Tough law on celeb endorsement: New normal for ad world, say experts

From Madhuri Dixit and Amitabh Bachchan, who had faced the brunt for endorsing Maggi Noodles, to Pierce Brosnan recently facing the backlash for featuring in a pan masala ad, celebrities have always been at the centre point for appearing in misleading ads or ads for products that can cause harm. The question that arises here is – are celebrities liable for any of the products that they endorse? This topic has sparked many a debate amongst industry experts. Since the celebrity endorsers enjoy a huge fan base and act as influencers, consumers feel a sense of trust and loyalty towards the product, and thereby tend to buy it. 

In September this year, the Ministries of Consumer Affairs and Law had approved changes in the Consumer Protection Act to provide for jail term of up to 5 years to the celebrity, apart from a penalty of Rs 50 lakh for false and misleading ads. But in the latest development, there is some respite for celebrities. According to several media reports, on November 9, 2016, a meeting was held between the ministers of the Finance Ministry headed by Arun Jaitley, where the panel unanimously agreed to do away with the imprisonment of celebrities, arguing that such provisions did not exist in our country, as mentioned in an Indian Express report. 

Panel recommendations further mention that in the initial instance, celebrities could be fined Rs 10 lakh, apart from a one-year ban on endorsing new products, if found guilty of appearing in a misleading ad. The penal provision will go up for repeated offence. Against endorsement for repeat offence of pitching ‘dodgy’ products, the celebrity will be fined Rs 50 lakh, along with a three-year ban. 

Since a large chunk of Indian products are been endorsed by celebrities, the advertising industry will face potentially larger implications and adverse effects. Adgully spoke to a cross-section of brand consultants and media experts to know their insights on the panel decision and long term implications on the industry. 

Is the step taken by the panel too harsh? 

“First of all, brands and brand ambassadors should lead consumers and not mislead them,” remarked Jagdeep Kapoor, CMD, Samsika Marketing Consultants. 

According to N Chandramouli, CEO, TRA, “It is indeed a strong step in the direction of celebrity endorsements and celebrity responsibility, but it may be a much-needed step. This has been recommended by the Ministries of Consumer Affairs and Law, prompted by the report of the Parliamentary Committee on Food, consumer Affairs and Public distribution to tackle misleading advertisements and two fix liability on endorsers.” 

He further said, “The consumers put their trust in the celebrity and implicitly transfer the trust to the brand being endorsed and it becomes the moral, and now legal, responsibility of the endorser to ensure that they are fully aware of the claim they are endorsing, almost like Caveat emptor – in this case let the endorser beware. This will bring better diligence to the advertising world. Also, it is not likely that this law will be misused as all complaints can only be made by the Central Consumer Protection Authority, signed off by the Chief Commissioner.” 

On the other hand, Sundeep Nagpal, Founder Director, Stratagem Media, did not consider it to be a very serious penalty. He said, “I see this only as a counter-balance. I guess that such steps are just corrective measures, which had become somewhat inevitable.” 

Echoing similar views, Harish Bijoor, Brand-expert & Founder, Harish Bijoor Consults Inc, said, “I do believe this is a much needed step to bring in responsibility among brand-endorsers that is a much needed aspect. This will make potential brand-endorsers show a greater degree of interest in the product or service before they sign the dotted line. They need to understand that brand endorsement is not a fling. It is a marriage.A marriage that can take you to the courts even!” 

“The step, while harsh, adds a layer of accountability that was missing,” opined Sandip Tarkas, CEO (Sports, Media and Special Projects) at Future Group. “The well-paid celebs can always afford a battery of lawyers to ensure that they scrutinise the claims before endorsing them, I would be more worried about the potential misuse. How does one define a celebrity? A lowly paid model who appears in 5-6 ads can also be termed a celeb and held accountable. And this poor sod has no resources to verify any claims, etc. There must be safeguards against this.” 

Long term implications of the decision 

Tarkas continued, “This will delay the process of advertising over a period of time, but that will be a new normal and people can get used to it.” 

According to Nagpal, the long term implications will depend on how it is enforced. Several such measures had fizzled out over a period of time, he pointed out. 

To this, Bijoor added that greater responsibility and a strong belief in brand due-diligence were some of the long term implications. “In addition, consumer interest is going to count greater than brand interest,” he noted. 

Chandramouli remarked, “The long term implications of this law is likely to bring more trust in advertisements and being more control into the manner of endorsements making reckless endorsements which are false or misleading lesser. The consumer will be the direct beneficiary of this action.” 

“The implications are going to be very good for brands, brand ambassadors and consumers,” said Kapoor. “Brands will improve their quality and meet their promises. Brand ambassadors will be more discerning and choosy to endorse only high quality and reputed brands, including start-ups with promoters with good integrity. Consumers will trust brands and brand ambassadors because brand ambassadors would have done due diligence.” 

Impact on brands’ decision to involve celebrities for endorsements 

Chandramouli pointed out that dubious products and services would find it difficult to get endorsers, and celebrities might not endorse such products, but the core objective of this law is to protect the consumer, which it is likely to do. “The publishers are likely to find some impact as well, since without the endorser, the products and services of dubious claim often have little else to say,” he added. 

On the other hand, Bijoor sees no shortage in the brand-endorsers market. “In fact, I see a surge,” he said. 

Nagpal added here, “May be, but perhaps they will just be more careful, given that they could land in a soup. I imagine that their lawyers’ fees would increase!” 

Kapoor opined that brands would continue using celebrities, with new terms and conditions. “In fact, since brand ambassadors will be choosy and discerning, I foresee their fees going up by 50 per cent to 100 per cent,” he added. 

Tarkas, too, doubted if celebrities endorsing products would come down. He, however, believed that the process might become more bureaucratic.