To Endorse or Not to Endorse

Celebrity Endorsement
Celebrity Endorsement

‘To endorse or not to endorse’- actors will now find themselves grappling with this question the next time they sign an endorsement contract. This is because the Central Consumer Protection Council (CCPC), the apex body for consumer protection in India, has now decided to hold actors accountable in cases of false claims made in advertisements for products which they endorse. This means that a consumer can now claim compensation for false claims, made in respect of a product, not only from the advertiser but also from the celebrities associated with the brand. In order to hold a celebrity liable, the mens rea requirement is that he must have made the statement “recklessly” or with knowledge that the claim was false or misleading.

In this post, I attempt to discuss the rationale behind CCPC’s decision-

CCPC’s decision has given rise to a mixed bag of reactions- while some feel that it is a good idea to hold actors responsible in case of false claims made on products which they endorse, there are people who think that this rule, if implemented, will give rise to vexatious suits against the actors.

To begin with, one cannot belittle the influence that actors wield over their fans and it is very often the case, that a consumer’s preference for a particular product is governed by the actor who endorses it. For example, the reason why a teenager ‘X’ buys ‘Pepsi’ and not ‘Coca Cola’ may have little do with the taste of the two beverages and may be because Ranbir Kapoor is the brand ambassador of Pepsi.

The reason why celebrity endorsements are hugely successful for advertisers in India is also evident from the fact that 50% of advertisements in India are celebrity endorsements. Given that India’s illiteracy population is the largest in the world, one can safely assume that celebrity endorsements govern consumer choice for people who are less educated.

Endorsement & Image Rights:

The endorsement of a product is one of the many ways in which an actor exploits his image rights. An endorsement contract is a form of personality endorsement. Personality endorsement is when a well-recognized public figure ‘endorses’, i.e., supports or approves of a particular product or service. The consumer base that the endorsement generates is attributed to the fact that the celebrities who endorse the products are trusted and emulated by a wide section of the population. Endorsement by celebrities extends to non-commercial activities as well- for example, the widely successful anti-polio campaign of the Indian Government which had veteran actor, Amitabh Bachchan, urging parents to get their children vaccinated.

Given that fans often emulate their favourite actors and their likes and dislikes, they invariably buy the products which they associate with a particular actor. For example, a few years ago when Reebok launched ‘EasyTone’ running shoes, their claim to fame was that the shoes tone calve muscles 11% more than other shoes; Reebok roped in Bipasha Basu to endorse the shoes. The advertisement featuring the famous actor was convincing enough for consumers (including myself) to buy the shoes. One of the buyers later found the claim to be untrue. Then, later in 2011, the Federal Trade Commission in USA ordered Reebok to pay $25 Million as refund to consumers for deceptive advertising of its EasyTone shoes. While advertisers were made to pay heavily for false claims, it was a win-win situation for Bipasha Basu and the other actors who endorsed Reebok’s (in) famous trainers; they went scot-free.

Contrast this with the situation today- if CCPC goes ahead and implements this new rule of making celebrities pay, Reebok as well as the actors who endorse the product (the advertising of which involved false claims) would have to pay compensation to the buyer.

False Advertising & Consumer Protection Laws:

In India, consumers can bring a case in a consumer court for ‘unfair trade practice’ which has been defined under section 2(1) (r) of The Consumer Protection Act, 1986 and includes false claims made for promoting sale of any goods.

When we speak specifically in context of food items, according to section 24 of the Food Safety and Standards Act (FSSA), any person who makes false claims (orally, in writing, or visually) about the nutritional value of the product or the efficacy of the product without providing any scientific justification stands in violation of the Act.

One must realize that a commercial done by a celebrity is different from that done by any other actor- this is because in the former case, the motivation for a consumer to buy a product comes not only from the appeal of the commercial but from the ‘person’ who has done the commercial. Both the Acts cover false claims made orally or by visual representation and the celebrity can well fall in the purview of the legislations.

Interestingly, in a talk this year at IIM-A, Amitabh Bachchan revealed that he had stopped endorsing Pepsi after a school-girl asked him why he was promoting the sale of a soft drink which her teacher branded as “poison.” It is time that more movie stars realize their fiduciary obligation towards the people who repose trust in them and be more responsible when endorsing any brand.



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3 thoughts on “To Endorse or Not to Endorse”

  1. Just a few clarifications.. I believe the CPCC is contemplating action against celebrity endorsers for misleading ads and have therefore constituted a sub committee to look into it.
    Also, I just checked out the Provision in the Companies Act, 2013. I believe that reference is being made to Section 36 and it mainly relates to investment made in securities. So I am not quiet sure how the same can be imported to include consumers who be definition consume only goods and services.

    However Section 36, also makes it an offence to inducing any person to enter into any agreement for , or with a view to obtain credit facilities from any bank or finaincial institution. Maybe the same could be interpreted as applicable to consumers of banking services.
    Overall a nice read.

  2. Hi Jacob,

    Thank you for the comment. It is true that CCPC has set up a sub-committee to look into the issue of false advertising; it is yet to come out with a notification declaring that celebrities will be liable in case of false advertising.

    The aforementioned link also states that this decision, if implemented, will allow consumers to claim compensation for false advertising in case of fairness creams etc…therefore, this is not restricted to ‘investments made in securities’.

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