The new bill will replace the Consumer Protection Act, 1986 and seek to protect consumers who could get lured by misleading ads or false claims.
Misleading advertisements may land celebrity endorsers in jail as per the Consumer Protection Bill 2019 which was passed by the Lok Sabha earlier this week. The new bill will replace the Consumer Protection Act, 1986 and seek to protect consumers who could get lured by misleading ads or false claims.
Apart from manufacturers and service providers, celebrity endorsers too, will now face fines and jail terms for making misleading claims in advertisements. The bill, which is yet to become law, seeks to penalise misleading advertisements in virtually any medium, be it television, radio, print, outdoor ads, e-commerce, direct selling or telemarketing.
This will plug a huge gap in the advertising industry, which has been so far monitored by the self-regulatory watchdog Advertising Standards Council of India (ASCI).
So, how does the bill define misleading ads?
Promotions which falsely describe a product or service, or give false guarantees, will be deemed misleading. Also, if an ad deliberately conceals important information it would come under the radar. The question of making brand ambassadors accountable has been in the spotlight since the alleged presence of MSG and excess lead in Maggi noodles, which was endorsed by several movie stars. Similarly, in the past, Kellogg’s Special K breakfast cereal and even fairness creams, allegedly making false claims have been endorsed by Bollywood actors.
The consumers tend to believe advertisements promoted by celebrities blindly without making any analysis. But when the unfair trade practices are exposed, the celebrities quickly disassociate themselves with the products or companies they are representing. The bill therefore, seeks to establish a Central Consumer Protection Authority to protect consumer rights and look into the issues related to false or misleading ads.
The authority will take immediate action after a complaint is filed, even if it is by a single consumer. The authority can also file a class suit and will have the power to impose a penalty on a manufacturer or an endorser.
For endorsers, the penalty would include a fine of up to 10 lakh rupees and a one-year ban on any endorsement. For a repeat offence, the fine will be up to 50 lakh rupees and a three-year-ban on endorsements.
The bill also has provisions for product liability action on account of harm caused to consumers due to defective products or by deficiency in services.
The bill will now go to Rajya Sabha for passage, after which it will become law.For more on this, watch the video by Sakshi Batra. Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.