Celebrities share onus of claims made in ads

The CCPA can impose a penalty of ₹10 lakh on manufacturers, advertisers and endorsers for misleading claims in ads and up to ₹50 lakh for subsequent breach. It can also bar a brand ambassador from endorsing products for a maximum of three years if they violate the CCPA guidelines

Last week, the Supreme Court’s remarks put the spotlight on making celebrities and social media influencers accountable for any misleading or deceptive claims in ad campaigns they endorse. While hearing a petition against misleading ads by Baba Ramdev’s Patanjali Ayurveda endorsed by the yoga guru himself, the Supreme Court said that both the advertiser and endorser will be equally liable for any misleading claims made in a campaign.

Celebrities share onus of claims made in ads

SC’s remarks reinforced the Advertising Standards Council of India (ASCI) guidelines on celebrity endorsements and the penalties notified by the Central Consumer Protection Authority (CCPA) in 2022.

The CCPA can impose a penalty of ₹10 lakh on manufacturers, advertisers and endorsers for misleading claims in ads and up to ₹50 lakh for subsequent breach. It can also bar a brand ambassador from endorsing products for a maximum of three years if they violate the CCPA guidelines.

These rules are critical in India’s booming brand endorsement market. Last year’s Celebrity Brand Valuation report by risk advisory firm Kroll estimated the overall brand value of the top 25 celebrities in 2022 at $1.6 billion, an increase of 29.1% from 2021. Celebrities such as Ranveer Singh, Virat Kohli, Alia Bhatt, Akshay Kumar, MS Dhoni are ranked based on values derived from their brand endorsement portfolios and relative social media presence.

Besides, in the first 37 matches of the Indian Premier League the share of celebrity endorsed ads stood at 61% versus ads without celebrities at 39%. “Advertising has become safe and formulaic. It does not want to offend or upset anyone. There is a certain sense of safety that comes with a star, a known face that is liked even before the commercial begins,” said Priya Pardiwalla and Steve Mathias, explaining advertisers’ over-reliance on celebrities. Pardiwalla and Mathias are chief creative officers and co-founders of the newly launched agency, Steve Priya. “If the star is used in a clutter-breaking way, it could turn all her/his followers into users of the brand,” they said.

Subhash Kamath, special advisor to ASCI and its former chairman, said the SC’s recent warning will make brands and stars cautious. Earlier brand ambassadors didn’t care what they said as long as they were paid. Now the more responsible celebrities are asking questions from the advertiser, Kamath said. “They are asking questions not just about the scripts but about product benefits,” said Pardiwalla and Mathias, adding, “They know that fans, friends and followers are a currency that can’t be devalued.”

Consumers are more aware, they research products and read labels. “They don’t want to be fooled by anyone. The SC observation is in sync with this current sentiment,” they added.

Manisha Kapoor, CEO and secretary-general at ASCI, said given the huge impact they have on consumers, celebrities are required to complete due diligence on claims made in brand endorsements. While brands hold the ultimate responsibility, celebrities cannot shy away from theirs. The law is very clear that the endorsers’ liability is a separate one from advertisers, she said.

Kapoor said ASCI is committed to constantly improving its advertising code. In August 2023 it updated the definition of celebrity to include influencers with over 5 lakh followers or annual income of more than ₹40 lakh.

“There is a shared responsibility of brands and celebrities in endorsements. Everyone in the ecosystem must step up and be aware of their own responsibilities and liabilities under the law. While celebrities may not be experts in all matters, they should seek the opinion of experts for due diligence,” she said.

Film and sports stars earn hefty fees for endorsements and have a strong influence on consumers. “It is their responsibility to ensure that the advertising for brands they endorse is honest, legal and decent,” said Samit Sinha, managing partner, Alchemist Brand Consulting. They must insist on a legally binding contract to ensure that no ads featuring them can be released by the brand without their explicit and written consent.

Pardiwalla and Mathias said they have been lucky to work with responsible companies that spend on research and technology to keep their products safe. “It requires an investment in the product and not just in the communication. The SC verdict will force organisations to invest and create better products that actually make a difference to consumers and their lives.”