Celebrities & Influencers are liable for Misleading Advertisements: Supreme Court

Celebrities & Influencers are liable for Misleading Advertisements

The Supreme Court recently in Indian Medical Association v. Union of India,[1] addressed concerns surrounding misleading advertisements in the case where Indian Medical Association (IMA) has filed a petition accusing Patanjali Ayurved of issuing misleading advertisements and passing critical remarks against allopathy. The Court highlighted the responsibility of both advertisers and endorsers in instances of misleading advertisements.

Background

Last November, Patanjali provided assurances to the court regarding the withdrawal of advertisements that made false claims about its products or cast doubt on scientific medicines and vaccinations. Despite this commitment, it was discovered that the company continued with these misleading advertisements.

As a result, the court summoned yoga guru Ramdev and Patanjali’s managing director, Acharya Balkrishna. In response, both issued two public apologies for their failure to comply with the court’s directives. The court dismissed the apology affidavit submitted in response to the contempt notice. The Supreme Court then expanded the case of misleading advertisements, directing Union ministries and authorities to take action against fast-moving consumer goods (FMCG) companies indulging in false campaigns.[2]

Observations

On May 7, 2024, the Supreme Court delivered a strong message to social media influencers, celebrities, and public figures, criticizing them for endorsing products without fully understanding the potential consequences.

The Court issued, inter alia, the following directives:

• Before an advertisement is printed, aired, displayed, a self declaration must be submitted by the advertiser or advertising agency on the lines contemplated in Rule 7 of the Cable Television Networks Rules, 1994. The Self-declaration shall be uploaded by the advertiser/advertising agency on the Broadcast Sewa Portal run under the aegis of the Ministry of Information and Broadcasting. As for the advertisements in the press, print media, or internet, the Ministry is directed to create a dedicated portal within four weeks from today. Immediately on the portal being activated, the advertisers shall upload a Self-declaration before any advertisement is issued in the Press/Print Media/Internet.
• Endorsers should have adequate information or experience with the specific food product being endorsed, and it must be ensured that it is not deceptive.
• Celebrities and social media influencers would be equally liable for issuing false or misleading advertisements, such as if they endorse any deceptive product or service.
• The Ministry of Consumer Affairs, Food and Public Distribution was ordered to file a fresh affidavit on action taken by the Central Consumer Protection Authority (CCPA) on noticing / being informed of false or misleading ads, particularly in the food and health sector.[3]
• Ministry of Health and Family Welfare was directed to file an affidavit furnishing the relevant data with regard to the complaints received by the Food, Safety and Standard Authority of India and the action taken on such complaints relating to penalty of food not of the nature or substance or quality demanded, sub-standard food, misbranded food, misleading advertisement and food containing extraneous matter under the Food, Safety and Standards Act, 2006. It was noted that FSSAI is authorized to take action on its own in the event of any such misleading advertisements coming to its notice, without waiting for any complaint to be received.

It was observed that the Ministries ought to set up specific procedures that encourages the consumer to lodge a complaint, and for the said complaint to be taken to a logical conclusion, instead of simply being marked/forwarded to the concerned State authority, thus leaving the consumer clueless as to the final outcome of the complaint made.

A bench of Justices Hima Kohli and Ahsanuddin Amanullah further stated that “We are of the firm view that advertisers/advertising agencies and endorsers are equally responsible for issuing false and misleading advertisements. Such endorsements that are routinely made by public figures, influencers, celebrities etc. go a long way in promoting a product. It is imperative for them to act with a sense of responsibility when endorsing any product and take responsibility for the same …”.

The Court further observed that when the Consumer Protection Act, 1986 has dedicated an entire chapter to the CCPA to regulate matters relating to, inter alia, false/misleading advertisements, those provisions ought to be used with much more vigour and intensity.

Misleading Advertisements

Under the provisions of the Consumer Protection Act, 2019 (“Act”), the Central Consumer Protection Authority (CCPA) was established to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements.

Misleading advertisements are defined under the Act as advertisements, which – (i) falsely describe a product or service; or (ii) give a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or (iii) convey an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or (iv) deliberately conceals important information.[4]

In a bid to address misleading advertisements and safeguard consumers from unfair trade practices, the Advertisement Standards Council of India (ASCI) previously introduced certain guidelines. However, these guidelines lacked the authority to compel businesses to adhere to them effectively.

Therefore, the CCPA stepped in and issued the Guidelines For Misleading Advertisements And Endorsements, 2022 on June 9, 2022. (“Guidelines”)

These Guidelines obligated, inter alia, businesses to comply with stringent regulations governing misleading advertisements.[5] These Guidelines also applied to an advertising agency or endorser whose service is availed for the advertisement for such goods, products, or services.[6] “Endorser” would include celebrities or influencers, as the term is defined to include an individual or a group or an institution making endorsement of any goods, product or service.[7]

The Guidelines require that the endorsement in an advertisement must reflect the genuine and reasonably current opinion of the endorser, that includes celebrity or influencer, and must be based on adequate information about, or experience with, the identified goods or service and should not be deceptive.[8] Read our detailed post on the Guidelines here.

In case of non-compliance with the Guidelines, the CCPA can impose a penalty of up to INR 10 lakh on manufacturers, advertisers, and endorsers for issuance of misleading advertisements, as has been provided under Section 21 of the Consumer Protection Act, 2019. For any subsequent contraventions, CCPA may impose a penalty of upto INR 50 lakh. Further CCPA can also prohibit the endorser of a misleading advertisement from making any endorsement for upto 1 year and for subsequent contravention, prohibition can extend upto 3 years.

Conclusion

The Supreme Court’s directive requiring self-declaration forms from broadcasters and print media before airing advertisements is a measure to combat misleading advertisements and safeguard consumer interests. This is a commendable move in my opinion, however, it may increase the burden of compliance for various companies and brands engaging in advertisements.

Additionally, the Court’s stance on the liability of celebrities and social media influencers for endorsing misleading ads underscores the importance of ethical advertising practices and prioritizes consumer welfare. The order in this case, therefore, may widen the ambit of liability for endorsers such as celebrities or influencers, and thereby, result in greater due diligence required by such endorsers, to avoid falling foul of the law.

It would be interesting to see how the court reasons and concludes its stance on misleading advertisements in its judgement, as it has greatly widened the scope of the case, thereby affecting various stakeholders involved, particularly FMCG companies.

End notes:

[1] Indian Medical Association v. Union of India, Writ Petition (Civil) No.645/2022.

[2] https://www.livemint.com/companies/news/patanjali-misleading-ad-case-supreme-court-asks-if-the-apology-is-the-same-size-as-you-publish-advertisements-in-newspa-11713851367163.html

[3] https://www.scconline.com/blog/post/2024/05/07/patanjali-misleading-ads-case-celebrities-social-media-influencers-equally-liable-endorsing-misleading-ads-supreme-court/

[4] Section 2 (28), of the Consumer Protection Act, 2019.

[5] https://www.mondaq.com/india/social-media/1312524/ccpa-guidelines-for-misleading-advertisements-and-endorsements-2022

[6] Guideline 3, of the CCPA Guidelines For Misleading Advertisements And Endorsements, 2022.

[7] Guideline 2 (1) (f), of the CCPA Guidelines For Misleading Advertisements And Endorsements, 2022.

[8] Guideline 13, of the CCPA Guidelines For Misleading Advertisements And Endorsements, 2022.

Image generated on Dall-E

(The article has been updated on reviewing the SC order)