A parliamentary panel has recommended some suggestions to impose accountability on celebrities for endorsing products and misleading advertisements by bringing in the Consumer Protection Bill, 2015 .
One of the biggest change being brought about in the consumer market is with respect to authenticity and accountability attached to advertisements. The revised consumer bill defines “endorsement” in Sec. 17 as "any message, verbal statement or any other form of depiction to show a celebrity’s “likeness” for a product, which leads the consumer to believe that it reflects the celebrity’s opinion, finding or experience.
The legislative department of the Law Ministry has defined “endorsement” and “endorser” unambiguously including individual, group or any institution after suggestions from the Parliamentary Committee on Food, Consumer Affairs and Public Distribution chaired by J C Divakar Reddy.
Penalties to hold the Celebrities accountable under Consumer Protection Bill, 2015
A good illustration on accountability of manufacturers, endorsers etc was seen in a famous case; where Trinamool Congress MP Dinesh Trivedi paid an advance for a car, he did not realise that the car dealer had shown him the brochure of a vehicle that was to be launched a year later. But he could not take any action under the existing law.
However, as per the new law, he can approach the Consumer Forum for having been misled.The Bill proposes an investigative body, the Central Consumer Protection Authority, on the lines of the U.S. Federal Trade Commission.
Section 75B of Consumer Proetction BIll 2015
Section 75B provides for liability of an endorser: “ Whoever makes an endorsement which is false or misleading and prejudicial to the interest of any consumer shall be punishable with imprisonment for a term which may extend to two years and with fine which may extend to ten lakh rupees; and for the second and subsequent offences, be punishable with imprisonment for a term which may extend to five years and fine which may extend to fifty lakh rupee ."
Hence 75B imposes penalties on the manufacturers, service provider and any celebrity who makes any misleading or false advertisement that is prejudicial to the interest of any consumer and has crucially now imposed Rs. 10 lakh as fine with a jail term of two years for the first offence and Rs. 50 lakh and a jail term of five years for subsequent offences which may seem harsh to a few but a reasonable proviso have been made to the statutory provision.
Provisio: The provison to section 75B allows a celebrity to escape liability by proving that he or she took reasonable precautions and exercised all due diligence before endorsing the product or service.
Section 75A makes a manufacturer and service provider also legally responsible for any false and misleading advertisements and prescribes penalties in the same manner in which celebrity brand ambassadors have been made liable.
Important Amendments suggested in the Bill: The Bill replaces the Consumer Protection Act, 1986. The new law has provisions for Product Liability, which was unheard of in India.Product liability is the concept where manufacturer or seller are being held liable for placing a defective product into the hands of a consumer. Responsibility for a product defect that causes injury lies with all sellers of the product who are in the distribution chain.
Under the new draft, even the service providers like airlines can face liability action. The liability extends to the services being provided by the airlines which are the product in this case. Hence, a flyer can now sue an airline for not just reimbursement for a missed flight but also compensation for any important event or meeting he or she missed because the flight was cancelled at last minute.
Role of Central Consumer Protection Authority(CCPA)
Central Consumer Protection Authority (CCPA) shall be established which would have the authority to settle the enforcement for the first time after payment of compounding fee in case of celebrity but the brand ambassador would only be made free from charges after trial court accepts the settlement. The agency will also make regulations for e-commerce, direct selling and multi-level marketing.
It also seeks to remove overlap of powers of Central Consumer Protection Authority (CCPA) and the Consumer Fora. An investigating wing will be set up at CCPA while limiting the role of a district collector to support CCPA in an investigation.
RERA has stopped the practice of misleading advertisements in the Real Estate sector
Under the new RERA guidelines, " no promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project "with the Real Estate Regulatory Authority established under this Act. Each advertisement has to carry the RERA registration number .
In the first case of penalty under the RERA, a Mumbai-based real estate consulting firm was recently fined Rs. 1.2 lakh for a misleading advertisement of an ongoing construction project. This has further cast a negative spell on the fraternity who do not want to take any risk before reworking their marketing strategy.
Current Scenario of the Act
Out of 29 states and 7 union territories, only 15 states had notified the final rules of the Real Estate Regulatry Act (RERA)while all seven UT's had notified them. As per an ET Realty article, out of a total of 35 states and union territories (UTs) in the country, excluding Jammu & Kashmir, 23 states and UTs have already notified their respective RERA rules, according to a government release.
However, it allowed a period of three months for the promoters to get their ongoing projects registered with RERA i.e. until 31st July 2017. Going forward, every real estate project, new or on going project which is to be sold or advertised by the builder will necessarily have to carry the project registration.
The living legend like Amitabh Bachchan to master blaster Sachin Tendulkar, many distinguished personalities are endorsing projects for various real estate companies. Amrapali, Supertech, Ajnara and Assotech, among others, are signing celebrities to be their brand ambassadors.
Special case of Pharma sector or medicines -'Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954'
Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954, seeks to stop negative advertisements relating to drugs and magical remedies because advertising is considered to encourage self-medication of harmful drugs.
Legal Scenario of the Act
- Section 3 of the Act articulates that no person shall take any part in the publication of any advertisement promoting a drug or leading to the use of a drug for the specific cure.
- Section 3 further prohibits any advertisement promoting drugs for diagnosis, cure, mitigation, treatment or prevention of any disease; disorder or conditions as specified in the Schedule.
- Section 4 of Act forbids advertisements relating to a drug if the advertisement contains any matter which directly or indirectly gives a false impression regarding the true character of the drug or Makes a false claim for the drug or is otherwise false or misleading.
- Section 5 of the Act prohibits advertisements of magic remedies for the treatment of certain diseases and disorders.
- Penalties - Any person who contravenes the provisions of Section 3 or Section 4 is punishable. On the first conviction, with imprisonment up to two years, and with a fine up to two thousand rupees. In the event of a second or subsequent conviction, with imprisonment for a period ranging between six months and five years and also with a fine ranging between ten thousand rupees and one lakh rupees.
Jurisdiction of the Court in Such Cases
No court inferior to that of Presidency Magistrate or a Magistrate of the First class shall try any offences punishable under this Act.
We can see that endorsements by famous celebrities often leads to the high sale of any products in such a competitive market. But, such endorsements are done for profit motive by the Endorser. It has been a trend that the endorsers don't take effective care and remedy to stop the negative impact which the users face.
However, due to rise in various complaints the governmental body and Parliamentary Panel's are passing appropriate legislation in various different areas i.e Medicine and Drugs Act 1954, Real Estate Development Act 2017, Consumer Protection Bill 2015, providing a proper safeguard for the consumers, and imposing fines and imprisonment against such negative endorsements and Endorsers.
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