'Explicit and clear': New ad rules set celebrity endorsement guidelines

Management firms argue that holding stars accountable is unfair; experts say step needed to check misleading claims in ads

Stars may have to think twice before endorsing a brand. On Friday, the Department of Consumer Affairs, Government of India, notified guidelines that specify due diligence to be carried out by celebrities when endorsing brands.

For the advertising industry, regulators and consumers in general who are struggling with misleading claims made by brands, the guidelines hold promise and hope, say experts.

To be sure, this isn’t the first instance that celebrity endorsements have come into the spotlight. In 2019, the government had brought the Consumer Protection Act into effect, seeking to make celebrities liable for their endorsements. The Act, which put in place a Central Consumer Protection Authority (CCPA) to regulate matters, stipulated stiff penalties — from a fine of Rs 10-50 lakh to a jail-term of five years — for those making false claims. It also sought to bar a celebrity from endorsing a product for up to a year, extending it to three years for repeat offences.

Yet, misleading ads and claims made by celebrity endorsers have continued unabated, as a recent study by community social media platform LocalCircles notes. It says that at least two in three (or 70 per cent) respondents said that they had come across misleading ads in the last 24 months amid the Covid-19 pandemic. The survey received 33,000 responses from consumers in 312 districts across the country.

“This is a step in the right direction,” said Sandeep Goyal, managing director of ad agency Rediffusion. “However, if a celebrity is penalised for making false and misleading claims then that would act as a strong deterrent for the rest,” he says.

The new guidelines indicate that any endorsement has to reflect the genuine, reasonably current opinion of the individual, group or organisation that is making the representation and must be based on adequate information about, or experience with, the identified goods, product or service and must not otherwise be deceptive.

Celebrity management companies are predictably unhappy with the new guidelines, arguing that holding celebrities accountable for misleading claims is not appropriate, since it is the manufacturer of the brand, who has created the advertisement.

“I am not saying that celebrities should not do due diligence before picking up an endorsement. But holding them responsible for the misleading claim is not correct,” the chief executive of a popular celebrity management firm based in Mumbai said. He declined to be quoted, given the sensitivity of the matter.

But the Advertising Standards Council of India (ASCI), which is the sector regulator, says that it was time that misleading claims across categories were checked.

“The guidelines issued are quite consistent with the prevailing ASCI code on misleading advertisements. ASCI will continue to engage and offer its support and expertise to the government in the area of consumer protection. It is important for different stakeholders to work collectively and in a streamlined manner to address the issue of misleading ads, particularly in the dynamic environment of digital advertising,” Manisha Kapoor, chief executive officer and secretary general, ASCI, said.

Shweta Purandare, an advertising compliance expert and former secretary general of ASCI, felt the guidelines would rein in not only celebrity endorsers but also social media influencers.

“I see brand endorsements getting shaken and stirred with these guidelines by the government. ASCI is a self-regulatory body and has limitations in terms of its scope of work. With the government stepping in with these guidelines, endorsers as well as social media influencers will be careful when endorsing a brand,” she said.

The importance of celebrity endorsements has only grown in the last few years, especially during the Covid-19 pandemic, as brands have sought trusted names and faces who could communicate their message effectively.

Celebrity endorsements saw a 44 per cent growth in 2021 as opposed to 2020, according to a recent report by AdEx India, a division of TAM Media Research. In terms of ad volume share on television, 27 per cent constituted celebrity endorsements in 2021, the report said. Of this, film stars together added more than 80 per cent share of advertising during 2021, followed by sports persons and TV stars that added 13 per cent and 3 per cent each in terms of share.

Lens on Celebs

(What the new guidelines suggest)

·       Any endorsement has to reflect the genuine, reasonably current opinion of the individual, group or organisation that is making the representation

·       It must be based on adequate information about, or experience with, the identified goods, product or service and must not otherwise be deceptive

(What the law states)

·       The Consumer Protection Act put in place a Central Consumer Protection Authority and stipulated stiff penalties — from a fine of Rs 10-50 lakh to a jail-term of 5 years — for those making false claims

·       It also sought to bar a celebrity from endorsing a product for up to a year, extending it to three years for repeat offences