The Consumer Protection Act, 2019 (hereinafter referred to as the “CPA”) replaces more than three-decade old Consumer Protection Act, 1986 and has received the assent of the President. The CPA shall be effective on the date as may be notified, which notification is awaited. The genesis of the CPA is derived from the Consumer Protection Act, 1986 and has introduced below mentioned new concepts and the presumption is that this will lead to protecting the consumer in each and every aspect, thereby ensuring protection of “consumer rights” to the fullest:

The inclusion of “e-commerce” and “electronic service provider” within the ambit of CPA appears to be in pace with the evolving industries thereby attempting to cover the entire gamut for the consumers. Further the terms “endorsement” “product”, “product liability”, “product manufacturer” and “product seller” suggests the clear intention of the legislature to hold everyone involved in the chain, right from the manufacturer, endorser and seller liable for violation of any “consumer rights”.

The inclusion of mediation cell attached to each of the District Commission, State Commissions and to the National Commission, where consumer disputes can be referred by the respective Commission, may lead in speedy resolution of consumer issues.

The advisory council in the form of “the Central Consumer Protection Authority” (hereinafter referred to as the “CCPA”) to regulate matters relating to violation of rights of consumer, unfair trade practices, and false / misleading advertisement1/ endorsement2 which are prejudicial to the interest of public, consumer and to enforce the right of consumer as a class.

The flexibility of filing a complaint via electronic mode will provide the consumer the ease of initiation and pursuing their grievance.

The aforesaid inclusions are certainly a step forward in safeguarding and protecting the consumer however, the implications and effectiveness of the CPA will have to be tested from the point of view of other industries viz. the manufacturer, seller etc. of goods.

Under this article we are focusing on the requirements in compliance under the CPA in relation to “endorsement” vis-à-vis an “endorser”, the challenges thereto and the effect of non-compliance.

The CPA, does not specifically mention the do’s and don’ts which could act as a bible for the endorser whilst advertising / promoting any products or services. However, the endorser will be held liable under the CPA, if the CCPA pursuant to investigation is satisfied that the advertisement is false or misleading may impose a penalty of Rs. 10 Lakhs and subsequent contravention with Rs. 50 Lakhs. The CPA goes a step further and authorizes the CCPA to prohibit the endorser from making endorsement of any product or service for a period which may extend to one (1) year and subsequent contravention to three (3) years. It is pertinent to mention that the said prohibition on the endorser does not appear to be a restriction on the particular advertisement which has been found to be false or misleading but the prohibition appears to be on any and all advertisements endorsed by the said endorser. The only exemption to the given situation is if the endorser has exercised due diligence to verify the veracity of the claims made by the endorser in the advertisement regarding the product and services endorsed by the endorser.

This raises a few questions as the authority of the CCPA imposing prohibition on the endorser in case of a false or misleading advertisement amounts to restrain of trade? The exemption in the form of due diligence being conducted by the endorser also raises certain practical concerns viz.

• The time period when the due diligence is to be conducted by the endorser i.e., at the time of accepting an advertisement assignment, post acceptance of the advertisement assignment, or prior to the commencement of the shoot by the endorser. The implication of the stage of conducting the due diligence may be different at each given stage.
• Is the due diligence required to be conducted by the endorser himself/ herself, the agency engaging the endorser or by an expert on the subject matter?
• The criteria as to what will suffice to pass the test of due diligence being conducted by the endorser. For example, will a dermatologist’s certification that a particular cosmetic is safe will be sufficient to be procured by an endorser whilst advertising a cosmetic brand or will the endorser require to do anything further to complete the due diligence process.

The Central Government has not yet notified the Rules to the CPA and we can hope that the Rules will answer or put to rest and provide clarity on most of the aforesaid concerns.

The term “misleading advertisement”3 mentioned under the CPA is a term which may be another concern will be open for interpretation. For example, the endorser may advertise a toothpaste saying the same is good for teeth and despite using the toothpaste a consumer develops cavity may choose to sue the endorser for misleading advertisement whereas there is a possibility that the cavity has been developed due to other reasons.