Celebrity brand ambassadors could soon have to think twice before endorsing products that make unrealistic claims, which can fetch them a jail term up to five years, apart from penalty of Rs 50 lakh.
The government has accepted the recommendations of a parliamentary panel to impose stringent accountability on celebrities for endorsing products and for misleading advertisements.
Following a nod to the proposed official amendments by the Consumer Affairs Ministry, a draft Cabinet note was moved, and the Law Ministry has cleared significant changes in the existing legal regime to make celebrities liable for such advertisements.
According to the new Bill, the onus would be on celebrity brand ambassadors to prove their innocence. “It is a defence if it is proved that the endorser took all reasonable precautions and exercised all due diligence before endorsing a product or service, but mistaken belief shall not be a defence,” states the Law Ministry draft of the new law.
While ascertaining the compounding fee, the agency would be taking into account the gross revenue from sales due to the misleading advertisement, impact of the violation with respect to the audience it affected, frequency and duration of the violation, and the vulnerability of the class of people so affected.
The new law also seeks to authorise the CCPA to make regulations for e-commerce, direct selling and multi-level marketing. “The Central government may, for the purposes of protecting the rights of consumers and to prevent unfair trade practices in e-commerce and direct selling, may make such rules as may be necessary,” the Law Ministry’s note says.
Endorsements are a form of advertising that uses famous personalities or celebrities who command a high degree of recognition, trust, respect or awareness among the people. Such people advertise for a product lending their names or images to promote a product or service. Advertisers and clients hope such approval, or endorsement by a celebrity, will influence buyers. For example, Salman Khan endorsing cold drinks or Shah Rukh Khan endorsing mobiles can influence young men or children who look to him as role model. Lux is an example, which is endorsed by all the leading actresses of the generation, helping greatly to keep Lux a relevant and attractive brand even as consumers change.