China Slaps Record Fine on False Advertising - Draft Advertising Law stimulus for tougher stance?

A toothpaste television advertisement was hit with a record fine of RMB 6.03 million (approximately US$0.96 million) for violating the Advertising Law in China.

According to a recent report of the Shanghai AIC published last week, the television advertisement showed a well-known Taiwanese celebrity showing off her teeth and boasting that they were visibly whiter after just one day of using the toothpaste. The AIC found that the alleged visual "whitening" effect in the advertisement was a result of computer editing, as opposed to the actual effect of using the product. The advertisement was found to constitute a false advertisement under the Advertising Law.

The AIC did not mention whether there were any aggravating factors which justified this record fine. However, this decision is certainly in line with the recently proposed changes to the Advertising Law which aim to root out false advertising in China. The existing Law was enacted in 1995. Since last year, following the enactment of the revised Consumer Rights Protection Law in March 2014, the Chinese Government has issued a series of consultation drafts on the amendments to the Advertising Law, with a view to further enhancing consumer protection.

These draft changes to the Advertising Law are now undergoing what is believed to be the final round of review by the Chinese Government and could become law shortly. The proposed amendments, if enacted, would have wide-ranging implications on all advertising activities in China and on all stakeholders (including brand owners, advertising companies, and endorsers). False advertising is not solely about legal liabilities or monetary compensation; very often it is the reputational and publicity issues which really matter. Hence, all stakeholders should familiarise themselves with the legal developments in this area and take immediate steps to review (and revise) their advertising practice.

Please click here to read the full article which covers the major proposed changes to the Advertising Law and their likely ramifications.

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