Offer And Advertising In Consumer Relationships

Author:Ms Lucia Ancona Lopez De Magalhães Dias
Profession:Magalhães e Dias – Advocacia
 
FREE EXCERPT
  1. Introduction - 2. On the advertised offer and how it is binding upon the supplier - 3. Misleading advertising - 4. Abusive advertising - 4.1. Advertising for children- 5. Comparative advertising - 6. Civil liability for illicit advertising.

  2. Introduction

    Advertising and the limitations related thereto are governed by articles 36 through 38 of the Consumer Defense Code ("CDC"). More than 25 years since the CDC was enacted, with unprecedented and express reference to advertising in its text, the subject is still evolving, but the Code and its guiding principles remain the most effective instrument to deal with the newest (as well as more traditional) forms of commercial expression.

    Article 37 of the CDC regulates commercial content information that may lead to a consumption relationship between the supplier and the receiver. Advertising that shares information not related to an economic activity (for example, religious, philosophical and political propaganda), in principle, is not included in the concept of advertising established by the article, which is explicit with respect to the control of information of "advertising nature" - meaning that which directly or indirectly entails an economic purpose.

    On this particular point, it is important to keep in mind that commodification of values is ever-rising, which turns certain efforts a priori imbued with clear propagandistic content into paradigmatic advertising pieces to stimulate true exchange relationships. Along those same lines, in light of the constant technological innovations, especially the Internet, certain messages that allegedly have no economic aim may also fall under the control of the CDC, since in this case, the economic intention will have been masked by the supplier or third party contracted by it. Under these circumstances, there is a violation of the principle of identification as an advertising message, which establishes that all advertising should be "easily and immediately" identified as such (art. 36, main section). According to this principle, clandestine messages are banned, as is any subliminal advertising.

    So, within the scope of advertising, the CDC instituted a set of principles specific to advertising1, which is fundamental for the control of the most varied publicity techniques and also defines the concepts of misleading and abusive advertising.

  3. On the advertised offer and how it is binding upon the supplier

    Before we can move on to the analysis of illicit advertising, some considerations must be made about the concept of offer, as established in article 30 of the CDC, according to which any sufficiently precise information or advertisement is binding on the supplier that disseminates it or makes use of it, becoming an integral part of any contract entered upon.

    The rule seeks to keep legitimate consumer expectations from being frustrated when faced with sufficiently precise offers or advertising, and imposes upon the supplier the obligation to enact contracts under the exact terms of the advertised offer. Hence, it introduces the principle of the binding nature of the advertising message into consumer business relationships, by creating rights and obligations arising from public advertising.

    Not all advertising, however, contains an offer. At times, an advertising piece might not even offer information about goods and services, as is the case, for example, of institutional ads or merchandising efforts in which the product is merely displayed.

    Furthermore, it is also correct that not every offer is made through advertising. To the contrary, products are offered through simple exposure in automated machines (e.g. coffee machines, soda machines), by simply providing a consumer with an estimate for a product or service, by display of merchandise in store windows or labels, etc.

    Nevertheless, if the advertising presents in its contents "sufficiently precise information" about goods and services offered, then it will be treated as an offer and will be binding upon the supplier, obliging it to fulfill the terms. In order for this binding nature to arise, the offer needs to be: (i) broadcast through any means of communication in relation to the goods and services offered, which presupposes its exposure to consumers; and (ii) sufficiently precise. The term "sufficiently precise" does not require that the offer be total, which is to say, it does not need to contain all the elements of the future contract; a reference to a single characteristic of the product is sufficient to bind it to the supplier.

    Therefore, as far as the CDC is concerned, if an advertising offer is sufficiently precise - irrevocable and irreversible - and it is accepted by the consumer within a fixed period of time, or another period deemed reasonable, the contract is consummated. Any refusal on the part of the advertiser to meet it gives the consumer the right to demand forced fulfillment of the offer (art. 35, I) or, if that is not possible, to accept another equivalent product or service (art. 35, II), in both cases through the specific relief device (art. 84, main section, CDC). If a contract has already been enacted, the consumer may also choose to terminate it, with right to restitution of any amount paid in advance, corrected for inflation, plus any losses and damages (art. 35, III).

