An ombud for the advertising and marketing industry

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15 Sep 2016

Section 82 of the Consumer Protection Act 68 of 2008 (“CPA”) allows the Minister of Trade and Industry to accredit industry specific ombudsman schemes, and to prescribe accompanying industry codes. To date, two industry ombudsman schemes have been accredited, namely the Motor Industry Ombudsman of South Africa (which enforces the South African Automotive Industry Code of Conduct), and the Consumer Goods and Services Ombud (which enforces the Consumer Goods and Services Code of Conduct).

On behalf of the South African advertising and marketing industry, the Advertising Standards Authority of South Africa (ASA) has approached the National Consumer Commission (“NCC”) with a proposed industry code, the Advertising and Marketing Industry Code of Practice (“the Industry Code”). The ASA has also requested accreditation as an ombudsman scheme in the advertising and marketing industry. The Industry Code was published for public comment in the Government Gazette of 26 July 2016, and interested parties have been invited to submit comments.

The Industry Code is designed to protect consumers against improper trade practices, and deceptive, misleading, unfair or fraudulent conduct in the marketing and advertising industry. It aims to ensure that all advertising and marketing in South Africa is informative, factual, honest, conforms to fair marketing practices and does not contravene any laws.

If the Industry Code is accepted, it will be compulsory for all advertising and marketing industry “participants or subscribers” to:

  • register with the ASA;
  • comply with the Industry Code;
  • place suitable notices on their websites and at their trading premises, advising consumers that they subscribe to, and are bound by, the Industry Code and providing the ASA’s contact details to consumers; and
  • contribute towards the funding of the ASA. It is proposed that a levy collection agency will be established for this purpose.

Advertising and marketing industry “participants or subscribers” is widely defined, and includes marketing and advertising agencies, media owners and their agents, media buyers and all other marketers and advertisers of goods and services in South Africa (such as retailers, suppliers, wholesalers, distributors, manufacturers, producers and importers).

Although the Industry Code overlaps, to a certain extent, with the ASA’s current Code of Advertising Practice (“ASA Code”), some changes were necessitated by the need to bring that Code in line with the CPA. The definition of “advertisement” has been given the meaning as set out in Article 1 of the CPA, but it has been made clear that editorial matter, for which no consideration has been given or received (such as news articles), does not fall within the definition of an advertisement.

The Industry Code appears to place more emphasis on consumer rights. Clause 1.4 of the Industry Code states that the Code:

specifically deals with the resolution of complaints of prohibited conduct and the failure to comply with required conduct in respect of advertising and marketing of goods and services to consumers as provided for and envisaged within the scope of the [Consumer Protection] Act”.

That being said, and similar to the ASA Code, the Industry Code provides a basis for dispute resolution between industry participants (i.e. competitor complaints), in addition to complaints between industry participants and consumers (i.e. consumer complaints). As is the current practice, consumers and organisations serving in the public interest will not be required to pay any fees when filing complaints before the ASA, or in subsequent appeal proceedings. Competitors will (or may) be required to do so.

The Industry Code’s complaints procedure overlaps with the current complaints procedure before the ASA. Initial complaints will still, in general, be considered by the Directorate, and appeals may be filed with the Advertising Industry Tribunal, Advertising Standards Committee or the Final Appeal Committee, as the case may be. The sanctions that may be imposed by these tribunals have been limited to (i) withdrawal or amending the contravening advert, (ii) submitting the proposed amendment(s) to the advert for pre-publication advice and (iii) ordering the advertiser to publish a summarised version of the ASA ruling in certain media. The Industry Code also provides that non-compliance with ASA rulings will be escalated to the NCC, and dealt with in terms of the CPA.

Only a few of the 19 general principles that are found in Section II of the ASA Code have been incorporated into the Industry Code, including those relating to truthful presentation and substantiation of claims, and the prohibition of misleading claims (which overlaps with Section 41 of the CPA, dealing with false, misleading or deceptive representations).

Many of the clauses in the ASA Code that often form the basis of competitor complaints before the ASA (including disparagement, imitation and exploitation of advertising goodwill) have been excluded from the Industry Code. In the circumstances, if the Industry Code is accepted in its current form, the grounds on which the ASA will be able to consider competitor complaints will be more limited.

Only some of the appendices to the ASA Code have been incorporated in the Industry Code, including those relating to alcohol advertising, the advertising of cosmetics, direct marketing and environmental claims. Provisions dealing, specifically, with advertising for slimming products, foodstuffs and beverages, breastmilk substitutes, baby feeding bottles and teats and collective investment schemes have been excluded from the Industry Code. Furthermore, Section III of the ASA Code, which sets out advertising requirements relating to specific categories of goods, services or other activities (such as the advertising relating to charitable causes,  property, cell phones, and the rental of televisions and other domestic appliances) have also been excluded from the Industry Code. These exclusions from the Industry Code are, presumably, due to the fact that the advertising and marketing of those goods and services are regulated in terms of other legislation, and should be enforced by other suitable bodies or Government departments.

As many of the important clauses in the ASA Code have been excluded from the Industry Code, it appears that, in certain instances where the ASA has been an appropriate dispute resolution forum in the past, other suitable Tribunals may have to be approached in the future. That being said, it remains to be seen which amendments, if any, will be made to the Industry Code before it is finalised and accepted.

Interested parties have until 20 October 2016 to submit comments to the Industry Code. After this date, the NCC will consider the submitted comments, and consult with relevant industry participants. The NCC may then revise the proposed Industry Code, to the extent that it deems this necessary, before making recommendations to the Minister of Trade and Industry relating to the recognition of the Industry Code, and the accreditation of the ASA as an ombudsman scheme in terms of Section 82 of the CPA.

See also: Tweeting truthfully in paid posts – Advice for brands and influencers

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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