Recent Reforms and New Challenges under the Consumer Protection Act, 2019: A

Focus on Endorsements

Introduction

In the ever-evolving landscape of consumer rights and protection, the role of endorsements
has become a pivotal point of discussion and regulation. With the advent of digital media and
influencer marketing, the dynamics of endorsements have significantly transformed,
presenting both opportunities and challenges for consumer protection laws. This essay delves
into the recent reforms introduced by the Consumer Protection Act, 2019, and the new
challenges posed by endorsements, emphasizing the need for transparency, accountability,
and consumer awareness in the realm of advertising and promotions.

Understanding Endorsements

Endorsements, traditionally associated with celebrities or public figures, involve the

promotion or advertisement of products, services, or brands to leverage the influence and
credibility of the endorser. These endorsements can take various forms, from celebrity
endorsements seen on television commercials to influencer endorsements on social media
platforms like Instagram, YouTube, and TikTok. The power of endorsements lies in their
ability to influence consumer behavior, shape brand perception, and drive purchasing
decisions.

While endorsements can be highly effective in enhancing brand visibility and credibility, they
also come with inherent risks. One of the primary concerns is the transparency and
authenticity of endorsements. Unlike traditional advertisements where the commercial nature
is overt, influencer endorsements, especially on social media, often blur the lines between
genuine recommendations and paid promotions. Consumers may not always be aware of the
financial arrangements or incentives behind these endorsements, leading to potential
misleading or deceptive practices.

Consumer Protection Act, 2019: Reforms and Provisions

The Consumer Protection Act, 2019, marks a significant milestone in India's consumer
protection framework, aiming to address emerging challenges in the digital era. With specific
reference to endorsements and advertising, the Act introduces several key reforms and
provisions:
Definition and Regulation of Advertisements: Section 2(1) of the Act defines
advertisements, bringing clarity to what constitutes commercial communications. This
definition is crucial in identifying misleading or deceptive advertisements that may harm
consumers' interests.

Prohibition of Misleading Advertisements: Section 2(28) of the Act defines misleading

advertisements and prohibits their dissemination. This provision empowers consumers to
seek recourse against advertisements that contain false or misleading claims about products
or services.

Establishment of the Central Consumer Protection Authority (CCPA): Section 10 of the

Act establishes the CCPA, a regulatory body with powers to investigate and penalize
violations of consumer rights, including false or misleading advertisements. The CCPA plays
a vital role in enforcing transparency and accountability in advertising practices.

Penalties for False Advertisements: Section 21 of the Act empowers the CCPA to impose
penalties on entities found guilty of publishing false or misleading advertisements. The
penalties range from fines of up to Rs. 10 lakhs for first-time offenses and up to Rs. 50 lakhs
for subsequent breaches. Additionally, the CCPA can prohibit offenders from making
advertisements for specified periods.

Due Diligence by Endorsers: Sub-section (5) of Section 21 provides a safeguard for

endorsers who exercise due diligence in verifying the accuracy of claims made in
advertisements. Endorsers who ensure that their endorsements reflect genuine and accurate
information are exempted from penalties under the Act.

These provisions under the Consumer Protection Act, 2019, signify a proactive approach
towards regulating advertisements and endorsements to protect consumers from deceptive
practices and false claims.

Challenges and Concerns in Endorsements

Despite the regulatory framework provided by the Consumer Protection Act, 2019, several
challenges and concerns persist in the realm of endorsements:

Disclosure and Transparency: One of the primary challenges is ensuring adequate

disclosure and transparency in endorsements, especially in the digital space. Influencers and
brands must clearly disclose any material connections, such as financial arrangements or
partnerships, to ensure that consumers are aware of the commercial nature of the
endorsement.

Authenticity and Credibility: Maintaining authenticity and credibility in endorsements is

another challenge. Consumers trust endorsements based on the perceived authenticity and
honesty of the endorser. Any perception of insincerity or hidden motives can erode consumer
trust and lead to backlash against both the endorser and the brand.

Enforcement and Monitoring: Effective enforcement and monitoring of endorsements pose

challenges, particularly in the digital ecosystem where content is rapidly produced and
disseminated. Regulatory authorities like the CCPA need robust mechanisms to monitor
endorsements, identify violations, and take timely action against offenders.

Consumer Awareness: Despite legal safeguards, many consumers may not be fully aware of
their rights regarding endorsements or how to identify deceptive practices. Enhancing
consumer awareness through education and outreach programs is essential to empower
consumers to make informed choices and report misleading advertisements.

Guidelines and Best Practices

In response to the challenges posed by endorsements, regulatory authorities and industry

bodies have developed guidelines and best practices to promote responsible advertising and
endorsements:

Disclosure Guidelines: The Advertising Standards Council of India (ASCI), a self-

regulatory body, has issued guidelines requiring influencers to clearly disclose any material
connections with brands in their endorsements. These disclosures must be prominent,
unambiguous, and easily understandable to consumers.

Due Diligence Requirements: Influencers and endorsers are encouraged to exercise due
diligence in verifying the accuracy and truthfulness of claims made in endorsements. This
includes testing products/services, reviewing factual information, and ensuring that
endorsements reflect genuine opinions and experiences.

Monitoring Mechanisms: Brands and agencies are urged to implement internal monitoring
mechanisms to oversee endorsement campaigns and ensure compliance with regulatory
requirements. Regular audits, reviews, and checks can help detect and rectify any misleading
or deceptive practices.
Consumer Feedback and Complaint Mechanisms: Establishing channels for consumer
feedback and complaints regarding endorsements is vital. Brands and regulatory authorities
should actively solicit feedback from consumers, investigate complaints, and take appropriate
action to address concerns and grievances.

Case Studies and Precedents

Several notable cases and precedents highlight the importance of transparent and responsible
endorsements under the Consumer Protection Act, 2019:

Zydus vs. Competitor Advertisements: In a case involving comparative advertisements, the

Delhi High Court restrained Zydus from telecasting misleading advertisements that
disparaged competitors' products. The court emphasized the importance of truthful and non-
misleading advertising practices, setting a precedent for regulating competitive endorsements.

CCPA Enforcement Actions: The CCPA has taken enforcement actions against entities
found guilty of publishing false or misleading advertisements, including endorsements. These
actions serve as deterrents and underscore the accountability of endorsers and brands in
ensuring truthful and transparent endorsements.

Conclusion

In conclusion, endorsements play a significant role in shaping consumer perceptions and

purchasing decisions. The Consumer Protection Act, 2019, introduces essential reforms and
provisions to regulate endorsements and advertising practices, emphasizing transparency,
authenticity, and consumer protection. However, challenges such as disclosure, authenticity,
enforcement, and consumer awareness remain pertinent.

Effective implementation of guidelines, due diligence by endorsers, proactive monitoring,

and consumer education are key strategies to address these challenges. Regulatory
authorities, industry stakeholders, and consumers must collaborate to promote responsible
advertising and endorsements that prioritize consumer interests and uphold ethical standards.