New Delhi: Manufacturers, service providers and celebrity endorsers face fines and jail terms for making misleading claims in advertisements, under the terms of a bill passed in the Lok Sabha on Tuesday.
The Consumer Protection Bill 2019 seeks to penalize misleading ads placed on virtually any medium, including television, radio, print, outdoor ads, e-commerce, direct selling and telemarketing.
The bill, which is not yet law, plugs a yawning gap in the advertising industry, monitored by the self-regulatory watchdog Advertising Standards Council of India (ASCI).
Under the bill, a misleading ad is defined as promotions across platforms that “falsely describes a product or service; or gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice or deliberately conceals important information".
A Central Consumer Protection Authority, headed by a government-appointed chief commissioner, will be set up in Delhi to regulate matters relating to violation of consumer rights, unfair trade practices and false or misleading advertisements.
Guilty manufacturers and service providers face jail terms of a maximum of two years, along with fines of up to ₹10 lakh.
Celebrities endorsing misleading ads can be fined up to ₹10 lakh.
For repeat offences, the authority can impose a fine of up to ₹50 lakh and a jail term of up to five years. It can also bar a celebrity from endorsing advertisements for up to a year, extending it to three years for repeat offenders.
Endorsers won’t be liable if they can prove that they have done due diligence to verify claims made in the ads.
The authority will only penalize manufacturers or endorsers if they fail to discontinue the false advertisements or to modify them.
“It is a welcome first step towards creating a law. I also feel that putting a moral and legal responsibility on endorsers is another welcome step towards responsible advertising and brand endorsements," said Ajay Kakar, chief marketing officer of Aditya Birla Capital.
D. Shivakumar, chairman of ASCI said: “ASCI has been working closely with the department of consumer affairs. We expect this coregulation model to be strengthened further as per recommendations of the parliamentary standing committee."