The Consumer Protection Bill 2019 that was cleared by the Lok Sabha on Tuesday makes the game harder for the advertising industry.
The act was revised as misleading advertisements, tele-marketing, multi-level marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive interventions. "Therefore, it has become inevitable to amend the Act to address the myriad and constantly emerging vulnerabilities of the consumers," said a government notification.
Offenders can face a jail term upto two years and repeat offenders can even be jailed upto five years, according to the new bill. Any manufacturer or service provider who causes a false or misleading advertisement to be made which is prejudicial to the interest of consumers shall be punished with imprisonment for a term which may extend to two years and with fine which may extend to ten lakh rupees; and for every subsequent offence, be punished with imprisonment for a term which may extend to five years and with fine which may extend to fifty lakh rupees.
There is also a provision for class action law suit for ensuring that rights of consumers are not infringed upon.
The new act even tightens the screw around brand ambassadors or endorsers. Product endorsers can protect themselves from a penalty only if they have exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by them.
Authorities ranging from the district collector to the rank of a director general can take action against errant advertisers. A Central Consumer Protection Authority to be known as the Central Authority will regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of consumers.
The Central Authority shall consist of a Chief Commissioner and such number of other Commissioners as may be prescribed, to be appointed by the Central Government to exercise the powers and discharge the functions under this Act.
The Central Authority has the powers to prohibit the endorser of a false or misleading advertisement from making endorsement of any product or service for a period which may extend to one year.
The Central Authority has powers to issue directions and penalties against false or misleading advertisements. The Central Authority may, after receiving any information or complaint or directions from the Central Government or of its own motion, conduct or cause to be conducted a preliminary inquiry as to whether there exists a prima facie case of violation of consumer rights or any unfair trade practice or any false or misleading advertisement, by any person, which is prejudicial to the public interest or to the interests of consumers and if it is satisfied that there exists a prima facie case, it shall cause investigation to be made by the Director General or by the District Collector.