Should advertisers be held responsible for claims in advertising?

On June 9, 2022, the Central Consumer Protection Authority (CCPA) notified guidelines for ‘Prevention of Misleading Ads and Approval for Deceptive Ads, 2022’, The guidelines, brought with immediate effect, are as follows: Applicable to all types of ads, While the Consumer Protection Act of 2019 provides for misleading advertisements, the CCPA can impose a fine of up to ₹10 lakh on manufacturers, advertisers and endorsers for misleading advertisements and up to ₹50 lakh for subsequent violations. It may also prevent the endorser of a misleading advertisement from making any endorsement for up to one year; For subsequent violations, the prohibition can be extended up to three years. In a conversation moderated by Sonam Sehgal,Anushree Rauta And Akashneel Dasgupta Discuss the need for the new guidelines and how they overlap with the ‘code for self-regulation in advertising’, which was adopted by the Advertising Standards Council of India (ASCI). Edited excerpt:

As per the data released by AdEx India, a division of TAM (Television Audience Measurement) Media Research, in March 2022, 2021 saw a 44% increase in celebrity endorsements as compared to 2020. Why do companies hire brand ambassadors for a product or service?

Anushree Rauta: In this country people worship some celebrities. It is a cinema and cricket lover country. Nowadays a lot of brands are either actors or cricketers as brand endorsers. This enhances the credibility of the brand. This is the trust people place in some celebrities [that they] Promote brand image. [Having such brand endorsers] Affects buyers’ buying decisions because of the celebrity’s authority and/or relationship with the audience.

Akashneel Dasgupta: There are many reasons to hire a celebrity. Some brand endorsements are for the right reasons, where there is a fit with the brand, a communication purpose or even a business objective to solve. When a celebrity comes along, it brings the trust or credibility that is needed. But often the support is also for the wrong reasons, because there is nothing new to say. In mature categories that have high penetration, have established brands that have little to differentiate [among them] And have almost reached a level of similarity, celebrities are used as identifiers. Sometimes it’s lazy marketing. When you don’t have an idea, you just take a face, sit back and believe it’s going to work.

What do you think the recent guidelines have placed on the brand ambassador?

Anushree Rauta: Supporters are service providers. They have responsibilities considering the kind of impact they have on the audience. But at the end of the day, it’s not just them. They will not have the technical knowledge to verify the products. Even though the ASCI guidelines provide something similar in terms of due diligence exercise to be carried out by celebrities, these guidelines are now an obligation for them. The guidelines require celebrities to reflect their actual or current opinion, to disclose any relationship they have with their brand… This will lead to cases where brand endorsers may need to seek some technical advice may be required to avail the services. ASCI, which provides a team of dedicated technical experts to verify whether approvals are certified [by the claims they make], I think these guidelines will lead to increased transparency and more responsible advertising.

Akashneel Dasgupta: There are celebrities who do their due diligence and are careful before endorsing a product or brand. Then there are people who are not interested in what the brand is, or what the product is, and it’s just about the money they are earning from advertising. These guidelines are good, but in the real world it is only going to make a difference because the brand ambassador is fined so much [little]It doesn’t really matter to them.

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Since you mentioned fine, the guidelines impose a fine of ₹10 lakh and may even ban an endorser for one year for misleading advertisement. What do you think about this?

Anushree Rauta: Before the Consumer Protection Act came into existence, there was a provision which considered imprisonment as an alternative to deceptive advertising. But I think the legislature rightly removed it and only imposed a fine. The amount of the fine is debatable. For any subsequent offences, there is also a penalty in case the celebrity is not able to support for a certain period of time, which is also loss of reputation, and that is good.

Akashneel Dasgupta: For a celebrity, a talent management team is a legal team. There are many people who do their due diligence so that conscious decisions are made about whether or not to endorse a product or brand. But celebrities are easily turned away in terms of misleading advertising with a public apology. Hence, the ₹10 lakh fine is nothing if they have a ₹4 crore deal. It should have been more because I don’t think monetary penalty will solve the problem here. There should be some other criteria of accountability, or punishment. Damaging his reputation and deterring him from advertising for a period is a punishment that works for him.

There is already a provision for ‘due diligence’ in the ASCI and Consumer Protection Act that needs to be done on the part of those endorsing the products. Why were the new guidelines needed then?

