By Dr Sanjay Murari Chaturvedi, Editor In Chief
In the recent past, many celebrity like Sachin Tendulkar, Shahrukh Khan, Anil Kapoor and many others have endorsed real estate projects. Ministry of Consumer Affairs has received a recommendation from a parliamentary panel to this effect. The ministry has accepted the recommendations to impose stringent accountability on celebrities for endorsing projects and for misleading advertisements. There are stringent provisions in Real Estate Regulation and Development Act. Following a nod to the proposed official amendments by the Consumer Affairs Ministry, a draft Cabinet note was moved, and the Law Ministry had cleared significant changes in the existing legal regime to make celebrities liable for such advertisements.
Section 17 of the revised consumer protection Bill defines “endorsement” as any message, verbal statement or any other form of depiction to show a celebrity’s “likeness” for a product, which leads the consumer to believe that it reflects the celebrity’s opinion, finding or experience. The Parliamentary Committee on Food, Consumer Affairs and Public Distribution, chaired by Shri J C Divakar Reddy of Telugu Desam Party, had in its report suggested an unambiguous definition of the term “endorsement” in the new law. The legislative department of the Law Ministry has, therefore, defined the term “endorsement” and also “endorser” as including individual, group or any institution. Section 75B of the new proposed Bill seeks to make any “false or misleading” endorsement which is “prejudicial to the interest of any consumer” a penal offence, punishable with a jail term of up to two years and a fine of Rs 10 lakh for the first such offence, and imprisonment of five years along with a fine of Rs 50 lakh for the second and subsequent offences. According to the new Bill, the onus would be on celebrity brand ambassadors to prove their innocence. “It is a defense if it is proved that the endorser took all reasonable precautions and exercised all due diligence before endorsing a product or service, but mistaken belief shall not be a defense,” states the Law Ministry draft of the new law. The proposed amendments also lay down a mechanism to prosecute celebrities, stating a court shall take cognizance of offences regarding false and misleading advertisements only after a complaint is made by the Central Consumer Protection Authority (CCPA), a new executive agency that shall be established to fill “an institutional void in the regulatory regime extant. This agency would have the authority to settle the first offence by celebrities on payment of a compounding fee, but the brand ambassador shall be exonerated only if the trial court accepts the settlement. While ascertaining the compounding fee, the agency would be taking into account the gross revenue from sales due to the misleading advertisement, impact of the violation with respect to the audience it affected, frequency and duration of the violation, and the vulnerability of the class of people so affected.
To further strengthen the provisions for consumer protection especially in the new era of globalization, online platforms, e-Commerce markets etc., the Consumer Protection Act, 2019 was enacted to replace the Consumer Protection Act 1986. It inter-alia, provides for improved protection for consumers involved in online transactions. The Consumer Protection Act 2019 has widened the scope of the definition of “consumer” to include persons who buy or avail of goods or services online or through electronic means which was not present in the Consumer Protection Act 1986. The Consumer Protection Act 2019 has also included definition of advertisement as any audio or visual publicity, representation, endorsement or pronouncement made by means of, inter-alia, electronic media, internet or website.
Under the provisions of the Consumer Protection Act, 2019, a Central Consumer Protection Authority (CCPA) has been established w.e.f 24.07.2020 to regulate matters, inter alia, relating to false or misleading advertisements which are prejudicial to the interests of public and consumers as a class.
The CCPA has notified the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 on 9th June, 2022 with the objective to curb misleading advertisements and protect the consumers, who may be exploited or affected by such advertisements. As per these guidelines, due diligence is required for endorsement of advertisements so that any such endorsement in an advertisement must reflect the genuine, reasonably current opinion of the individual, group or organisation making such representation and must be based on adequate information about, or experience with, the identified goods, product or service and must not otherwise be deceptive. Further, these guidelines state that where there exists a connection between the endorser and the trader, manufacturer or advertiser of the endorsed product that might materially affect the value or credibility of the endorsement and the connection is not reasonably expected by the audience, such connection shall be fully disclosed while making the endorsement.
The CCPA has issued advisories to, inter-alia, e-commerce companies to desist from manufacturing, selling or listing of products or services which are dangerous to life of the consumers which included selling and listing of car seat belt alarm stopper clips, illegal sale and facilitation of wireless jammers and also advised all marketplace e-commerce platforms to display information provided by sellers as per the E-Commerce Rules, 2020. CCPA has also issued two safety notices cautioning consumers against buying goods that do not hold valid ISI Mark and violate compulsory BIS standards, such as Helmets, Pressure Cookers and Cooking gas cylinders and other household goods including electric immersion water heaters, sewing machines, microwave ovens, domestic gas stoves with LPG etc.
The Consumer Protection Act 2019 explicitly includes e-commerce transactions within its scope, defining e-commerce as the buying or selling of goods or services including digital products over digital or electronic network.
To safeguard consumers from unfair trade practices in e-commerce, the Department of Consumer Affairs has already notified the Consumer Protection (E-commerce) Rules, 2020 under the provisions of the Consumer Protection Act. These rules, inter-alia, outline the responsibilities of e-commerce entities and specify the liabilities of marketplace and inventory e-commerce entities, including provisions for customer grievance redressal.
The Department has noticed emergence of unfair trade practices known as “dark patterns” which involve using design and choice architecture to deceive, coerce, or influence consumers into making choices that are not in their best interest. The Department of Consumer Affairs (DoCA) conducted an interactive consultation in Mumbai on June 13, 2023 with various stakeholders including Advertising Standards Council of India (ASCI), e-commerce companies, industry associations etc. The Department of Consumer Affairs has urged the e-commerce companies, industry associations to refrain from indulging in any design or pattern in the online interfaces of their platform that may deceive or manipulate consumer choices and fall into the category of dark patterns.