Advertising law in Israel: limits and duties

Service page: Defense against a motion to certify a class action.

The legal framework: who supervises advertising in Israel?

You launched a campaign, and one customer claims the advertisement was misleading. If the same advertisement reached many customers, their claim may turn into a motion to certify a class action on behalf of everyone who was exposed to it (section 3(a) of the Class Actions Law, 5766-2006, and item 1 of the Second Schedule to the Law). The legal basis: the Consumer Protection Law, 5741-1981, which prohibits a dealer from doing anything that is likely to mislead a consumer in a material matter in the transaction (section 2). On top of it operate the Torts Ordinance [New Version], which allows tort claims for negligence and misrepresentation, and the Commercial Torts Law, 5759-1999, which prohibits, among other things, a false description (section 2 of the Law).

Unlike the United States, where the FTC acts as a federal regulator, in Israel supervision of advertising is spread between the Consumer Protection and Fair Trade Authority, the Second Authority for Television and Radio, and the Ministry of Health as regards health claims.

In addition, Israel has specific laws for particular areas of advertising: the Prohibition of Advertising and Restriction of Marketing of Tobacco and Smoking Products Law, 5743-1983 (חוק איסור פרסומת והגבלת השיווק של מוצרי טבק ועישון, התשמ״ג-1983), which restricts the advertising and marketing of tobacco and smoking products; section 30A of the Communications (Telecommunications and Broadcasting) Law, 5742-1982, which applies to sending an advertising message (commercial message) by means of a telecommunications facility or terminal equipment; and section 14C of the Consumer Protection Law, 5741-1981, which applies to a distance sale (purchase made online or by phone).

Misleading advertising: what exactly is prohibited?

Misleading in advertising is not only an outright lie. The Law prohibits anything “that is likely to mislead” a consumer, not only misleading that actually happened, provided it concerns a material matter in the transaction; the section lists matters that are considered material, among them the regular price, the warranty terms and the quantity in stock (section 2(a)). This includes:

• A partial truth: “The most-sold product in Israel”: if this is true only for one month, it is misleading.
• Conditions behind an asterisk: an attractive price in the headline with strict conditions that are almost impossible to read: this is misleading.
• Unrepresentative pictures: a product photographed under professional lighting that leads the customer to expect a result that will not be achieved: this is misleading.
• Fabricated reviews: using reviews by fictitious customers (astroturfing): a clear breach.
• Health claims without a basis: “strengthens the immune system”, “cures back pain”: a factual claim without a basis may mislead, and for food and preparations, Ministry of Health regulation also applies.

Advertising to children: what may be advertised to children, and what not?

Section 7A of the Consumer Protection Law prohibits an advertisement or a marketing method that is likely to mislead a minor, to exploit their age, innocence or lack of experience, or to encourage an activity that may harm their body or health; in broadcasts, the rules of the Second Authority also apply. The main rule: an advertisement may not exploit children’s inability to tell marketing content from factual information. The Minister may set, in regulations, rules and conditions for advertising aimed at minors (section 7A(b)), and a breach of section 7A is also an offense (section 23(a)(4)).

Comparative advertising: allowed, but with limits

Advertising that compares your product to a competitor’s product is legitimate in Israel, provided it is true, accurate and does not create a misleading impression. The Commercial Torts Law prohibits a “false description” of a competitor’s product. If you write “The competitor sells only 10,000 units a year” when the real number is higher, this is a commercial tort that can give rise to a tort claim and even an injunction.

You stated a figure in an ad: who is responsible for verifying it?

If your advertisement contains a figure (“7 out of 10 customers recommend”, “an average saving of 30%”, “Number 1 in Israel for 15 years”), you must be able to present research or reliable data that backs it up. The Commissioner may demand that whoever the advertisement was made for present evidence of the facts in it, and if the evidence is not presented to the Commissioner’s satisfaction, this is prima facie evidence that the advertisement was misleading (section 7(b)).

Penalties: what happens when the rules are broken?

The penalties for false advertising in Israel are a combination of administrative enforcement, criminal enforcement and civil claims. Administratively, the Consumer Protection and Fair Trade Authority may impose a monetary sanction for misleading (section 22C). Criminally, a dealer who misled is liable to one year’s imprisonment or a fine of seven times the fine in section 61(a)(2) of the Penal Law, 5737-1977, and a corporation to double that fine (section 23). Civilly, and this is where the greatest risk lies, any consumer who was harmed can sue, and a group of consumers can file a class action, in which the damage of all the class members is examined in one proceeding.

Class actions in the advertising field are the most significant risk. A hypothetical example: if each customer was harmed by NIS 50 and there are a million customers, the total exposure is NIS 50 million. For a business that received a certification motion: Defense against a motion to certify a class action.

Five practical rules before a campaign

• Document the basis for every claim: before you publish a figure, make sure you have a document that backs it up.
• Full conditions, in the body of the advertisement: not behind an asterisk that is too small to read.
• Have the advertisement checked by a lawyer before launch, especially for large campaigns.
• Keep screenshots and copies of the advertisements: preferably for at least 7 years, the general limitation period for a civil claim (section 5 of the Prescription Law, 5718-1958).
• Digital advertising: do not forget section 30A of the Communications Law: sending an advertising message by email or by text message generally requires express prior consent, subject to the exceptions in the section.

What to keep in each campaign’s substantiation file

• For every figure or factual claim in the advertisement: the research or test that supports it, with a date and a source. For facts about the features of the product or service, about test findings or about the results expected from its use, the Commissioner may demand evidence (section 7(b) of the Consumer Protection Law).
• Every version of the advertisement: a copy, together with where and when it was published.
• A “regular price”, or a discount from it: records of the price actually charged before the sale. The regular or usual price is a material matter in the transaction (section 2(a)(13)).
• Sponsored content, an article or advertising with an influencer: records of the clear statement that it is an advertisement (section 7(c)).
• Direct mailing by email or text message: the express prior written consent of each recipient, and every refusal notice received (section 30A(b) and (d) of the Communications Law).