19 Jan 2018 17:19 IST

‘Due diligence needs clarifying’

The Consumer Protection Bill 2018 proposes to punish endorsers for misleading claims

Last week, the Consumer Protection Bill 2018 was tabled in Parliament. One of its proposals is penalties on the “concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be” for false or misleading advertisements. The penalties can go up to ₹10 lakh and for every subsequent contravention, extend up to ₹50 lakh. It can even bar the erring endorsers from endorsements for periods extending up to 1-3 years. The endorser will not be liable to penalty if they have exercised “due diligence” in verifying the veracity of the claims being made.

Concerns over celebrity endorsements have been debated for years, and resurfaced in 2015 when tests found excessive lead in Maggi noodles. Various stars including Amitabh Bachchan, Madhuri Dixit and Preity Zinta had endorsed the brand. Opinion has been divided on endorsers’ responsibility, and the Bill raises questions about the implementation of the provisions as well.

Anirban Das Blah, Founder and MD at KWAN Entertainment, a diversified talent management and entertainment firm, says the term ‘due diligence’ has to be defined. “What’s the mechanism for it? How is a celebrity different from a well-known model? Why is the accountability being placed on one person when the marketer, the ad agency, the media agency, the advertising medium are all involved in creating and disseminating the advertisement?” he demands. The proposed Bill does not expressly use the word ‘celebrity’, though. Among those KWAN manages are Bollywood stars Ranbir Kapoor, Deepika Padukone and Hrithik Roshan, and tennis player Sania Mirza.

The Kolkata-based FMCG company Emami, which uses Bachchan and Salman Khan as endorsers, also notes that ‘due diligence’ has to be specified. “The penalty is rather stiff for endorsers as the Bill does not differentiate but equates both endorsers and manufacturers,” says Harsha V Agarwal, Director, Emami.

It’s an emotional point of view, that celebrities have a moral responsibility to not endorse false claims, says Blah. The brand indemnifies the celebrity against false claims, so the celebrity is also a victim when the brand errs. In such cases, while the brand’s promise to the customer is broken, the celebrity endorser suffers a higher level of wrong-doing as a legal contract has been breached, he says.

Brand strategy specialist Harish Bijoor says the Bill “puts the responsibility where it belongs.” It’s the endorser’s magnetism that lures consumers. “The brand endorser is really as responsible for any harm as the manufacturer,” he asserts, adding that this magnet must not wash its hands of the damage inflicted, as some have, in the past.

(The article first appeared in The Hindu BusinessLine.)