Social media influencers to attract up to Rs 50 lakh fine for flouting rules

NEW DELHI: Consumer Affairs Ministry on January 20 released endorsement guidelines for social media influencers.

A fine of Rs 10 lakh will be slapped on the offenders, which can go up to Rs 50 lakh for repeated offenders, the ministry said. The influencer can even be barred from endorsing products for up to 6 years in case of repeated non-compliance of the guidelines, it added.

The influencers should be able to substantiate the claims made by them. The Consumer Protection Act, 2019 provides the the framework for the protection of consumers against unfair trade practices and misleading advertisements.

The product and service must have been actually used or experienced by the endorser, the ministry said, adding that consumers can seek legal actions against those defaulting.

Virtual influencers, implying computer generated avatars, who behave in a similar manner as an influencer also fall under the ambit of these guidelines.

As per the guidelines, disclosures should be placed in the endorsement message in such a manner that they are clear, prominent and extremely hard to miss.

The new guidelines call for a Rs 10 lakh fine for offenders and for repeated offenders the fine can go up tp Rs 50 lakh. The ministry can even stop the celebrity from endorsing in case of repeated non compliance of the guidelines.

The advertisements must contain truthful and honest representation, and should not mislead consumers by exaggerating the accuracy, scientific, validity, or practical usefulness or capability of performance of the product, the ministry said.

The size of social media influencer market in India in 2022 was Rs 1,275 crore and by 2025 it is likely to rise to Rs 2,800 crore with a CAGR of 19-20 percent. Social media influencers of substance (who have substantial influence or followers) are in excess of one lakh, said Rohit Kumar Singh, the secretary of the Department of Consumer Affairs.

He added that the big categories where maximum money is involved when it comes to influencer marketing is personal care. The biggest impact of social media influencers is also in the buying of clothes, said Singh.

“The new guidelines broadly define as to how social media influencers should indulge in disclosure of their relationship with brands,” he said.

Influencer violations comprise almost 30 percent of ads taken up by ASCI, hence this legal backing for disclosure requirements is a welcome step, said Manisha Kapoor, CEO & Secretary General, ASCI.

“ASCI welcomes the endorser guidelines issued by the Ministry of Consumer Affairs. We are happy to note that they are aligned with ASCI’s influencer guidelines, 2021. The Ministry had been in touch with ASCI to review the various global guidelines on influencers,” she added.

The ASCI guidelines for influencers already had set the tone for regulating this vertical of endorsements, noted Chandrima Mitra, Partner, DSK Legal.

“The increasing reach of social media makes it necessary to ensure that there is responsibility and accountability for actions and that’s what this does. The guidelines mapped with the CCPA (Central Authority for Consumer Protection) have added accountability for actions if there is a violation,” she added.

In June, 2022 the Central Authority for Consumer Protection (CCPA) released guidelines for Prevention of Misleading Advertisements and Endorsements, pointed out Kritika Seth, Founding Partner, Victoriam Legalis, Advocates & Solicitors.

“The guidelines mention that advertisements must not only contain truthful and honest representations but also not mislead by way of exaggeration and include disclaimers for risk to the consumer’s personal security. They have made these guidelines applicable and mandatory for any group or individual who has access to an audience and the power to affect their audience’s purchasing decision,” she added.