Misleading ads: Holding brand ambassadors accountable

The issue of protecting consumers from false and misleading advertisements has been agitating the minds of the policymakers and consumer activists for long. Despite several laws and a self regulatory mechanism that prohibit misleading advertisements, consumers continue to be fed with false and exaggerated claims. The entry of celebrities from the field of sports and films in a big way has added several dimensions to this vexed issue, particularly the accountability of the brand ambassadors.

The controversy over the safety of Maggi Noodles where Bollywood actors had promoted the food product and the case of cricketer M S Dhoni promoting the Amrapali real estate venture has added colour to the issue. If the products promoted or endorsed by celebrities are found to be harmful or unhealthy, can they be held liable?

Yes. They should be, says the Parliamentary Standing Committee on Food, Consumer Affairs and Public Distribution constituted to study the Consumer Protection Amendment Bill 2015 and also the Central Consumer Protection Council.

In its 103 page report, the Committee has strongly felt the need to tackle misleading advertisement and fix liability on endorsers/celebrities. It recommend that for first time offence, the offender may be penalised with either of a fine of Rs 10 lakh and imprisonment up to two years or both; for the second time offence, a fine of Rs 50 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. Naturally, this has created a flutter within the industry. The liability of the celebrities is not merely a legal issue. Several factors need consideration.

The extent to which celebrities are liable for their promotion depends on the fact whether they are endorsing a product or acting as a spokesperson or they are used for testimonial purposes, where the liability is serious. At present, there is no specific law in the country to hold celebrities liable except a provision in the Food Safety and Standards Act.

According to Section 53 of the Act, anybody who is endorsing a product which is misleading or deceiving would be liable under the law, not just celebrities. It also envisages penalty for misleading the public. Whether the celebrity uses the product he or she endorses, their fans believe so and buy the product. Hence, the endorsers have a fiduciary duty towards the consumers.

However, it is also argued that the celebrity has no role in manufacturing the product he promotes. Celebrities are agents and cannot be held liable for defects in the product. Besides, celebrities enter into contracts or agreements with advertising agency and not the producer or the manufacturer. These agreements invariably protect celebrities through insurance. Another defence is that if the products endorsed are cleared by respective regulatory and statutory authorities, how can the celebrity be held responsible?

The Advertising Standards Council of India (ASCI) is a self-regulatory body which has had some success in protecting consumers from misleading advertisements. However, the Code of ASCI is voluntary and does not provide for penalising the endorsers or the manufacturers who issue misleading advertisements.

At best, they may be asked to withdraw or modify the advertisement. In some cases, the celebrities have themselves taken a stand not to promote products which they feel harmful or unhealthy.

For instance when a school girl asked Amitabh Bachchan why he is promoting a soft drink which is unhealthy according to her teachers, the matinee idol withdrew from the contract. If Sachin Tendulkar has refused to endorse alcohol, another celebrity Kangana Ranaut refused to endorse a fairness cream on the grounds that dark complexion is not a social stigma. But such instances are mere anecdotes.

Stringent laws

There are certain best practices to regulate this deception game. Countries like China, USA, South Korea etc have put certain stringent laws in place to make product endorsers accountable. In China, under the Food Safety Law, any organisation, whether individual, social or corporate which actively participate in the false or misleading advertising of food products, will be held responsible if their action is found harmful to the consumers. A consumer can seek compensation directly from the endorser. Jackie Chan was in trouble for endorsing a ‘’chemical free’’ shampoo which allegedly had cancer-causing ingredients.

In the US, the Federal Trade Commission (FTC) has prescribed certain guidelines relating to product endorsement by celebrities. In 2004, the FTC held Steve Garvey, the former baseball player, for false and deceptive advertising. But the courts held that the endorser had no actual knowledge of any misrepresentation and hence he could not be held liable. This lead the FTC to take corrective measures. 

In 2009, amendments were issued to the Guides Concerning the Use of Endorsements and Testimonials in Advertising. Separate guidelines were prescribed for endorsements by experts, consumer endorsements and endorsement by organisations. It says that endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser. The advertiser may use an endorsement of an expert or celebrity only so long as it has good reason to believe that the endorser continues to subscribe to the views presented.

An equally important guideline is that the advertiser can run the advertisement only so long as it is good reason to believe that the endorser remains a bona fide user of the product. Under the FTC guidelines, the endorser is liable for statements made in the course of their endorsements. Though everyone wants the celebrity to be accountable, the issue is not that easy. The process of law making should first start from defining what a “misleading advertisement” is.

(The writer is Member, Central Consumer Protection Council)