    Finally, doctrine and jurisprudence accept the theory of gross error in advertising materials as a special situation in which the application of the principle of the binding nature of an advertising message may be waived. If there is a flagrant mistake in the advertising, which is immediately perceivable by the targeted consumer, the law cannot be used to force the fulfilment of an offer that the consumer knows or should reasonably know is a mistake. Objective good faith applies to the interpretation of consumer relations.2

  4. Misleading Advertising

    Misleading advertising is defined in article 37, paragraph 1 of the CDC, and may be summarized as a message capable of leading a consumer to error with respect to the characteristics of the product or service advertised, be that through falsehood, omission or any other means (such as ambiguity and/or inaccuracy).3 The misleading message is capable of influencing the consumer's economic behavior, which could have been different were he/she better informed about the characteristics of the product.4 Under any circumstance, by action or omission, the will of the consumer will have been perverted to enact a consumer deal based upon flawed information.

    Controlling deception does not apply just to what we consider to be traditional advertising vehicles (television, print or digital media), but also to any and all information of an "advertising nature", including, for example, sales promotions brought to the consumer's attention directly at points of sale (through advertising materials, coupons, drawings), retail tasting and sampling activities, packaging and labels that include advertising information5 and slogans; the very design of the product vis à vis its content; "sponsored" messages in blogs, when the "advertising" information is not identified as such to the readers; product placement, among others. All these practices are subject to the so-called principle of veracity.

    When examining a potentially misleading message, one must establish whether the advertising is illicit or not by looking at it from a consumer's perspective, which is the key interpretative method provided by art. 37 of the CDC. The examination of the misleading potential in a specific advertising message needs to be accurately calibrated in light of the impression that the ad actually causes (or can cause) on its target consumers, who are the subjects of a future consumer relation.

    This is the case because a consumer's ability to perceive and discern does not remain constant. It can vary according to target public under investigation, based upon criteria like social and cultural attitudes, means of communication employed, taking into special consideration the nature and characteristics of the products and services advertised, in addition to other elements to be examined in each specific case.

    When examining deceit, is shout also be noted that paragraph 3, art. 37 of CDC also defines misleading advertising as omissive when it fails to provide "essential information" on the product or service being advertised. Given the open-ended concept of this rule, essential information would be anything that is capable of modifying the terms of the offer, that results in conditions or limits to the fruition of the good or service, or that creates a burden on the consumer, having not been addressed in any way in the advertising material.6

  5. Abusive Advertising

    The ban against abusive advertising is established in article 37, paragraph 2 of the CDC, which sets forth as abusive, among others, "advertisements of any discriminatory nature, or that incite violence, exploit fear or superstition or take advantage of a child's lack of judgment or experience, disrespect environmental values, or may cause the consumer to behave in a way that will bring harm to his health or safety."

    The rule in question does not provide a precise concept of abusiveness. Based on the examples given therein, however, a message could be defined as abusive when it opposes the highest principles and values of Brazilian legal order and those that guide and permeate our society. Protection from abusive advertising is not related to effective economic loss by altering the will of the consumer, but rather to their safety against messages that could lead to harmful situations (for example, ads that encourage self-medication), or to the protection of society as a whole against messages that are contrary to social values, particularly those expressed in our Federal Constitution.

    It should be noted that paragraph 2, article 37 of CDC, by providing a vast and flexible content to be interpreted in each specific case by the judge, introduces into consumer relations a veritable general non-abusiveness clause. The list in paragraph 2 is merely an example.

    On the other hand, it should equally be stressed that, by instituting a general non-abusiveness clause, the provision does not actually adopt what could be called a dominion of subjectivity. To the contrary, it demands from the judge a careful analysis of the existing transgression potential. The focus of such analysis is the value as calibrated from the standpoint of the community as a whole, not the tastes or the rather subjective outlook of any specific consumer.

    A brief digression about the application of this rule takes us along the 25 years since the Code was enacted, at which time the examination of abuse focused on discussions of discrimination involving ads for the brand BENETTON. A widely advertised brand in the 1990's, its social campaigns covered themes such as AIDS and racial discrimination, and ended up being heavily criticized. More recently, the question of discrimination has led to discussions about gender equality, especially as it pertains to the alleged objectification of the female form in beer and lingerie ads.7 Still on the theme of discrimination, it is always important to differentiate potentially discriminatory advertising from comedic ads that employ satire or humor as creative manifestations of the freedom of expression and creation held by advertising.8

    4.1 Advertising to Children

    Currently, questions of abuse are receiving attention both from the courts and society as a whole when it comes to advertising targeted at children. This discussion involves determining the limits established by the Code in relation to this type of communication, according to which the following is considered abusive: "advertising that takes advantage of a child's lack of judgment and experience". There is no question that children, like the elderly, have a higher degree of vulnerability and are therefore more susceptible to the effects of advertising. Given their particular condition of persons still in development, children deserve special protection. Often what is not clear is the extent of this intervention: whether there is a lack of legal provisions, whether advertising to children should be banned or restricted by new legislation, or further, whether jurisprudence would have to strengthened on groups of cases that deserve prompt reproach.

