Instead of jail term, celebrities endorsing misleading ads will have to pay penalty of up to Rs 50 lakh and serve a ban of up to three years once the new Consumer Protection Bill is cleared by Parliament.
The Consumer Protection Bill, 2018 was introduced by Consumer Affairs Minister Ram Vilas Paswan in the Lok Sabha and it seeks to replace the 31-year-old law.
One of the major objective of the bill is to crack down on misleading advertisements.
If the Central Consumer Protection Authority (CCPA), proposed to be set up under the bill, is satisfied that an advertisement is false or misleading, it may issue directions to endorsers, advertiser, publisher as well traders and manufacturers to discontinue or modify such an ad.
The CCPA will have the powers to impose penalty of up to Rs 10 lakh on endorsers and manufacturers. For subsequent violation, the penalty will be of up to Rs 50 lakh.
The authority will also have the power ban endorser of false or misleading ads from making endorsement of any product or service for a period of one year, while subsequent violation will attract a ban of up to three years.
"No endorser shall be liable to a penalty if he has exercised due diligence to verify the veracity of the claims made in the advertisement regarding the product or service being endorsed by him," the bill said.
The Parliamentary Standing Committee that vetted the Consumer Protection Bill 2015 had suggested stringent penalty and jail term for endorsers of misleading ads. However, the government did not accept the recommendation of jail term and has instead proposed ban of up to three years.
In case of those publishing misleading ads, the bill empowers CCPA to impose a penalty of up to Rs 10 lakh.However, no penalty will be slapped if publishers prove that the ad was published in the ordinary course of their business.
"No defence shall be available to such person if he had previous knowledge of the order passed by the CCPA for withdrawal of or modification of such advertisement," the bill said.
Since the Parliamentary panel had made many recommendations, the consumer affairs ministry decided to withdraw the 2015 bill and introduced a fresh one.
Consumers will be able to file complaints with consumer courts from home as the Consumer Protection Bill 2018 will make way for e-filing to ensure faster disposal of grievances. The new bill will also allow the Central government to regulate e-commerce and direct selling, ensuring at the same time strict punishment for misleading advertisements and food adulteration.
"This Bill provides for simplification of consumer disputes adjudication process for faster disposal of grievances through filing of complaints by a consumer from his place of residence, e-filing and video conferencing for hearing," Minister of Consumer Affairs, Food and Public Distribution Ram Vilas Paswan said in a series of tweets on Friday.
The consumer protection bill, 2018 which seeks to replace the archaic Consumer Protection Act, 1986 was presented in the Lok Sabha on Friday, Paswan said.