Influencers can now be fined upto Rs 50 lakh for misleading consumers

In a bid to curb malpractices in influencer marketing, the Consumer Affairs Ministry on January 20 released endorsement guidelines that propose a penalty of Rs 10 lakh on the offenders, which can go up to Rs 50 lakh for repeated offenders.

The Department of Consumer Affairs held a press conference in Delhi on Friday to announce new guidelines to make it mandatory for social media influencers to disclose promotional content in accordance with the Consumer Protection Act, 2019.

It is noteworthy that the Advertising Standard Council of India (ASCI) has released influencer guidelines in 2022, it doesn’t prescribe any punitive action on the violators as ASCI’s mandate is limited to self regulation.

As per the fresh guidelines, the influencer can also be barred from endorsing products in case of repeated non-compliance with the guidelines.

In June 2022, the Central Consumer Protection Authority had notified rules to prevent celebrities from promoting misleading advertisements and products.

Influencers found sharing misleading endorsements, fake reviews or products, to influence fans to buy or spend, can face prosecution under the new law, officials added.

The disclosures should be easy to notice in post descriptions where you can usually find hashtags or links. It should also be prominent enough to be noticeable in the content, the department said.

The Ministry also said that before endorsing, the product and service must have been actually used or experienced by the endorser. In case of default, the consumers can seek legal action, the Ministry further noted.

According to the new guidelines, virtual influencers, computer-generated avatars, who behave in a similar manner as an influencer will also fall under the ambit of these 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.

When it comes to promoted content in videos, the department said that disclosures for paid promotions should be placed in the video — not just in the description — and be made in both audio and video format. Influencers must also disclose if they promote a brand, service or product during live streams, per the guidelines.

The department said the disclosures and endorsements should be in the language of the content.

“Today’s guidelines are aimed at social influencers who have a material connection with the brand they want to promote on various social media platforms. So this is an obligation for them to behave responsibly,” consumer affairs department secretary Rohit Kumar Singh told reporters.

Influencer marketing is most popular on Instagram, followed by YouTube. India has nearly 80 million content creators, including video streamers, influencers, bloggers, and essentially anyone building a community around their niche.

According to the INCA-e4m Influencer Marketing Report 2022, the Influencer Marketing Industry was valued at Rs 1,275 crore as of FY22, and will grow at a CAGR of 25% in the next 5 years. 

Manisha Kapoor, CEO & Secretary General, ASCI, says, "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. Influencer violations comprise almost 30% of ads taken up by ASCI, hence this legal backing for disclosure requirements is a welcome step. The Ministry had been in touch with ASCI to review the various global guidelines on influencers."