    Advertising enjoys constitutional protection in the light of the guiding principles of economic order, i.e. free initiative and free competition, and the Brazilian constitution further states that "the exercise of any economic activity is free, regardless of authorization from government agencies, except in the cases provided for by law" (art. 170, sole paragraph). In addition, and beyond any commercial purpose, the constitutional guarantee to advertise may also fall under the protection of the freedom of expression and information (arts. 5, IX, 220, Brazilian Constitution).

    Naturally, since these constitutional guarantees must interact with other principles and guarantees equally established in the Brazilian Constitution, the activity, depending on the case, may be restricted. So much so that article 220, paragraph 3 of the Constitution sets forth that federal law will be responsible for establishing new restrictions on advertising activities deemed harmful. Paragraph 4, in turn, names a priori the products that deserve prompt constitutional restriction, to wit: drugs, tobacco, alcoholic beverages, pesticides and insecticides, all of which had their advertising messages restricted and/or prohibited through Federal Laws 9.294/96 and 10.167/2000.

    Specifically with respect to children, the Brazilian Constitution establishes in its article 227 that "it is the duty of the family, the society and the State to ensure to children and adolescents, with highest priority, the right to life, health, food, education...". Indeed, children have yet to reach physical and psychological maturity, which puts them in a situation of higher vulnerability. Given the peculiar condition that children are in, the CDC anticipated, in the aforementioned article 37, that advertising is abusive when it exploits a child's lack of judgment and experience.

    In addition and in supplementary fashion, pursuant to the so-called mixed control of advertising (self-regulatory and governmental), the National Advertising Self-Regulation Council (Conselho Nacional de Autorregulamentação Publicitária - "CONAR"), through the Brazilian Advertising Self-Regulation Code (known as "CBARP"), provides guidelines to the market with respect to the proper content of any advertising aimed at children, and includes a series of directives in its Section 11 and Annex H, the latter dealing specifically with food advertising. More recently, the agency imposed bans on merchandising activities targeted at children, limiting advertising to children exclusively to commercial breaks.

    In our view, two logical conclusions arise from the existing legal framework on the matter and the fundamental guarantees that regulate both advertising and the rights held by children: (a) advertising freedom may be restricted by the issuance of federal law (art. 220, paragraph 3, combined with art. 22, XXIX, Brazilian Constitution), with ample democratic debate; and (b) advertising to children was authorized by the Constitution, and guidelines for it are provided in article 37, paragraph 2 of the CDC, which - at least in the 25 years it has been in force - only banned the abuse of marketing communication which takes advantage of a child's lack of discernment, not the activity itself.9

  6. Comparative Advertising

    Finally, although our consumer defense code makes no express mention to comparative advertising, it should be stressed that this advertising strategy is not banned; instead, within the scope of self-regulation, CONAR chose to expressly regulate this practice, recognizing it as part of market uses and customs. To that end, art. 32 of CBARP provides limits for comparative advertising and can be considered a subsidiary interpretative source in advertising matters.

    Comparative advertising is still not widely used in Brazil, but it has become more popular in the past few years. In this connection, we can point to a comparative campaign about Rayovac x Duracell batteries, claiming that Rayovac batteries were just as durable but less expensive, which the Superior Court found to be legal and pro-consumer (REsp n. 1.668.550). Although this practice is of interest to both competitors and consumers, misleading comparisons that could induce consumers to err are still prohibited.

  7. Civil liability for illicit advertising

    Who is responsible for illegal advertising? First, one must identify the different actors in advertising: i) advertiser: this is the supplier and the main party responsible for making the ad; ii) advertising agency: which may be defined as the as the company responsible for planning, creating and distributing advertising for those who hire them; and, iii) media: these are the means to carry advertising to the consumers.

    These different parties will be held liable in different ways, based upon different interpretations of the CDC. On the one hand, jurisprudence has determined that only the advertiser will be held directly liable for the messages. This argument is based upon the interpretation of article 38, combined with article 36, sole paragraph of the CDC - an understanding that was endorsed by the Superior Court of Justice (STJ) in its ruling Resp 604.172. However, it can also be argued that all participants should be held objectively and solidarily liable, based upon article 7, sole paragraph, combined with paragraph 1, art. 25 of the CDC.

