Thursday, September 21, 2017

Ethics in Product Endorsements and Advertising

In an era when advertising drives the success of a product or service, it is very important to place strict codes of conduct for the genuineness of what is being advertised and also for the celebrities who endorse a product. From the efficacy of “valampirishankhu” (conch with a right twirl) to magic remedies for baldness or acne to the supposed benefits in terms of prosperity in buying gold during certain periods like Akshayathritheeya, advertisements and endorsements play a big role in promoting businesses. To what extent are ethics followed in ensuring that the interests of the consumer are protected in this field?  

In the United States, the Federal Trade Commission (FTC) has strict guidelines concerning the use of endorsements and testimonials in advertisements. It has clearly defined what claims do not amount to endorsements and at what point the person who endorses a product becomes responsible for the claims. However, in India, there is a lot of gray area regarding this aspect and it is high time legal checks and balances are put in place so that the consumer rights are protected.

In India Advertising Standards Council of India (ASCI) set up in 1985 has adopted a Code for Self-Regulation in Advertising. It is a commitment to honest Advertising and to fair competition in the market-place. It stands for the protection of the legitimate interests of consumers and all concerned with Advertising - Advertisers, Media, Advertising Agencies and others who help in the creation or placement of advertisements.”

The main problem with the ASCI is that it is a voluntary self-regulating council, registered as a not-for-profit company under section 25 of the Indian Companies, Act. The ASCI is not a government body, nor does it formulate rules for the public or the relevant industries. It has no powers to prosecute any offender. 

ASCI seeks to maintain and enhance the public’s confidence in advertising. ASCI’s objective is to ensure that advertisements conform to its Code for Self-Regulation which requires advertisements to be: “Honest representations which are truthful and honest to consumers and competitors, non-offensive to public within the bounds of generally accepted standards of public decency and propriety, against harmful products and situations so that it is not used indiscriminately for the promotion of products, hazardous or harmful to society or to individuals particularly minors, to a degree unacceptable to society at large and finally fair in competition, meaning not derogatory to competition”. 

There may be enough other provisions in our legal system to deal with misleading advertisements still there is no clarity about the liability of the celebrity who endorses a product. There has been a proposal that the Central Consumer Protection Council (CCPC) should effectively constitute the subcommittee to discuss the liability of celebrities who misleads the customer leading to a financial or other loss. The FTC of the United States, on the other hand, has provisions to determine the liability of the celebrity and has guidelines making the celebrities responsible enough to investigate the products first and then make a testimonial. Even China is said to have much stricter guidelines.

In an endorsement where a celebrity is involved, the responsibility of others like the ad. agency, the scriptwriter, the producer and the advertiser has also to be fixed, as it is a collective effort. Who will pay the compensation: the celebrity, the producer or the advertiser; and in what proportion? Besides shouldn’t there be criminal liability as well if the ad. leads to health issues or even loss of life? In many cases the celebrities just spare some time for the ad. for the money involved and as such they have to be educated about the consequences and responsibilities involved. 

The role of the government has to be enlarged to vet ads, particularly when health or safety issues are involved. The government can empower the CCPC to screen the ad. before it is aired or printed. This can be enforced more strictly if the product is endorsed by a big celebrity.

Heavy penalties should be imposed on advertisers and even on celebrities in case of blatant violations, where the advertisement totally misrepresents the truth, resulting in losses to the consumer. Just banning the not enough: a punitive law should address the violation of the act or code. 

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Item Reviewed: Ethics in Product Endorsements and Advertising Rating: 5 Reviewed By: BUXONE