Liability of Brand Ambassadors in Advertisements
Brand ambassadors play a crucial role in promoting products or services, but they can also be held liable for false or misleading advertisements under Consumer Protection Act 2019 because The Central Consumer Protection Authority (CCPA) can take cognizance of misleading advertisements and hold a manufacturer or brand endorser liable. The CCPA can impose a fine of upto ?1m on the manufacturer and/or endorser for false or misleading advertisements, and this can rise to ?5m for every subsequent contravention by a manufacturer or endorser. An endorser can also be barred from endorsing any product or service for a period of upto 1 year, and upto 3 years for subsequent contraventions.
Types of Liability
1. Contractual Liability: Brand ambassadors may be liable for breaching contract terms.
2. Tortious Liability: Ambassadors may be liable for damages caused by negligent or intentional acts.
3. Statutory Liability: Ambassadors may be liable under consumer protection laws.
Case Laws
1. Patanjali Ayurved Ltd. v. Dabur India Ltd. (2016): The court held that brand ambassadors can be held liable for false advertising claims.
2. Colgate-Palmolive (India) Ltd. v. Hindustan Unilever Ltd. (2017): The court ruled that brand ambassadors cannot be held liable for false claims if they have no knowledge of the product's composition.
3. Amway India Enterprises Pvt. Ltd. v. Union of India (2019): The court held that brand ambassadors can be liable for promoting pyramid schemes.
4. Francis Vadakkam Vs. A One Medicals & Others C.C. No. 345/2012. The Court ordered both the company and the ambassador will pay compensation to consumer for misleading advertising 10000 Rs. each to consumer.
Indian Laws
1. Consumer Protection Act, 2019: Holds brand ambassadors liable for false or misleading advertisements.
2. Advertising Standards Council of India (ASCI) Code: Requires brand ambassadors to ensure advertisements comply with ASCI guidelines.
3. Indian Penal Code, 1860: Sections 420 (cheating) and 502 (sale of false goods) apply to brand ambassadors.
International Laws
1. Federal Trade Commission (FTC) Guidelines (USA): Requires brand ambassadors to disclose material connections with advertisers.
2. EU Unfair Commercial Practices Directive (EU): Prohibits misleading advertising practices.
Best Practices for Brand Ambassadors
1. Conduct thorough research on the product/service.
2. Ensure advertisements comply with regulatory guidelines.
3. Disclose material connections with advertisers.
4. Avoid making false or misleading claims.
Conclusion
Brand ambassadors have significant influence over consumers, but they also carry legal liability for false or misleading advertisements. Understanding relevant laws and regulations is crucial to avoid potential consequences.
Article written by Jitendra Tiwari as a part of the Course.