising will be held jointly and severally liable. The industry and commerce administration department may make a confiscation of illegal income based on the new Advertising Law, and impose a fine of not less than one time but not more than two times the illegal gains.