Decoding IT Amendment Rules: The Hits and Misses

  • April 18, 2023
  • Padma Sinha
  • Sanjana Sreenath

On April 6, 2023, the Ministry of Electronics & Information Technology (MeitY) notified the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 to amend the 2021 Rules. In this article, the important changes introduced to the Rules are highlighted.

Introduction

Through the amendment, the Ministry intends to make a few changes to the intermediary eco-system by introducing new due-diligence requirements for intermediaries. It can be broadly summarised under two heads – partial censorship of digital media, and regulation of online gaming intermediaries. 

Partial censorship of digital media

The new amendment requires social media intermediaries, significant social media intermediaries and online gaming intermediaries to follow additional due diligence. It aims to regulate digital media by disallowing the publication of such information related to the business of the Central Government which is identified or declared as fake, false, or misleading by a fact-checking unit set up by the Central Government. This addition to the rules would make it mandatory for the intermediaries to take down (when given a notice by the user) any piece of information that is declared fake or misleading by the fact-checking authority. It is unclear from the amendment if the information checked by the already established fact-checking authority would warrant take-down, but with the available information, it would be reasonable to assume that any information fact-checked and deemed fake by the PIB fact-check mechanism would warrant takedown.

This part of the amendment has been challenged by a political satirist, Mr. Kunal Kamra. He filed a writ petition with the Bombay High Court with the averment that the amendment with respect to establishing a separate unit by the Central government to fact-check digital media is violative of Articles 14, 19(1)(a), and 19(1)(g) of the Indian Constitution and that it is ultra vires Section 79 of the Information Technology Act, 2000. The Bombay High Court has now directed MeitY to file its response within one week on why the IT Amendment Rules, 2023 should not be stayed, and also describe the factual background that necessitated the issuance of the amendments. The affidavit has been ordered to be filed by April 19, 2023, and the matter has been listed on April 21, 2023.

Regulation of online gaming intermediaries

Earlier, a draft of the amendment (pertaining to online gaming) to the 2021 Rules was released in January 2023; though the draft lacked clarity on the kind of online games it intended to regulate (click here to read more). Further, it did not delve into differentiating between games that are in the form of wagering/betting and those which are not. The current amendment attempts to overcome these shortcomings by providing for an ‘online gaming intermediary’ and stipulating the due-diligence requirements for such intermediaries.  

The amendment defines an online gaming intermediary as one that enables users to access one or more online games. It further defines an ‘online real money game’ that is played with real money, where the users are asked to deposit money. The amendment allows the online gaming intermediary to host only those games which are permissible online games and are certified by the online gaming self-regulatory body.

Disallowing online wagering and betting games.

As per the new amendment, social media intermediaries or online gaming intermediaries are not allowed to host an online game which is not verified as a ‘permissible online game’, or any information or content which is in the nature of an advertisement or a surrogate advertisement of such non-permissible online games. It also prohibits the hosting of such games that causes harm to the user.

Permissible online real money game

The amendment further clarifies that for a game to be certified as a permissible online real money game, any member of the online gaming self-regulatory body that enables online real money game can make an application to the online gaming self-regulatory body. The said private body is set up for the sole purpose of acting as an online-gaming self-regulatory body and is notified by the Central Government. It has the power to decide whether an online game is permissible or not. The regulatory body will inquire and ensure that the game does not involve any wagering and that the gaming intermediaries or the online game undertakes all the due diligence laid down in the Rules. Additionally, it shall also ensure that the permitted games are not against the interest of the country. It also has safeguards that protect users against harm, risk of addiction, financial loss, fraud, etc by providing repeated warnings or such. The body is required to adhere to the principles of natural justice. While the self-regulatory body has the power to certify an online game as a permissible one, the Central Government still reserves the right to suspend the certification if it believes that the said game is not in conformity with the Rules.

This is a private body set up for the sole purpose of acting as an online-gaming self-regulatory body and is notified by the Central Government. In brief, they have the power to decide whether an online game is permissible or not.

Due-diligence requirements

Previously, Rules 3 and 4 of the Rules stipulated the due-diligence requirements for social media intermediaries and significant social media intermediaries. With this amendment, such due-diligence requirements in Rules 3 and 4 are extended to online gaming intermediaries too.

Through these amendments, in addition to the existing due diligence requirements under Rules 3 and 4, the online gaming intermediaries that enable permissible real money games have certain additional due-diligence requirements like requiring to display a visible mark of verification, and inform the users about the policy related to the deposit and withdrawal of money, the KYC norms that they follow, the measures taken to protect the deposits made amongst others.  

Online games which are not real-money games do not have to follow the additional due-diligence requirements by default, the Central Government by notification may direct an intermediary to undertake certain due-diligence requirements.

Conclusion

The IT amendment rules are an improvement on the previously proposed amendment to the 2021 Rules. The definitional ambiguity is removed and a step is taken toward regulating online games that are based on wagering. It also makes the self-regulation of online gaming intermediaries more transparent by stipulating for disclosure of decision-making reasons, etc.

Image Credits:

Photo by anyaberkut: https://www.canva.com/photos/MADCr_H7g_U-it-concept-information-technology-diagram/ 

The new amendment requires social media intermediaries, significant social media intermediaries and online gaming intermediaries to follow additional due diligence. It aims to regulate digital media by disallowing the publication of such information related to the business of the Central Government which is identified or declared as fake, false, or misleading by a fact-checking unit set up by the Central Government. This addition to the rules would make it mandatory for the intermediaries to take down (when given a notice by the user) any piece of information that is declared fake or misleading by the fact-checking authority. It is unclear from the amendment if the information checked by the already established fact-checking authority would warrant take-down, but with the available information, it would be reasonable to assume that any information fact-checked and deemed fake by the PIB fact-check mechanism would warrant takedown.

