Celebrity ads under scrutiny

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By Xu Wei (China Daily) 08:20, November 01, 2013

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Revised law extends liability for health damages from products and services

Celebrities, beware when endorsing products or services.

That caution was given by legislators and lawyers on Thursday, after a newly revised law, for the first time, makes celebrities liable for appearing in misleading advertising for products that damage consumers' health.

The revision to the law, passed by the top legislature on Oct 25, has a new clause stating that social groups and individuals who endorse products or services that cause harm to consumers should be jointly liable with the producer of the product or service provider.

Celebrities should take extra caution when advertising food and medicine, said Shi Hong, an official with the civil law division under the Commission for Legislative Affairs of the National People's Congress Standing Committee.

"Joint liability means consumers can seek compensation either from the producer or from the party who endorsed it. It is a matter of the consumers' own choices," he said at a symposium on Thursday.

Wu Jingming, an associate professor of consumer rights law at the China University of Political Science and Law, said the new law fixed a loophole, as China was one of few countries where celebrities were not punished for endorsing products that cause damage to consumers.
The revised law also states the designers and publishers of the advertisements will be held liable.

Chen Jian, an official with the China Consumers' Association, said the revision will prompt media to strictly review ads.

"For the media, they should take more responsibility. For consumers, they take it for granted that the better-known the media outlet is, the more trust they can have in the products advertised."

In other countries, if a media organization publishes a misleading advertisement, they would be forced to use the same time period or newspaper pages to correct the influence on consumers, she said.

Qiu Baochang, director of the Huijia Law Firm in Beijing, said more still needs to be done. The current law makes celebrities and the media liable for ads that cause health damage but Qiu said the damages should not be limited to just health.

The revised law also increases the legal liability for business owners, with harsher punishments for producers and service providers that cause personal harm or death to consumers.

According to a judicial interpretation by the top court, compensation for death is 20 times the yearly per capita disposable income in the area.

The revised law also states that dealers should not only compensate consumers for economic and psychological losses but also pay punitive damages up to a maximum of twice the amount of the losses. This means the total payout could be more than 2 million yuan ($328,000) in Beijing and Shanghai.

The law also states that consumers can seek compensation for psychological loss from business owners if they cause psychological damage through verbal insults, body searches or restricting their personal freedom.

Zhang Jinxian, a judge with the Supreme People's Court, said psychological harm will be carefully defined.

Consumers will get compensation for psychological losses from business owners only when there is evidence the business owners caused severe psychological consequences to the consumers, he said.

In some cases, where the psychological losses are not severe, the court may ask the business owners to apologize and remedy the bad influence instead of paying consumers compensation.