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By Roopen Roy: Should celebrities lend their names to products, brands and services they do not use? Should they allow their eminence and aura to be attached to companies simply in exchange of large sums of money? What is their liability if the advertisement is clearly misleading? What if the unsuspecting consumer suffers a significant loss? Let us take an extreme case. Millions of small investors lost their life’s savings when Ponzi schemes like Saradha and Rose Valley collapsed. The brand ambassadors, who were the faces of these Ponzi schemes, took no responsibility. They contended that it was not possible for celebrities to perform a due diligence on the business of their sponsors. The buyers should have exercised caution. If they had suffered because of their own folly or negligence, then they deserved it and the brand ambassadors could not be held responsible. We will wait and see if these arguments finally hold water in the courts of law. But the common people have very little sympathy for this “no duty of care, no responsibility” argument. The government too is sitting up and taking notice. The parliamentary committee on consumer affairs, headed by Telugu Desam Party MP JC Divakar Reddy is mulling proposals for inflicting fines and jail terms for celebrities associating themselves with blatantly misleading advertisements and endorsements. Celebrities and stars have an enormous influence on their fans and followers. They earn enormous amounts from sponsoring companies. It is, therefore, unacceptable that they bear no responsibility whatsoever for false representations. Because their interests are affected, the marketing and advertising firms are opposing the intervention of the legislature. They are making a huge noise about injustice against celebrity endorsers, while choosing to keep silent about the duped consumers. They point out that advertisers have established a mechanism to deal with misleading ads: The Advertising Standards Council of India (ASCI). ASCI is considered a protection for the consumer. If an advertisement is found to be misleading, ASCI may take steps against the delinquent member of the advertising industry. They argue, therefore, that the government should not intervene with a heavy hand. This argument falls apart on closer scrutiny. First, ASCI is a self-regulating body of the players in the advertising industry. So, while it may be arguably impartial, there will always remain a question its independence and objectivity. This question mark is not unique to the advertising industry, the same questions have arisen time and again against self-regulatory bodies in the professions of law, accounting and medical practice. Secondly, ASCI does not have any jurisdiction over celebrities or rogue companies. Lastly, ASCI does not have teeth sharp enough to cause effective deterrence — it cannot imprison, it cannot impose penal fines large enough to cause pain and its actions do not have the sanction of law. To protect consumers from predatory and fraudulent peddlers, there ought to be fair laws. In the US, celebrity endorsers follow guidelines formulated by the Federal Trade Commission (FTC) on the use of endorsements and testimonials in advertising. The FTC guidelines state that endorsements are supposed to reflect the honest opinions, findings, beliefs or experience of the endorser. For example, when an advertisement shows the endorser using the product, the celebrity must have been a bona fide user of the product at the time of the endorsement. In India, even if the celebrity has never seen the product or experienced the service, he or she blindly endorses it in exchange of a hefty fee. How can it be that we sing paeans to the American way of life but shrink when it comes to laws that protect the consumer? The Union minister for food and public distribution Ram Vilas Paswan confirmed last week, that once the new consumer protection bill 2015 comes into force, celebrities would be held liable for any fault in the products they endorsed. Celebrities should think twice before endorsing any product/service. He has famously said, “One should use a common sense approach while endorsing. If an advertisement says a person can get taller in six months using this particular product — is it possible? Consumers are getting misled as they tend to listen and believe that the particular product/service endorsed by celebrities must be of good quality.” Of course there should be safeguards against trigger-happy regulators, but that is different from the claims of immunity for celebrities. The business of endorsements is a murky one much beyond “money for a smiling face ad”. Take the case of Amrapali Mahi Developers. Not only was the Indian limited overs cricket captain Mahinder Singh Dhoni its brand ambassador, his wife Sakshi Dhoni owned a 25 per cent stake in the company. The promoter was a ruling party politician in UP with influence in the corridors of power. Homebuyers, who had invested in the hope of flats in the project were duped. A handful of these buyers decided to take their grievance to social media. They used Twitter trolls to lodge their protest against the realtor and also tagged Amrapali brand ambassador MS Dhoni, requesting that he disassociate himself from the firm. #AmrapaliMisuseDhoni saw 35 lakh impressions. The social media movement spread to the electronic and print media. Dhoni resigned and later his wife disassociated herself from the company. Amrapali’s brand is damaged for good. The negative endorsement on social media has cooked the promoter’s goose as new investors have voted with their feet. While we wait for the new laws to level the playing field, the power of social media is surging. Wielded thoughtfully, it has enormous influence. The helpless legal cries of caveat emptor (the buyer should be careful) are being drowned by chatters on Twitter and postings on Facebook. Social media messages spread fast and wide. The asymmetry of information, which makes markets imperfect, is being narrowed. The power is shifting, advertisers and endorsers of dishonest companies, beware. (The author is founder and CEO of Sumantrana, a strategy advisory) Source: mydigitalfc.com
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