    We are of the mind that there could be joint liability between the advertiser and the advertising agency. This understanding is also in line with the CONAR rules, which, albeit of an ethical nature, restate the guidelines followed by the advertising market (art. 45, "b"). Naturally, the agency would have the right to seek redress against the advertiser, if it is able to demonstrate that the creation of the illicit advertising was exclusively due to the latter's conduct.

    The media, in turn, are not part of the advertising creation process. They are only responsible for spreading the message. It is equally certain that they cannot control the content of all the messages or make a detailed examination of technical and scientific data. However, we think it correct that they hold some responsibility when they act in malice or gross negligence.

    And what about celebrities who appear in ads? Celebrities lend their image, voice and prestige to the advertiser to promote its products. They do not participate in the creation of the advertising piece, and are generally reciting a script written by the advertiser. They cannot be held objectively liable. Furthermore, celebrities are treated as freelancers, who according to article 14, paragraph 4 of the CDC may only be held subjectively liable, upon a finding of malice or gross negligence.

    Footnotes

    1 The Code, alongside the principle of objective good faith that guides and should permeate any and all consumer relations (art. 4, III, CDC), also introduced specific legal principles for advertising, as logical consequence of its articles 30, 36 through 38 and 60, item XII. Thus, in addition to the already mentioned (i) principle of identification (art. 36, main section), we highlight: (ii) the principle of veracity (art. 37, paragraphs 1 and 3); (iii) the principle of transparency of claim (which imposes upon the advertiser the duty to retain, for information of those legitimately interested, factual, technical and scientific data that back up the message - article 36, sole paragraph); (iv) the principle of binding nature of the contractual offer (which we could summarize as "if advertised, it must be honored" - article 30); (v) the principle of non-abusiveness (prohibition of abusive advertising - art. 37, paragraph 2); (vi) the principle of the burden of proof falling on the supplier (according to which the supplier is responsible for proving the correctness and adequacy of his/her message - art. 38); (vi) the principle of correction of advertising deviations (which means the imposition of the counter-advertising penalty as set forth in art. 60, XII). For more information on specific principles applicable to advertising, cf. DIAS, Lucia Ancona Lopez de Magalhães, Publicidade e Direito, Revista dos Tribunais, 2nd ed., Chapter 3, pg. 55 and subsequent).

    2 To this end, e.g., São Paulo Court of Law, Appeal 0017678-86.2013.8.26.0482 and Appeal 1001335-74.2014.8.26.0510.

    3 Art. 37, paragraph 1. Any information or public communication that is entirely or partially false, or is in any other way, even by omission, capable of inducing the consumer to make a mistake regarding the nature, characteristics, quality, quantity, properties, origin, price or any other feature of products and services will be considered misleading".

    4 A classic example of deceit by commission is the advertising campaign for the product "Cogumelo do Sol", which was merely a food product with no health benefits, but was offered as a cure for cancer (STJ, REsp n.1.329.556-SP).

    5 To wit, Rio de Janeiro Court of Justice, Appeal 0337522-63.2012.8.19.0001, regarding the information "whole wheat", on bread packaging when in fact there was a very low percentage of whole wheat in the actual product.

    6 A classic example misleading advertising by omission was the offer of an HD plasma TV set in which high definition could only be obtained by connecting the device to a signal decoder or DVD player, an essential piece of information that was not provided by the supplier in their ads and was not even listed in the product's packaging. (Technical Note from the National Consumer Secretariat, no. 133/2012/CGCTPA/DPDC/2012)

    7 Annexes "A", "P" and "T" of the Brazilian Advertising Self-Regulation Code (dealing with alcoholic beverages, beer and wine) provided guidelines for advertisers, establishing that "occasional sexual appeals shall not be the main content of messages, and models used in advertising [men and women] shall never be treated as sex objects".

    8 Acknowledging humor in advertising, cf. TJ/MG, Appeal n. 1.0024.10.149915-0/001 (the "talking cans" ad campaign from Skol, which made playful reference to Argentinians); TJ/SP, Appeal n. 994.05081591-3 (ads containing a humorous take on the "dumb blonde" stereotype).

    9 Please see the following rulings by the São Paulo Court of Law: Appeal no. 0035929-18.2012.826.0053; Appeal no. 0008196-14.2011.8.260053; Appeal no. 566.275-4/7; Appeal no. 994.04.072694-0 (absence of abusiveness in the specific case). Acknowledgment of abusiveness: STJ REsp 1.558.08, STJ REsp 1.613.561 and TJSP Appeal no. 0044517-82.2010.8.26.0053.

    The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To continue reading

REQUEST YOUR TRIAL