Villains or victims?

In the past few days, numerous media outlets have picked up the story about Parliamentary Committee recommendations on Consumer Protection Bill (2015) which were introduced by the Minister of Consumer Affairs, Food and Public Distribution, Ram Vilas Paswan last year in Lok Sabha on August 10. According to the recommendations of the panel, headed by Telugu Desam Party MP JC Divakar Reddy, celebrities appearing in misleading advertisements are to be held accountable for the false claims in the ads.

The committee proposed that first time offenders may have to pay fines of ₹10 lakh or undergo a jail term of two years, or both. For the second offence, the fine is ₹50 lakh and jail for five years. For subsequent offences, the penalty may be proportionately increased on the basis of the sales volume of the advertised product and services.

Many feel these are right steps towards fixing the liability of celebrities who charge exorbitant amounts from brands to endorse products, a popular trend in the country. The stringent penalties can be seen as the government’s way of controlling the misuse of celebrity endorsement and ensuring that celebrities do their homework before endorsing brands.

Though the financial penalty may not stop celebrities from promoting brands that can cough up good money, the imprisonment clause is likely to make them exercise prudence. While the objective of the parliamentary panel cannot be faulted, there are a number of issues in going ahead with these recommendations.

The first is the manner in which advertisements use celebrities. The general perception is that consumers tend to believe in the products and services celebrities endorse. Academic research also supports this contention.

However, even though an ad uses a celebrity as a face, she may be playing different types of roles in the advertisement. A celebrity, besides being an endorser, can be used for testimonial purpose or as spokesman.

When a celebrity provides a testimonial, she attests to the superiority or excellence of the product or service. The ads of Hyundai Santro where Shah Rukh Khan promoted the virtues of car in the late 1990s, fall in this category.

When a celebrity acts as a spokesperson, she represents the company or brand like a salesman; more of an official nature as she is authorised to express the position of a sponsor. When the Centre for Science and Environment alleged that soft drinks made by cola companies contained harmful pesticides, Coca-Cola responded by bringing in Aamir Khan, who appeared on a television commercial gulping a bottle of the beverage and endorsing Coke’s security standards.

In such cases, the accountability of celebrities is much higher in comparison to situations where celebrities appear as actors, merely as a character in a dramatic presentation. It will be wrong to attribute the problems related to the products and services to celebrities in cases where they are not explicitly highlighting the virtues of product. A good number of celebrity ads in India fall in this category.

The second issue is about understanding ‘misleadingness’ in advertisements. Misleadingness or deception in advertising is a major issue worldwide but there is no standard practice of dealing with it. Some countries have statutory bodies to look into it, while in many others the industry self-governs it.

Level of awareness

In India, the Advertising Standards Council of India (ASCI), the self-regulatory organisation of the advertising industry, is responsible for advertising regulation. ASCI has developed a code and a process whereby anybody can register a complaint to it.

Once a complaint is registered, the body asks for proof to substantiate the claim made in the advertisement. While the onus for providing the proof lies with the advertiser, in many cases, it is not possible for celebrities to have the technical know-how about the products.

The recent controversy over Maggi noodles is a case in point. Madhuri Dixit, the endorser for the brand, cannot be expected to check each ingredient in the product and verify its quality.

One can argue that celebrities and agencies handling them, given the significant monies involved, are supposed to do a thorough due diligence before they sign up with the brand.

However, given the technicalities involved and lack of standards for many products, it will be difficult to say if the misconduct is wilful or a genuine omission. In second type of cases, it will be wrong to put blame on celebrities.

The third issue is related to the lack of legislation in India on behaviour of celebrity endorsers. In the US, celebrity endorsers follow guidelines formulated by the Federal Trade Commission (FTC) on the use of endorsements and testimonials in advertising.

The FTC guidelines state that endorsements are supposed to reflect the honest opinions, findings, beliefs, or experience of the endorser. For example, when an advertisement shows the endorser using the product, the celebrity must have been a bona fide user of the product at the time the endorsement.

To establish that the customer is a bona fide user, companies often provide supply of product in reasonable quantity during the endorsement period. However, there is no such established regulation in India. Some foreign brands are trying to bring in these practices here.

When Hyundai asked Shah Rukh Khan to endorse Santro, it placed one car at his residence in Mumbai which appeared in numerous photoshoots. However, regarding the actual usage of Santro by the actor, your guess is as good as mine.

The government must understand these issues before moving ahead with the recommendations to regulate celebrity endorsements.

While the severity of punitive actions recommended by the parliamentary committee has angered advertisers and celebrities, the nature of recommendations are now new.

Previously, one version of Companies Bill proposed sending celebrities to jail for up to three years if they induced consumers to buy a product with misleading claims.

However, it was also provisioned that prosecution will have to conclusively prove that the celebrity endorser was aware that she was making a false or misleading statement or representation, or that she made the statement ‘recklessly’, without ascertaining the facts. The new recommendations also need to take this aspect into account.

The parliamentary committee has made the right start by suggesting recommendations for defining words like ‘endorsement’, ‘misleading’, ‘false’ and ‘objectionable’ with respect to celebrity advertisements.

These words require proper definition to avoid ambiguity and misuse of the law. We should be clear about not throwing the baby out with the bath water.

The writer is with IIM-Ahmedabad

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