Is penalising brand ambassadors a fair move?

Experts say it is unfair to impose hefty fines on celebrity endorsers who are not responsible for the brand and marketing strategy

The government's move to penalise brand endorsers with hefty fines for making misleading claims in ads is unfair, say brand and marketing experts. While due-diligence levels are expected to go up if it becomes law, most celebrity managers that Business Standard spoke to fear that the move could actually discourage brand endorsements.
 
“Last year, state food regulators had come down hard on Maggi's brand ambassadors both past and present for being part of ads that misled consumers about the product. This was at the height of the Maggi controversy and was perceived even then as being inappropriate by most experts and observers,” said Indranil Das Blah, COO, Kwan Entertainment & Marketing Solutions that manages the endorsements of a number of sports and entertainment celebrities.

 
“Brand endorsers are merely the face of the brand, they are not drivers of the manufacturing and marketing strategy. How can they be held responsible for the claims made by a marketer in an ad?" he asks.
 

Dhruv Jha, general manager (content & experiences), IPG Mediabrands, said there “…cannot be a blanket law for celebrity endorsements. Products go through several regulatory checks and a celebrity is aware of this when endorsing a brand. How can he be then held responsible if the product turns out to be faulty?"
 
In a meeting on Tuesday that included Finance Minister Arun Jaitley, Consumer Affairs Minister Ram Vilas Paswan and a few others, it was decided that brand ambassadors would be fined up to Rs 1 crore if they were found making tall claims in ads. 

 
A jail term, as was previously suggested by a Parliamentary Committee, was not considered by the ministers since it was found to be too harsh. At the meeting yesterday, it was decided that it was better to hike the penalty to dissuade false and misleading brand endorsements. 
 
The Parliamentary Committee overseeing the revamped Consumer Protection Bill, which is expected to be tabled in Parliament soon, had proposed in April that first-time offenders be handed down a fine of Rs 10 lakh or a jail-term of two years, or both. For second-time offenders, the proposal was to increase the fine to Rs 50 lakh or a five-year jail term. 

 
A final decision, however, on the matter is expected to be taken shortly by the group of ministers before it makes its way to Parliament.