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Consumer Protection Bill gives power to consumers but leaves celebs fuming

Celebrity endorsements are a huge part of the advertising industry. However, as per the Consumer Protection Bill 2019, an endorser is liable to a fine of Rs 10 lakh and one-year ban on future endorsement for misleading ads. reached out to the industry and stakeholders to ask how tough is it going to get for celebrities to become brand ambassadors

Last week, the Indian Parliament passed the Consumer Protection Bill 2019. After getting clearance from the Lower House on July 30, the Bill was approved by the Rajya Sabha on August 6 and will replace the Consumer Protection Act, 1986.

The Consumer Protection Bill seeks to establish authorities for the timely and effective administration and settlement of consumer disputes. Further, it seeks to strengthen the rights of consumers and provides a mechanism for redressal of complaints regarding defects in goods and deficiency in services. The following penalties will be awarded for misleading advertisements:

  • A manufacturer is liable for jail for up to two years with fine up to Rs 10 lakh for the first offence. Consequent offence to attract jail up to five years with fine up to Rs 50 lakh.
  • An endorser is liable to a fine of Rs 10 lakh and one-year ban on future endorsement for the first offence.
  • A publisher/advertiser, if found guilty by the Central Consumer Protection Authority, is liable to a fine up to Rs 10 lakh.

Only in cases where the endorser can prove that they have done due diligence to verify claims made in the ads, they will be exempted from punishment.

The Consumer Protection Bill 2019 draws more attention for the fact that celebrity endorsements are a huge part of the advertising industry. It commands about 24% of India’s total advertising expenditure; and it would continue to be so in future as well. That is the sheer power of celebrities to influence purchase decisions.

Therefore, reached out to the industry and stakeholders to ask how tough is it going to get for celebrities to become brand ambassadors? And will they have to walk a tight rope every time they sign a contract with the brand?

D Shivakumar

According to D Shivakumar, Chairman, Advertising Standards Council of India (ASCI), the idea of the Consumer Protection Bill is to inculcate a certain level of awareness and responsibility among the celebrities about the brands they endorse. A celebrity would now be compelled to make an informed decision while endorsing products and services.

“In 2017, ASCI came up with ‘Guidelines for Celebrities in Advertising’ and the part of due diligence process also resonates in the new Consumer Protection Bill. While the celebrities would have their own legal experts for reviewing other contractual details, ASCI is their ‘go to’ expert body to avail ‘advertising advice’ for due diligence,” informs Shivakumar.

While the intention is good, chances are it will make things more complex. A new genre of due-diligence firms will arise. Forms will be filled by brand endorsers and signed as signs of lack of culpability. Due diligence will become yet another process, rather than a real piece of conscience action as it was meant to be.

Pooja Bedi

Pooja Bedi, actor, television personality and columnist, says celebrities will obviously have to have disclaimers in their contract, stating that company is liable and will foot the bill for any legal issues that may arise.

“I've been brand ambassador to Kamasutra Condoms, Kaya Skin Clinic, Country Club India, Allergan Pharmaceuticals and Welocity Life Sciences. I always do due diligence before endorsing a brand as to quality and standards, etc,” Bedi says.

“However, if a condom bursts because of rough use, how can a celebrity who endorsed it be made accountable,” she points out.

Similarly, if a high quality car breaks down, or an airbag doesn’t inflate during an accident, can a celebrity be held responsible or is expected to check the production of every single car and be more diligent and knowledgeable than the manufacturers, Bedi says.

A classic example in this context is Maggi — the brand came under the scanner after samples collected by the Uttar Pradesh Food Safety and Drug Administration were reported to contain monosodium glutamate (MSG) and lead above the permissible limits. After the sample tests were conducted, legal notices were served to Amitabh Bachchan, Madhuri Dixit and Preity Zinta for endorsing and promoting Maggi as a healthy snack. The incident is symbolic of how absurd it is to make a celebrity endorser liable for an issue with a product of a highly reputed multinational company that has stringent quality checks with many government bodies that routinely certify it as of quality standards.

“As far as any product/s are concerned, if certifications (which are accepted by government/internationally recognised bodies) are in place, it’s absurd to assume a celebrity would know more than an agency created to monitor production quality, ethics, authenticity and standards,” Bedi says.

Tough times ahead?

Celebrity-led endorsements are a norm in the marketing space. Endorsements are not confined to film stars and sportspersons but are now extending to influencers and micro influencers with an increase in digital penetration.

The new bill is envisaged to be fair and transparent to all stakeholders, be it consumers or advertisers. However, the passing of the bill will significantly impact the business of brands now that consumers are empowered to act against misleading advertisements and the Consumer Protection Authority would address these grievances. Advertisers will have to face consequences for any issues with product quality, safety, efficacy and service deficiency.

Kamal Nandi

“The act attempts to make endorsers responsible and given the influence they have on the audience, it is in consumer interest to sensitise the endorsers. From an endorser’s perspective, things of course have gotten tougher,” says Kamal Nandi, Business Head and EVP, Godrej Appliances and President, Consumer Electronics and Appliances Manufacturers Association (CEAMA).

Shivakumar, however, feels that the new rules will only strengthen ASCI’s efforts over the years for self-regulation of advertising content. “Incidence of misleading advertisements, which are highest among educational sector and healthcare products and services sector, should reduce. There would be increased due diligence by celebrities before lending their name for product endorsements.”

Harish Bijoor

Harish Bijoor, Brand Guru & Founder, Harish Bijoor Consults Inc. holds a completely different view. According to him, nothing is tough for the brand endorser in all of this.

“The brand endorser will seek to indemnify himself and herself from it. Due-diligence forms will be created, filled by brand owners and signed by brand endorser and brand owner mutually. It will be business as usual, but with a lot more forms and legalese to boot,” Bijoor says.

All in all, “self-regulation is the best regulation”. If advertisers, agencies, publishers and celebrities individually exercise self-regulation, collectively the advertising ecosystem will flourish and consumers are sure to reward such responsible advertisers with their trust and loyalty.

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