The New Landscape of Endorsements (Consumer Protection Act, 2019)

The Consumer Protection Act, 2019¹, propelled consumer protection law in India towards better protection of consumer rights². Key highlights of the statute include extension to e-commerce platforms, establishments of regulatory authorities and penalties for those flouting consumer interests including endorsers, and with that ushering endorsements into a unique era.

While numerous articles, publications and experts have rightfully highlighted the axe hanging over endorsers and urging endorsers to be mindful of the products endorsed by them and the claims made by them in such advertisements, the first question that comes to mind is whether this was all ‘new’ or something that was obvious with the events preceding the enactment of the new law.

Time and time again, there has been news of eminent names from the entertainment and sports fraternity being dragged into legal battles of aggrieved consumers. Whether it was Shahrukh Khan’s endorsement of fairness creams³ or Amitabh Bachchan’s erstwhile association with the Maggi Noodles⁴, the masses have been divided, where the media fraternity claimed that celebrities were being treated as easy targets⁵, and the authorities considered it as the celebrity’s moral obligation to be responsible for brands that they chose to associate with.

It was thus, no surprise when Advertising Standards Council of India (ASCI), a self-regulated watch dog of advertising, issued guidelines for celebrities in advertisements⁶ (“ASCI Guidelines“) in 2017. These guidelines re-emphasized the code laid down by ASCI and went on to enfold celebrities within its ambit by providing guidelines such as:

• Testimonials, endorsements or representations of opinions or preference of Celebrities must reflect genuine, reasonably current opinion of the individual(s) making such representations and must be based upon adequate information about or experience with the product or service being advertised.
• Celebrity should do due diligence to ensure that all description, claims and comparisons made in the advertisements they appear in or endorse are capable of being objectively ascertained and capable of substantiation and should not mislead or appear deceptive.
• If the Celebrity either directly or through the concerned Advertiser/Agency chooses to seek Advertising Advice from ASCI on whether the advertisement potentially violates any provisions of the ASCI code or not and if the Advertisement is developed fully following the Advertising Advice provided by the ASCI, then the Celebrity would be considered as having completed due diligence. However, ASCI’s Advertising Advice will not be construed as pre-clearance of the Advertisement.
• Celebrities should not participate in any advertisements for products which, by law, require a health warning such as “….. is injurious to health.

Interestingly, an analysis of endorser liability under Section 21 of the new Consumer Protection Act, which empowers the Central Authority to issue directions and penalties against false or misleading advertisements, brings out a stark resemblance to the aforesaid ASCI Guidelines, wherein it provides that “no endorser shall be liable to a penalty under sub-sections (2) and (3) if he has exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by him”⁷

Furthermore, the draft of the Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 20208 (“Guidelines”), provide inter alia that:

• To be considered as a valid advertisement an advertisement shall contain truthful and honest representations; and
• Honesty of statements and due diligence to be made by an endorser in relation to advertisements- (1) Every endorser endorsing a product or service shall take due care to ensure that all descriptions, claims and comparisons that they endorse or that are made in advertisements they appear in are capable of being objectively ascertained and are capable of substantiation. (2) Every endorser endorsing a product or service shall take due care to ensure that their endorsement does not convey any express or implied representations that would be false, misleading or deceptive if made by the trader or manufacturer or advertiser of the relevant product or service. (3) Any endorser who obtains advertising advice from an advertising self-regulatory organisation or a legal opinion from an independent legal practitioner regarding the honesty of statements in their endorsement and its compliance with these guidelines and the Act may be considered to have carried out due diligence for the purposes of his liability under the Act: Provided that no such advice or opinion may be considered adequate if it is otherwise found that the endorser had knowledge that the endorsement would be false, misleading or deceptive, or that its falsity or misleading or deceptive nature was apparent given the circumstances.
• Surrogate advertising – (1) Advertisements for goods or services whose advertising is otherwise prohibited or restricted by law shall not circumvent such restrictions by purporting to be advertisements for other goods or services, the advertising of which is not prohibited or restricted by law. (2) In judging whether or not a particular advertisement is an indirect advertisement for a product whose advertising is restricted or prohibited, due attention shall be paid to the following: (a) whether the unrestricted good or service which is purportedly sought to be promoted through the advertisement, is produced and distributed in reasonable quantities, having regard to the scale of the advertising in question, the media used, and the markets targeted; (b) whether there exists in the advertisement in question, any direct or indirect indications, which could suggest to consumers that it is a direct or indirect advertisement for the good or service whose advertising is restricted or prohibited by law; and (c) the mere use of a brand name or company name that may also be applied to a good or service whose advertising is restricted or prohibited is not a reason to find the advertisement in question objectionable, provided that the advertisement is not otherwise objectionable as per the provisions set out in these guidelines.

Thus, even though the Guidelines are yet to come into effect, it is safe to deduce that they will give the ASCI Code sharper teeth and relevance to ASCI beyond its stature as a self-regulatory body. So, when one reads the guidelines recently issued by ASCI for ‘online gaming for real money winnings’⁹ along with the news about Virat Kohli and Tamannah being dragged into the whirlwind of online gambling¹⁰, one can predict the next steps of the authorities would be towards safeguarding consumer interest from advertisements promoting online games. Same is the case for the ASCI guidelines for influencer advertisement¹¹.

In conclusion, the media fraternity and those tapping into it for their benefits, such as traders and service providers, must be mindful of the fact that the new Consumer Protection Act is perhaps the aftermath of the previous paradigm but certainly not the end to the steps being taken by legislative and judicial system , along with self-regulatory bodies, to safeguard the interests of the consumers. Endorsement engagements will have to be reviewed from a lens where the endorsers will need to be mindful of the products, brands or services that they are associating with are in compliance with applicable law and that all material created as a result thereby meet the standards of the new Consumer Protection Act and also those imposed by guidelines of self-regulatory bodies such as ASCI. All this with a strong safety net of strict representations and warranties, along with indemnities, in favour of the endorsers under their endorsement agreements.