On January 21, Estee Lauder (China), the beauty and skincare industry leader, was fined ¥2,381,671 for false advertising. The advertisement in question promoted their "Advanced Night Repair Essence" with the main contents of  "Youth Index + 77%" and "Softening + 17%, Smooth + 20%, translucent +15%", etc., to sell the product's efficacy on video and print advertisement. The advertisement was released at the end of 2019.

The concept of "youth" in this advertisement unilaterally uses research data based on some samples only, and cannot be extrapolated to represent the whole of China. Therefore, the advertisement violates provisions in the Advertising Law of China on false advertising. This is not the first time Estee Lauder has been fined for violating such offenses; in June 2021, the brand was fined ¥400,000 for false or misleading commercial promotions.

False advertising refers to the behaviors in which business operators use advertisements or other methods to promote false information about goods or services inconsistent with the actual content, resulting in misunderstandings by customers or consumers. Regardless of the industry, the advertising media in which it is published, or the form/content of the advertisement, false advertising is one of the main areas under the supervision of China’s Advertising Law. Companies employing false advertisements receive heavy fines, as they affect the rights and interests of consumers. False advertising will also cause irreversible losses to brand promotion in China and damage a brand’s image in China.

To avoid breaking the Advertising Law, advertisers must check carefully before promoting in China. False advertising often involves the following aspects:

1. Product features：

Product features refer to the product's purpose, function, and other characteristics. Advertisers should not overstate their product effect to make Chinese consumers more confident in their products.

Case: The cosmetic advertisement involves comparison with medical beauty items, implying medical beauty effects, such as skin boosters, whitening injection, and so on. It involves the false and exaggerated promotion of its efficacy.

2. Raw materials of the product：

The product's function is determined by the raw materials and the ratio of various raw materials. Thus, authoritative quality inspection reports are needed when special materials like natural silk are involved in the product, so as to prove their raw materials and content. Advertisers should not cover up low-grade raw materials to attract more customers.

3. Source of the product：

As one of the advertising contents, product provenance mainly represents the source of the product or service geographically. In addition to clarifying the geographical concept in the advertising content, other product characteristics can also help consumers determine the origin. Advertisers should not confuse or disturb consumers by imitating a high-quality origin to enhance their product's reputation.

Case: The beverage brand Nongfu Spring mentioned that Akatsuki, a type of white peach, is from Fukushima, Japan, in their new product advertisement. But Nongfu Spring officially declared that there are no ingredients imported from Fukushima, Japan. Although they did not receive any penalties at time of publication, their investor did lose confidence in them, and their stock price plummeted more than 6% the next day.

4. Product price：

Some fake advertisements never state their price clearly, but uses words like "Super low price", "Shockingly low price", "Exclusive price" to attract customers. However, most of the time, those wordings are gimmicks. There may have been a hidden charge in purchasing, no stock for the discounted products, the product may have already been marked up before discounting, or the discounted price is even higher than the original price. Hence, advertisers should be aware of not repeating these mistakes.

5. The historical origin and scale of the advertiser's enterprise：

For example, a store is advertised as a "Hundred-year-old store" when in actuality it is only a few decades old. Or, it is advertised as a "group" when the company is a partnership of just a few people or even a sole proprietorship. The advertisement contents are inconsistent with the actual situation and are likely to be judged as false advertising and at a high risk of being fined.

For more information on China’s advertising environment, contact our digital media consultant at: enquiry@so360.hk.