Parliamentary panel seeks 5-yr jail term and penalty of up to Rs 50 lakh if a celebrity-endorsed product misfires
With a parliamentary standing committee calling for stringent penal provisions to make celebrities who hawk brands accountable for misleading advertisements, industry experts feel it is unfair to single out celebs for such things.
The parliamentary panel on consumer affairs, in its recommendations on the Consumer Protection Bill, 2015, has called for stringent provisions, including jail term up to five years and penalty of up to Rs 50 lakh (Rs 500 million) if a celebrity endorsed product misfires.
"I agree that celebs should accept endorsements with a certain amount of responsibility. But it is unfair to make them accountable for products/ads as the subject is technical and requires sound understanding of science as it's related to the ingredients of the product and consequent claims," Madison World chairman Sam Balsara told PTI.
The committee wants that for first time offence, the celeb in question must be penalised with either a fine of Rs 10 lakh (Rs 1 million) or imprisonment up to two years or both. For the second offence, the fine should be increased to Rs 50 lakh (Rs 5 million) and imprisonment up to five years.
For subsequent offences, the penalties may be increased proportionately based on the value of sales of the product/ service in question.
After Nestle's Maggi noodles were banned by the foods regulator last year for allegedly containing excess lead and the additive monosodium glutamate (MSG), there were many voices demanding accountability from brand endorsers. Some of the noodle brand's endorsers included actors Amitabh Bachchan, Madhuri Dixit and Preity Zinta.
The domestic celebrity endorsement market is worth around Rs 5,000-7,500 crore and is growing at a fast clip. But its future looks uncertain with many in the government and Parliament baying for the blood of celebrities who earn most of their incomes from such brand endorsements.
Top male celebrities charge anywhere between Rs 12 crore (Rs 120 million) and Rs 25 crore (Rs 250 million) per annum for each endorsement, while their female peers get half of that at Rs 6-12 crore (Rs 60-120 million) per annum for endorsement, according to industry estimate. On an average, top celebrities endorse as many 8-12 brands.
According to Anirban Das Blah, managing director of talent management agency Kwan that handles brand endorsements for top Bollywood stars like Deepika Padukone and Ranbir Kapoor, the recommendation makes no sense as celebs don't have the expertise to whet the quality of the product they endorse.
"No celebrity has the means to verify what the brand is saying, and they don't run testing labs. What they have is a legally binding document. Almost every endorsement has a contract which warrants that it is making no false representation of any sort in its advertising," he said.
"And if the brand makes a false claim, then the celebrity is a victim of fraud, even more than the consumer and not a party to the fraudulent claim," he said.
Echoing similar view, Santosh Desai, esrtwhile adman and now managing director and chief executive of Future Brands, said, "I think it is a completely flawed co-relation that is being drawn. It is one thing to draw a co-relation and another to convert it into legally enforceable punitive action.
"I think it is at best an association between two things and converting it into a hardline like a law is not fair. The advertiser has the primary responsibility and the celebrity is not competent to adjudge the technical viability of a product that he/she endorses," he said.
Brand consultant Harish Bijoor, however, feels both the company and the celebrity are liable.
"Celebrities use their charm and appeal to entice consumers. Celebrities use their charisma to sell and tout. When they do that, they need to be more careful, especially so in the category of the foods and beverages, and skin care items, etc in particular. The key stakeholder is the brand owner, and then it is the brand-endorser. Both are liable."
Varun Gupta, managing director of Duff & Phelps, a valuation services firm, said, "The intent is perfectly legitimate but the implementation needs to make sure that you go after the celebrities only if you prove that they were aware of any malafide intentions and they still went ahead with the endorsement."
Desai points out that with the power of social media, people are quite vociferous in their views and use it well to let the celebrity know their displeasure.
"Being a public figure, if people don't like it they will let you know but to convert that into a legal liability and responsibility is to overstep," Desai said.
Recently, cricketer M S Dhoni had to resign as brand ambassador of Delhi-based developer Amrapali, after residents of a housing society started a protest campaign against the builder and the cricketer on the social media.
Gupta further says if the recommendations become a law, celebrities could start charging a higher fee while cutting back on endorsement deals.
"Celebrities may start demanding higher fees, and may become more selective in what they endorse. They may also make their contracts more complicated, demanding indemnities from advertisers. It would certainly make the whole business more complicated," he said.
Bijoor, too, expects celebrities to seek full indemnity on their involvements from brand owners.
"Brand endorsers will be forced to do better due diligence on brands they promote. They will show that much more care now," he added.