False advertisement has consistently been a vexing issue within the realms of marketing and corporate compliance, garnering significant attention from regulatory authorities in recent years. The crux of advertising compliance lies in the concept of authenticity. Article 4 of the Advertisement Law stipulates explicitly that the advertiser shall be responsible for the authenticity. Numerous renowned enterprises have faced administrative punishment and penalties due to their inadvertent dissemination of deceptive or false advertisement, stemming from a lack of meticulous scrutiny. 

In China, pertinent provisions pertaining to false advertising can be found in the Advertisement Law, Anti-unfair Competition Law, Law of PRC on the Protection of Consumer Rights and Interests, as well as various other relevant regulations.

The Criteria of False Advertisement

In accordance with relevant laws and regulations, the following circumstances shall be considered as false advertisement:
1. The products or services do not exist;
2. The information on products or services are inconsistent with the actual situations in terms of the performance, function, place of origin, purpose, quality, specification, ingredients, price, producer, valid period, sales, awards of the products or the content, provider, form, quality, price, sales and awards of the services, or in terms of any guarantee relating to the products or services, and such inconsistency has a substantial influence on purchase;
3. Using scientific achievements, statistics, research results, abstracts, quotations and other information that are false or forged or cannot be verified by evidentiary materials;
4. Claiming false effects of the use of the products or services; or
5. Other circumstances in which the consumers are deceived or misled by false or misleading contents.

The Legal Liability of False Advertisement

Generally speaking, a false advertisement may cause administrative liability, criminal liability and civil liability.

Administrative Liability

Once being considered as false advertisement, the enterprise shall be ordered by the administrative authority to immediately cease the publication of said advertisement, to rectify the adverse consequences or effects within the corresponding scope, and shall be imposed a fine equivalent to three to five times of the advertising fees (or ranging from CNY200,000 to CNY1 million if the advertising fees cannot be calculated or ascertained, or are significantly minimal). In addition, in the event that an enterprise is found to have repeatedly engaged in the publication and dissemination of false advertisement, it may be subject to a severe fine, even potentially have its business license revoked.

Criminal Liability

Any advertiser, advertisement agent or advertisement publisher who takes advantage of advertisement to make false publicity of commodities or services, in the event that the circumstances are serious, shall be sentenced to fixed-term imprisonment of no more than two years of criminal detention and shall also, or shall only, be fined.

In practice, the following circumstances shall be considered as serious:
1. The amount of illegal gains is over CNY100,000;
2. Under the guise of preventing or controlling emergencies or preventing and controlling infectious diseases, making false publicity through advertisements, causing many people to be deceived and the amount of illegal gains being CNY30,000 or more;
3. Publishing false advertisement of food or drug, and the amount of illegal gains is over CNY 30,000;
4. Having received administrative punishment for false advertisement/publicity twice or more within 2 years and publishing another false advertisement (although the amount of illegal gains doesn’t reach the threshold of crime
5. causing serious harmful consequences or adverse social impacts.

Civil Liability

In cases where a false advertisement is published and disseminated with the intention to deceive or mislead consumers, thereby resulting in detriment to the legitimate rights and interests of consumers who have purchased commodities or services, the advertiser shall bear civil liability in accordance with applicable laws and regulations. Furthermore, as per the provisions outlined in the Law on the Protection of Consumer Rights and Interests, if the enterprise engages in fraudulent practices while providing goods and services, the consumer has the right and entitlement to seek compensation amounting to three times the incurred costs for said goods or services.