Decks have been cleared for making celebrity brand ambassadors accountable for endorsing products that make unrealistic claims. The Ministries of Consumer Affairs and Law have approved changes in the Consumer Protection Act to provide for a jail term of up to 5 years, apart from a penalty of Rs 50 lakh for false and misleading ads.
The government’s move has been prompted by a report of the Parliamentary Committee on Food, Consumer Affairs and Public Distribution, which favoured “stringent provisions to tackle misleading advertisements, as well as to fix liability on endorsers/celebrities.”
The question of making brand ambassadors accountable has been in the spotlight since the alleged presence of monosodium glutamate and excess lead in Maggi noodles, which was endorsed by movie actors such as Amitabh Bachchan, Madhuri Dixit and Preity Zinta.
The clamour over the Maggi reports prodded the government into a delicate exercise to ascertain the legal and professional liability of brand ambassadors who, by endorsing a particular brand, bring to it attention, credibility and trust, and other intangible benefits in ways that other types of advertising can’t.
At a time when even companies are considered ‘persons’ with corporate social responsibility, the law was bound to evolve to regulate conduct of celebrities who are playing an ever wider role in modern culture and consumption patterns, serving as arbiters of taste, style and public opinion the world over. It appeared to be just a matter of time before legislation addressed lacunae that allowed marketers to employ celebrity power to create emotional bonds with consumers with the object of increasing sales.
The nod to the new law will likely trigger a debate and polarise the ad industry as well as celebrities, particularly cricketers and filmstars. But a scrutiny of the proposed legislation should clarify why brand ambassadors may not have to worry too much as long as they abide by the common law principles of due diligence and fair play.
While there are apprehensions that celebrities would have to take disproportionate flak for the products making claims that they often have no way of verifying, the proposed Consumer Protection Bill also lays down the specific defence.
Section 75B of the new Bill seeks to make any “false or misleading” endorsement which is “prejudicial to the interest of any consumer” a penal offence, punishable with a jail term of up to 2 years and a fine of Rs 10 lakh for the first offence, and imprisonment of 5 years along with a fine of Rs 50 lakh for the second and subsequent offences. The proviso to Section 75B, however, says that liability could be dodged by proving that the celebrity “endorser took all precautions and exercised due diligence before endorsing a product or service”.
In other words, Section 75B seeks to penalise only reckless endorsements by brand ambassadors who proceed to exercise their influence on consumers without paying heed to the veracity and truthfulness of claims made by the products. The proposed law does not make celebrities vicariously liable if something goes wrong with the product — but fastens them with a legal obligation to take all precautions and act with due diligence. For example, a celebrity cannot be held accountable if he advertises how good a product tastes since he has tasted it, but if he claims that it is free from bugs and bacteria, the least he has to do is examine a lab report.
Again, a celebrity need not be wary of facing trial in a criminal court on a complaint by a consumer — the proposed law lays down that no court shall take cognisance of such an offence except upon a complaint made by an officer of the Central Consumer Protection Authority, duly authorised by the Chief Commissioner. This Central Authority has been proposed as a new executive agency to fill “an institutional void in the regulatory regime extant”.
Adding another layer of protection, the new law also allows for the compounding or settlement of the first offence by brand ambassadors — and the Central Authority, the government’s department, has been empowered to do so. So, a charge of false and misleading advertisement can be dropped if the brand ambassador shells out monetary damages. If the prosecution has already begun in a trial court, the Central Authority could still seek exoneration of the brand ambassador by moving an application before the court, the proposed law states. If the court is satisfied, the accused may be discharged. The Bill also lays down that no proceeding, judicial or otherwise, can be instituted against a brand ambassador if the offence has been compounded under the law.
The crux of all this is that the power to commence prosecution of a celebrity brand ambassador will lie with an executive wing of the government, and it would not be open to a consumer to independently press charges against the ambassador in a court for false and misleading ads.
Also, a court would not be able to prosecute them without a complaint by the Central Authority, which is authorised to settle the offence on the payment of a fee.
And these stringent conditions before the brand ambassadors can be prosecuted are in addition to the defence of due diligence and sufficient precautions that celebrities shall have if Parliament passes the Bill in its present form.