Celebrities in false ads may have to pay hefty penalties

New Delhi: The new Consumer Protection Bill, 2019 proposes penalty for celebrities endorsing false or misleading advertisements of a product, along the manufacturers of the products.

The Bill was passed by the Rajya Sabha on Tuesday and was already approved by the Lok Sabha earlier. It will replace the Consumer Protection Act, 1986.

A Central Consumer Protection Authority (CCPA) will be set up to protect, promote and enforce consumer rights, under the Bill. The CCPA will have an investigation wing headed by a Director General to inquire into violations of consumer rights and for imposing penalties.

The CCPA can impose a fine of up to Rs 10 lakh on celebrity endorsers and manufacturers for a false or misleading advertisement under Clause 21. The authority can also order imprisonment of up to two years for false advertising. 

In case of a repeat offence, the authority can impose a penalty of up to Rs 50 lakh and a jail term of up to five years. Endorsers can be barred from promoting advertisements for up to a year, extending up to three years for repeat offenders.

The Bill defines "endorsement", as any message, verbal statement, demonstration or depiction of the name, signature of an individual.

Endorsement can also be a depiction of the name or seal of any institution or organisation, which makes the consumer to believe that it reflects the opinion, finding or experience of the person making such endorsement.

However, the endorser will not be liable if the person has exercised due diligence to verify the veracity of the claims made in the advertisement.

Introducing the Bill, Paswan said it provided for penalising manufacturer for not adhering to the promised quality and standards. Celebrities endorsing a product should only go by the standards and features, and should not promise anything else on their own, he added.