The government on Friday made it mandatory for social media influencers to disclose their “essential” interest in endorsing products and services, and violators can face severe legal action, including a ban on endorsements. The regulations are part of ongoing efforts to curb misleading advertising and protect consumers’ interests amid the expanding social influencers market, which is expected to be worth around Rs 2,800 billion by 2025.
The new guidelines, called “Endorsement Know-How – for celebrities, influencers and virtual media influencers (avatars or computer-generated characters) on social media platforms” were issued by the Department of Consumer Affairs.
Failure to do so will result in the Misleading Advertising Penalty under the Consumer Protection Act 2019.
the Central Consumer Protection Authority (CCPA) can impose a penalty of up to Rs 10 lakh on manufacturers, advertisers and endorsers. Further violations can result in a fine of up to Rs 50,000. The agency can ban the sponsor of a misleading ad from sponsoring for up to 1 year, and subsequent violations can extend the ban for up to 3 years.
Consumer Minister Rohit Kumar Singh introduced these guidelines at a press conference and said the guidelines were issued under the Consumer Law, which provides a framework for protecting consumers from unfair trading practices and misleading advertising.
He hoped the guidelines would act as a deterrent to social media influencers.
“It’s a very important issue. The size of the social influencer market in India in 2022 was in the order of Rs 1,275 crore and by 2025 it is likely to grow to Rs 2,800 crore with a CAGR of around 19-20 percent. The top social media influencers who have a good number of followers have more than 1 lakh in the country,” Singh said.
Explaining that social media influence is here to stay and will only grow exponentially, he said social influencers must behave responsibly.
“Today’s guidelines are aimed at social media influencers who have a material connection to the brand they wish to promote on various social media platforms. This is an obligation on them to behave responsibly in terms of disclosure to consumers.
“One of the biggest paradigms of consumer law is the consumer’s right to information, and this falls within that area. Consumers should know if the person or company they are sponsoring has taken money when something is thrown at them from digital media, or any form of connection they have with the brand,” Singh said.
The secretary said if a non-compliance occurs, there are statutory provisions under which people can contact the authority for legal action against non-compliance.
“These guidelines broadly define that framework for how social media influencers should disclose their relationship with the brand,” the secretary said.
CCPA Chief Commissioner Nidhi Khare cautioned that misleading advertising in any form, format or medium is prohibited by law.
The new guidelines have defined who must disclose everything, when and how it must be disclosed.
Individuals/groups who have access to an audience and the power to influence their audience’s purchasing decisions or opinions about a product, service, brand, or experience because of the influencer’s authority, knowledge, position, or relationship Stars to disclose the factual connection to their audience according to the new standard.
Disclosure should be made “when there is a material connection between an advertiser and a celebrity/influencer that may affect the weight or credibility of the celebrity/influencer’s portrayal,” Khare said.
She said the disclosure should be made in a way that would be “difficult to miss” and in plain language.
The disclosures should be placed in the acknowledgment message in a manner that is clear, conspicuous and extremely difficult to miss. Disclosures should not be mixed with a group of hashtags or links.
When acknowledging in an image, the disclosures should be superimposed over the image sufficiently for viewers to notice. In videos, disclosures should be placed in the video and not just in the description, and they should be in both audio and video formats.
For live streams, the information should be displayed continuously and prominently throughout the stream.
On platforms with limited storage space like Twitter, terms like “XYZAmbassador” (where XYZ is a brand) are also acceptable, she said.
The Secretary said that these guidelines are issued within the general scope of the Consumer Protection Act and one of the Act’s key principles is the prevention of unfair trading practices.
“There are many ways that unfair trading practices take place, one of the main unfair trading practices is the threat of misleading advertising by attempting to sell something that is not exactly as portrayed in the ad.
“While it has been handled skillfully in the conventional media – that is, television, print media and radio – the social and digital media platforms are proving to be a different ball game,” Singh said.
