Par panel suggests fine/jail for celebrities of misleading ads

To make celebrities accountable for misleading ads, a Parliamentary Standing Committee today recommended stringent provisions including jail term up to five years and hefty penalty of up to 50 lakh in order to protect consumer interest.

In its report on the Consumer Protection Bill 2015, tabled in Parliament today, the panel has suggested legal teeth to advertising watchdog ASCI to curb misleading ads besides proposing severe penalties, jail and cancellation of license of those involved in food adulteration.

Moreover, the committee - headed by Telugu Desam Party MP J C Divakar Reddy, advocated that the Department of Consumer Affairs should be empowered to make laws to regulate growing sectors of e-commerce, direct selling and multi-level marketing where consumer complaints are on the rise.

The government introduced the Consumer Protection Bill 2015 in the Lok Sabha in August last year to repeal the 30-year old Consumer Protection Act. The panel's report will be studied before final passage of the bill in Parliament.

"The committee strongly feels that misrepresentation of a product especially of food product should be taken very seriously considering the influence of celebrities and high networth individuals and companies. The existing laws are not deterrent enough to discourage manufacturers or publishers from using such personalities for misleading ads," the panel on Consumer Affairs said in its report.

The Committee, therefore, recommends that stringent provisions may be made in the bill to tackle misleading advertisement, as well as, to fix liability on endorsers/celebrities, it said.

"The committee recommends that for first time offence, the offender may be penalised with either a fine of Rs 10 lakh or imprisonment up to two years or both. For second time offence, a fine of Rs 50 lakh and imprisonment of five years. For subsequent offences, the penalties may be increased proportionately based on the value of sales volumes of such products or services," the report added.

Some celebrities have come under fire for endorsing brands misleading consumers. Recently, Indian cricket captain M S Dhoni had to resign as brand ambassador of Amrapali after residents of a housing society started a protest against the builder and the cricketer on social media.

The panel, which approved the passage of the Bill, also suggested giving "some legal teeth" to the Advertising Standards Council of India (ASCI) so as to compel the misleading advertiser to either issue corrective advertisement or come up with some punitive measures in the advertising code to cater to the consumer interest.

Noting that several public figures and celebrities who are honoured with national awards are often engaged as brand ambassadors for promoting products, the committee said, "such personalities are deployed to make advertisements which are often misleading by making unrealistic claims."

Consumers tend to blindly believe such advertisements promoted by eminent personalities or celebrities.

"However, when the unfair trade practices are exposed, the celebrities are quick to disassociate themselves with the products/companies they were hitherto representing," it said.

The stringent provisions in the bill would go a long way to correct the injury to consumers and competitor firms from damages caused by way of misleading advertisements, it added.

The panel also suggested the government to clearly and comprehensively define the word 'endorsement' in the bill so that there is no room for any misinterpretation or ambiguity.

To curb food adulteration, the panel said though the Food Safety and Standards Act provides for prevention of adulteration in food, there is urgent need for stringent provisions to prevent adulteration in other products like drugs, medicines, fertilisers, pesticides, seeds, etc.

"The committee, therefore, strongly recommends that severe penalties be imposed on offenders such as imprisonment of two years with a fine of Rs 10 lakh and suspension of licence for a period of two years," the report said.

The panel also recommended the government to insert suitable provisions in the bill to make it mandatory for the Law Enforcement Agency to take immediate action in cases where a consumer makes complaint of adulteration of products for human consumption by registering an FIR and arrest the accused.

"If for any reason, the FIR is not registered by the law enforcement agency, it should be deemed to have been registered after a lapse of 21 days from the date of complaint," the panel added.

Noting that the bill provides for liability only to manufacturer, the panel strongly felt that the liability provisions should apply to any or all parties involved in the chain, right from the manufacturer to retailer for any damage caused by that product.

On rising consumer complaints on e-commerce and multi-level marketing platforms, the panel advocated that the Department of Consumer Affairs should be empowered to frame laws to regulate them.

Also, the panel said the Central Consumer Protection Authority (CCPA) should function independently and proposed suitable provision in the bill to ensure that the chief commissioner and commissioners and officials of the CCPA are provided protection for action taken in good faith.