New norms for celebrity endorsements

  • June 12, 2022
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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New norms for celebrity endorsements

Subject: Governance

Section : Right issues

  • The government has tightened norms for endorsers, including celebrities and sports persons, as they are now required to make ma­terial connection disclo­sures and undertake due diligence while doing advertisements.
  • According to new guide­lines released by the Con­sumer Affairs Ministry, endorsements must reflect the honest opi­nions, belief or experience of the endorsers.
  • The en­dorsers have to make mate­rial connection disclosures and failing to do so will at­tract penalty under the Consumer Protection Act (CPA).
  • Material disclosures mean any relationship that materially affects the weight or credibility of any endorsement which a rea­sonable consumer would not expect.
  • Violation of these guide­lines will attract a penalty of Rs10 lakh for the first offense and Rs50 lakh for the subsequent offense, under the CPA.
  • The new guide­lines “Prevention of mis­leading advertisements and necessary due dili­gence for endorsement of advertisements”, which came into effect on June 10, 2022, have been issued to prevent misleading advertisements.

Consumer Protection Act, 2019

Key Provisions

  • The Consumer Protection Act, 2019 establishes the Central Consumer Protection Authority (CCPA) whose primary objective will be to promote, protect and enforce the rights of consumers.
  • It is empowered to:
    • Conduct investigations into violations of consumer rights and institute complaints/prosecution.
    • Order recall of unsafe goods and services.
    • Order discontinuance of unfair trade practices and misleading advertisements.
    • Impose penalties on manufacturers/endorsers/publishers of misleading advertisements.
  • Rules on E-commerce and Unfair Trade Practices: The government will notify the Consumer Protection (E-commerce) Rules, 2020 under the Act whose broad provisions are given below.
    • E-commerce entities are required to provide information to consumers, relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism, payment methods, security of payment methods, charge-back options and country of origin.
    • These are necessary for enabling the consumer to make an informed decision at the pre-purchase stage.
    • These platforms will have to acknowledge the receipt of any consumer complaint within 48 hours and redress the complaint within one month from the date of receipt. They will also have to appoint a grievance officer for consumer grievance redressal.
    • The Consumer Protection (E-commerce) Rules, 2020 are mandatory and are not advisories.
    • Sellers cannot refuse to take back goods or withdraw services or refuse refunds, if such goods or services are defective, deficient, delivered late, or if they do not meet the description on the platform.
    • The rules also prohibit the e-commerce companies from manipulating the price of the goods or services to gain unreasonable profit through unjustified prices.
  • Product Liability:
    • A manufacturer or product service provider or product seller will be held responsible to compensate for injury or damage caused by defective product or deficiency in services
    • Basis for product liability action:
      • Manufacturing defect.
      • Design defect.
      • Deviation from manufacturing specifications.
      • Not conforming to express warranty.
      • Failing to contain adequate instructions for correct use.
      • Service provided-faulty, imperfect or deficient.
    • Punishment for Manufacture or Sale of Adulterated/Spurious Goods:
      • In case of the first conviction, a competent court may suspend any license issued to the person for a period of up to two years and in case of second or subsequent conviction, may cancel the license permanently.
    • Alternate Dispute Resolution Mechanism of Mediation:
      • A complaint will be referred by a Consumer Commission for mediation, wherever scope for early settlement exists and parties agree for it.
      • The mediation will be held in the Mediation Cells which will be established under the aegis of the Consumer Commissions.
      • There will be no appeal against settlement through mediation.
    • Simplification of the Consumer Dispute Adjudication Process:
      • Empowering the State and District Commissions to review their own orders.
      • Enabling a consumer to file complaints electronically and in consumer commissions that have jurisdiction over the place of his residence.
      • Video-conferencing for hearing and deemed admissibility of complaints if the question of admissibility is not decided within the specified period of 21 days.
    • Other Rules and Regulations:
      • As per the Consumer Disputes Redressal Commission Rules, there will be no fee for filing cases up to Rs. 5 lakh.
      • The credit of the amount due to unidentifiable consumers will go to the Consumer Welfare Fund (CWF).
      • State Commissions will furnish information to the Central Government on a quarterly basis on vacancies, disposal, the pendency of cases and other matters.
      • Apart from these general rules, there are Central Consumer Protection Council Rules, provided for the constitution of the Central Consumer Protection Council (CCPC).
      • It will be an advisory body on consumer issues, headed by the Union Minister of Consumer Affairs, Food and Public Distribution with the Minister of State as Vice Chairperson and 34 other members from different fields.
      • It will have a three-year tenure and will have the Minister-in-charge of consumer affairs from two States from each region- North, South, East, West, and North-East Region.

Consumer rights under the Act

  • It defined 6 rights of the consumers which include:
  • Right to be protected against the marketing of goods, products or services which can be hazardous to life and property
  • Right to be informed about the quality, quantity, potency, purity, standard and price of goods, products and services
  • Right to be assured of access to goods, products and services at competitive prices.
  • Right to be heard at appropriate forums
  • Right to seek redressal against unfair trade practices that are involved in exploitation of customers
  • Right to consumer awareness
Governance New norms for celebrity endorsements