1. Who is to blame for misleading ads?

Who is to blame for misleading ads?

The draft Bill makes no distinction between manufactures/service providers and celebrities when it comes to punishment for misleading ads

By: | Updated: September 12, 2016 6:43 AM
ad-reu-L As per lawyer Gyanant Singh, the official amendment redefines endorsement in the widest possible way to ensure that even lending of name, putting signature, etc, does not go unpunished. (Reuters)

The government is looking at dropping a clause in the draft Consumer Protection Bill, 2015, that would otherwise have run the risk of jailing celebrities for misleading advertisements or backing products that fail to live up to claims.

The provision is being dropped as a consensus emerged at a ministerial meeting headed by finance minister Arun Jaitley that stars have little way of knowing whether a product is dubious or not. Instead, the consumer affairs ministry is thinking of imposing hefty fines for pitching dodgy products. To have better clarity, the government would study global practices before taking a final call. It is also discussing the need for segregating products into three broad categories—general, food and medicine—and formulating penalties, accordingly.

The issue of celebrity accountability has been in the spotlight since last year, when the Food Safety Authority found alleged presence of monosodium glutamate and excess lead in Nestle’s Maggi noodles—endorsed by actors such as Amitabh Bachchan, Madhuri Dixit and Preity Zinta. Although the ban was later reversed by the Bombay High Court, the endorsers had come under public scrutiny. Even cricketer MS Dhoni had to sever his ties with real estate developer Amrapali after flat buyers launched a social media campaign.

All this made the government think about the legal and professional liability of brand ambassadors, who bring along credibility, trust, attention and other intangible benefits to a brand.

The current draft, which was introduced in the Lok Sabha on August 10 last year, makes no distinction between manufactures/service providers and celebrities when it comes to punishment. This was introduced taking into account a Parliamentary Standing Committee’s April report which recommended fixing of liability on endorsers. The panel suggested a fine of R10 lakh or an imprisonment of two years or both for first-time offenders. For second-time offence, a fine of R50 lakh and imprisonment for five years, and for subsequent offences, the penalties may be increased proportionately based on the value of sales volumes of such products or services.

As per lawyer Gyanant Singh, the official amendment redefines endorsement in the widest possible way to ensure that even lending of name, putting signature, etc, does not go unpunished.

While apprehensions are legitimate, the proposed Bill does not make celebrities vicariously liable, rather it fastens them with a legal obligation to take all precautions and act with due diligence.

Under the proposed law, no court shall take cognisance of such an offence except upon a complaint made by an officer of the Central Consumer Protection Authority (CPA), which has been proposed to fill “an institutional void in the regulatory regime extant.” Therefore, a consumer cannot move a criminal court against the star for false ads.

The Bill empowers the Authority to compound or settle the first offence of brand ambassadors by imposing monetary damages. If the trial has already begun, the authority could still seek exoneration of a brand ambassador.

The committee has recommended other landmark changes, including laying down principles to determine whether contract terms are unfair. The ministry has accepted the recommendation to enforce product liability against manufacturers for “deficiency in services,” issue safety notices for goods and services, and pass orders for recall of goods and against misleading advertisements.

The authority will be able to intervene in the market for consumer protection along the lines of Bureau of Consumer Protection in the Federal Trade Commission of the US and the Directorate General for Consumers Protection in the European Commission, according to Sri Ram Khanna, former professor of commerce, Delhi School of Economics, and managing editor, Consumer Voice.

Both consumer activists and trade bodies feel that celebrities’ role in endorsing products cannot be ignored as consumers follow them blindly.

According to SC lawyer Ankur Saigal, celebrities like film stars and cricketers can be held accountable. “Public figures certainly change consumers perception towards a particular product, thus they should refrain from becoming part of misleading, false, deceptive claims and should follow law principles of due diligence and fair play.”

Even the Confederation of All India Traders wants sales campaigners to be brought under the Consumer Protection Act. “They act as service providers in entire sales mechanism and the money taken as consideration by the brand ambassadors is generally accounted for in the cost of product. Brand ambassadors are not doing any charity but providing commercial services and as such they cannot escape from the liability of good claims they make in an endorsement,” it said.

Rio silver medallist PV Sindhu feels that “it’s our job to screen and deep drive into the brand as much as possible. At the end of the day, we all operate with trust and we evaluate basis what the brand stands for.” However, she thinks that a celebrity should be morally responsible and not legally. “We are not brand custodians at the end of the day,” she added.

However, star shuttler Saina Nehwal differs. She feels that celebrities already abide by the rules made by the regulatory authorities and it’s actually for the government to protect them.

Seconding her, senior SC counsel Kevin Gulati said the government should be held responsible for misleading ads and product claims. A licence is given by the authorities, so it should actually share the blame if anything goes wrong.

“If one knowingly is appearing in inherently dangerous goods like cigarettes, pan masala or alcohol ads, which have the ability to harm people, then things are different. But for normal, run-of-the-mill products, you can’t put unreasonable burden on endorsers. How do they figure out whether a product is compliant?” questions the senior lawyer.

To suggest a way forward, he thinks the government should come out with a checklist for an endorser to ensure that the product is not misleading. “The celebrity, at best, can take reasonable precautions and exercise all due diligence before endorsing products. Even an undertaking or warranties can be taken from a manufacturer that there is no harmful substance in its product or the product is complying with all the laws.”

Though the law should bring cheer to consumers, it is expected that the government will plug all the loopholes and bring in a stronger law free from all lacunae to deter advertisers from releasing misleading ads. The Consumer Protection Bill, 2015, incorporating key changes will be placed before Parliament in the Winter Session in November.


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