Category Archives: Consumer Law

Do Not Disturb

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The problem with the Do Not Disturb service is that it doesn’t seem to automatically get cell phone companies to stop disturbing subscribers with promotional calls which are usually automated (meaning that the beleaguered subscriber doesn’t even have the option of giving the person at the other end a piece of his mind if he should want to).

There is, of course, a difference between a service message and unsolicited commercial communication (UCC). The National Do Not Call Registry web site defines UCC as ‘any message, through telecommunications service, which is transmitted for the purpose of informing about, or soliciting, or promoting any commercial transaction in relation to goods, investments or services which a subscriber opts not to receive.’ However, this does not include messages ‘relating to a service of a financial transaction under a specific contract between parties to such contract’.

So, while a call saying that your bill needs to be paid is a service message, a call you receive (almost invariably when you’re busy) promoting some bizarre ring tone is not a service message, and a cell phone company has no right to make such a call to you.

Getting on the Do Not Call Registry can be a royal pain in the neck too. One phone company, for example, asks subscribers to send an SMS to a certain number with a request for the DND service to be activated and says that it takes 45 days for activation. And during those 45 days, consumers not only have to put up with calls from arbitrary companies offering insurance policies but also from the phone company itself.

Calling their customer care at 111, one is told that this is the case because it’s what TRAI guidelines mandate. Apparently, the company has to send the consumer’s phone number to them and only after the number is added to the Registry, can the calls stop.

While this makes sense for calls being made by third parties, it’s difficult to understand why the cell phone company itself should need to wait 45 days. For example, if a girl asked a guy at college to stop phoning her to ask her out, if the guy were to say, “I’ll stop calling after the Principal says so,” the logic behind that statement would be obscure, to say the least. That is effectively what the this company’s customer care says though.

On October 21, 2008, the Telecom Unsolicited Commercial Communication (Second Amendment) Regulations, 2008 were notified. Under these regulations, service providers which send unsolicited commercial communication are supposed to take action within 28 days of a complaint being filed and inform the subscriber of what action has been taken. While this obviously applies to those who have an active DND service, it isn’t entirely clear whether it applies to those who have merely asked for the service to be activated.

If cell phone companies value customer goodwill, they would probably do well to ensure that it does apply to all their subscribers.

Celebrity endorsements – Liability ratcheted up

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By Sidhartha Jatar

One of the most commonly used tools for marketing a product is advertising, which uses the media to ‘reach out’ to consumers. Celebrities are an essential pawn in this strategy as they lend credibility to the product and engage with the consumer. But do celebrities really know the product to which they lend their face? If celebrity endorsers are not experts (or at least sufficiently knowledgeable) on the products they promote, how far should they be responsible if that product turns out to be a damp squib?

Currently, section 68 of the Companies Act, 1956 provides for punishment to any person fraudulently inducing another to invest money through a false or misleading statement made either knowingly or recklessly. The new Companies Bill, 2008 which was tabled in Parliament this October increases the liability to 50 lakh rupees and adds to this a jail sentence that may extend to three years (currently, the law provides for a fine of 1 lakh rupees). The inference then is that a celebrity who “knowingly” or “recklessly” makes a false representation will potentially have to undergo up to three years imprisonment. Quite clearly, the legislature wishes to add sufficient deterrent value to unfair practices and keep both celebrities and the companies on behalf of whom they endorse the product, in check.

It is a debatable issue whether the ratcheting up of liability is too severe given that ultimate product/service liability must rest with the manufacturer/service provider. While it may be fair to hold a management representative of a company liable for a misleading claim, should the celebrity be required to conduct a due diligence before entering into advertising contracts? While on one hand, the possibility of a jail term may appear harsh, proving knowledge and recklessness might turn out to be a difficult endeavour. Some of the factors that will have to be considered include – the nature and extent of involvement of a celebrity with the product (whether he/she is simply an endorser or has become a spokesperson over time), the impact the advert has had on the consumer (dependent on the ‘size’ of the celebrity and factual evidence), the extent of knowledge the celebrity has about the product and given the circumstance, the level of care the celebrity ought to have taken before endorsing the product. Unless there is proof beyond reasonable doubt (as is required under criminal law), the chances of a celebrity being sent to jail are low.

The next thought that occurs to one’s mind is why the Companies Act has taken on the onus of protecting the consumer from misleading advertisements. Why should a company tribunal be required to look into consumer protection issues? The Consumer Protection Law itself offers a detailed definition of an ‘unfair trade practice’, a term that was introduced to the Act in 1984 in order to protect consumers against false and misleading ads, among other things. Clearly, then, celebrity liability should fall under the purview of this act, rather than the Companies Act.

It remains to be seen how effective the new provision will be. There is little doubt,though, that such regulatory structures will contribute to the caution celebrities exercise while seeking to ‘cash in’ during a media blitz.