Related Posts

POST A COMMENT

CCPA Introduces New Guidelines to Ban Surrogate Advertising  

In the latest development in the advertising space, the Central Consumer Protection Authority (CCPA) under the Department of Consumer Affairs has introduced ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’. These guidelines aim to curb misleading advertisements and endorsers by putting a complete ban on surrogate advertising effective June 09, 2022. These new guidelines will apply to all advertisements irrespective of the form, format, or platform. 

The Consumer Protection Act, 2019, provides for ‘misleading advertisements’ under Section 2(28).

Section 2(28): “Misleading advertisement” in relation to any product or service means an advertisement that— (i) falsely describes such product or service; or (ii) gives a false guarantee to or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or (iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or (iv) deliberately conceals essential information.

The new guidelines touch upon each sub-section of section 2(28) and provide further definitions to include conditions for non-misleading and valid advertisements, definitions for bait and free-claim advertisements, and the complete ban on surrogate/indirect advertisements.

 

Salient Features  

 

Bait Advertising  

An advertisement in which goods, products or services are offered for sale at a low price to attract consumers. The guidelines lay down that:

  • The ad should not entice consumers to buy the goods or services without a reasonable prospect of selling them at a price offered in the advertisement.
  • There should be an adequate supply of the advertised goods or services to meet the demand created as a result of the advertisement.
  • The advertisement should state that the stock is limited; if the ad is to assess the demand, the same should be stated, and it should not omit restrictions regarding the availability of goods or services.

 

Free Claim Advertisement 

The advertisement should make clear the extent of commitment that a consumer shall make to take advantage of a free offer and should not use the term “free trial” to describe an offer that promises to pay the money back to the consumer in case of non-satisfaction if it requires the consumer to make a non-refundable purchase. Free claims should not be made in the advertisement –

  • If the consumers have to pay anything other than the unavoidable cost of responding to the ad or packing, handling or administration of free goods or services or if the price has been increased (except where such increase results from factors unrelated to the cost of promotion) or when the quality or quantity of goods or services has been reduced;
  • If an element of the package is included in the price, it should not be advertised as free.

 

Advertisements Targeting Children

In addition to taking measures to protect the general public from being misled, the CCPA has also laid down measures to protect the sensitive and impressionable minds of the younger generations.

  • It provides that advertisements that target or address children shall not condone or encourage activities that are dangerous for children or take advantage of their inexperience, and/or encourages practices that are detrimental to children’s wellbeing, etc.;
  • Advertisements should not be such as to develop negative body image in children or give any impression that such goods, product or service is better than the natural or traditional food which children may be consuming.
  • Advertisement for junk foods, including chips, carbonated beverages and such other snacks and drinks, should not be advertised during a program meant for children or on a channel meant exclusively for children.
  • The Guidelines also prohibit advertisers from featuring children and personalities from sports, music or cinema for products requiring  a health warning or for products children cannot purchase

 

Due Diligence Endorsers

The guidelines clearly state that the endorsements should reflect the genuine, reasonably current opinion of the endorser regarding their representation. Such endorsement must be based on adequate information or experience with the goods or services and must not be deceptive. Foreign professionals are barred from making endorsements in all circumstances where Indian professionals are barred.

If a connection between the trader/manufacturer and the endorser exists, such connection should be disclosed if such information is likely to affect the value or credibility of the endorsement and the audience does not reasonably expect the link.

 

Disclaimers 

While laying down provisions for disclaimers in advertisements, the Guidelines state that a disclaimer may expand or clarify the main offer but cannot contradict or hide the material claim made in the advertisement or attempt to correct a misleading claim made in the ad. Further, it provides that a disclaimer should be in the same language and font as the claim made in the advertisement and that the placement of the disclaimer shall be at a prominent and visible place on the packaging (ideally be on the same panel). Also, if the claim is presented as a voiceover, the disclaimer shall be displayed in sync with the voiceover and at the same speed as the original claim made in the advertisement.

Apart from the features mentioned above, the guidelines also stipulate specific duties on the manufacturer, service provider, advertiser, or advertising agency to ensure compliance in advertisements, which primarily deals with the veracity of the information/claims made in the advertisements. These guidelines are to be read as part and parcel of the Consumer Protection Act, 2019, and the non-compliance with the provisions shall also invite penalization as provided in section 21 of the Act.

These guidelines will also apply to government advertisements issued by PSUs engaged in providing consumer services along with those issued by private agencies. Moreover, the advertising guidelines for self-regulation issued by the Advertising Standards Council of India (ASCI) will also apply simultaneously.

 

Conclusion 

In the last few years, the regulatory bodies have undertaken many reformations and measures to control how and what is advertised. As our country is moving towards digitization, the need of the hour is to closely monitor the content that is made available to the public, mainly on online social media platforms. The guidelines intend to protect the interests of consumers by introducing more transparency and coherence in the way advertisements are published so that consumers can make informed decisions.

 

 

You may read our blog post detailing surrogate advertising and its enforceability for a deeper understanding of the issues.  

Image Credits: Photo by Dennis Maliepaard on Unsplash

The guidelines also stipulate specific duties on the manufacturer, service provider, advertiser, or advertising agency to ensure compliance in advertisements, which primarily deals with the veracity of the information/claims made in the advertisements. These guidelines are to be read as part and parcel of the Consumer Protection Act, 2019, and the non-compliance with the provisions shall also invite penalization as provided in Section 21 of the Act.

Related Posts

POST A COMMENT