Anushree Rauta: Section 21 of the Act (Power of Central Authority to issue directions and penalties against false or misleading advertisements) states that no endorser shall be liable to penalty if he has denied the veracity of the claims made in the advertisement in respect of the product. Due diligence has been done to verify. or the service being supported by them. Along with the guidelines, they are bound to do their due diligence and disclose their new physical connection with the brand. Now, it has come as a statutory obligation. Whether these guidelines were required or not is questionable. In my view, the ASCI guidelines were already in place; Perhaps now the extra load has been put in. It remains to be seen whether there is any reduction in misleading advertisements by following this new set of guidelines.

Akashneel Dasgupta: It is difficult to define what is confusing. A lot of things happen in a gray area in advertising. It is a bit hard to believe that a brand ambassador is not aware of what a brand is. For example, some products may claim that they make your baby stronger, or taller, or provide vitamin C, but how do you prove it… A lot of things are abstracted in advertising. To what extent one cannot say if the product lives up to the claim, as almost 80% of the advertisements are in the gray area regarding the claims. Hence, it is very difficult for a celebrity to verify the claims as sometimes even the clients are not able to verify those claims. So, maybe guidelines will help in that aspect.

Can you explain what kind of ‘reasonable precautions’ brand ambassadors can take to ensure they don’t sign up for deceptive ads?

Anushree Rauta: It has various aspects. As far as technical know-how is concerned, they would not be equipped to do it themselves, so it would be something they would have to outsource. They will need the brand to submit some reports and verify them, or they will go to ASCI, which has its own team of experts to perform these exercises. The second is in terms of the experience of the products and goods. I don’t know how this will happen, as not all celebrities may be comfortable using the products they are endorsing. Nowadays, there is a liability perspective; I’m sure brands have to give them an undertaking that they’ve used the products and confirm what they’re endorsing. Celebrities have to be more cautious and responsible while promoting products and services.

Speaking of liability, does a brand ambassador ensure that their contract has a clause inserted that ensures zero liability if any part of the claim in the advertisement turns out to be false?

Anushree Rauta: It depends on what type of products or services are being supported. If the celebrity has a good legal representation, they will certainly add clauses to the representations and warranties and indemnities, which are taken to ensure that any statements they make to say are verified and no false statements Not what the brand is asking the celebrity to make. It also depends on the bargaining power. There are some creative controls that some celebrities would like to take. Sometimes celebrities want the storyboards to be verified at the scripting level itself. Therefore, the clauses are generally there in all brand endorsement agreements where representations and warranties are taken from the brand and any indemnity for any claims made by them.

Akashneel Dasgupta: Most celebrities these days include these clauses because they are handled by a security management agency. So they make sure there is no responsibility.

In February 2021, the Ministry of Information and Broadcasting informed the Lok Sabha that between 2017 and 2020, complaints against misleading advertisements launched by the Department of Consumer Affairs had received over 12,000 complaints. The numbers are appalling. What do you have to say about that?

Anushree Rauta: A misleading advertisement is defined under the statute (section 2). To put it simply, an advertisement must not contain any false description of a product or service, must not provide any false guarantees, and must not be termed as unfair trade practice. During COVID-19, there were a lot of false and misleading advertisements. I am sure the number of 12,000 is highly attributed to the COVID-19 timing.

Akashneel Dasgupta: There is no way to determine whether a claim is misleading. You can’t really determine or measure whether a certain cement gives more life than another. Of course, there has to be evidence, but if it’s in the gray zone, you can’t really prove it. by the number of misleaders [advertising] The complaints received by the Ministry, I am sure, will only be genuine. In our country, we see people and brands getting trolled. There is also a lot of exaggeration in this. The 12,000 mark is to be taken with a pinch of salt. Not all of them are real. But yes, there are many genuine complaints. Most promises are abstract and lie in that gray area. There are always two ways to look at it. If promises are not kept, it is misleading.

Should brand ambassadors be held responsible for false claims in advertisements?

Akashneel Dasgupta: Absolutely. They should be held accountable and not just a monetary punishment.

Anushree Rauta: The Act already provides for substantial punishment. Of course, celebrities need to take some responsibility. They cannot shy away from responsibility.

Anushree Rauta is an Advocate and Partner for Media and Entertainment at ANM Global; Akashneel Dasgupta is the Chief Creative Officer at Network Advertising