Rs 50 Lakh Penalty For Social Media Influencers If They Break Rules: False Claims, Disclaimer & More


Shreya Bose

Shreya Bose

Jan 24, 2023


The Consumer Affairs Ministry has released endorsement guidelines for social media influencers.

Rs 50 Lakh Penalty For Social Media Influencers If They Break Rules: False Claims, Disclaimer & More

Punishment

A fine of Rs 10 lakh will be slapped on the offenders, which can go up to Rs 50 lakh for repeated offenders.

The influencer can even be barred from endorsing products for up to 6 years in case of repeated non-compliance.

The Consumer Protection Act, 2019 provides the framework protecting consumers against unfair trade practices and misleading advertisements.

No bold claims

Influencers have to be able to substantiate the claims they make. 

The product or service has to have actually been used or experienced by the endorser.

Consumers have the right to seek legal actions against those defaulting.

Virtual influencers such as computer generated avatars, who behave in a similar manner as an influencer are also covered by the guidelines.

No surreptitious marketing

Disclosures have to be placed in the endorsement message in such a way that they are clear, prominent and extremely hard to miss.

The advertisements must contain truthful and honest representation.

It should not mislead consumers by exaggerating the accuracy, scientific, validity, or practical usefulness or capability of performance of the product.

Market size

The size of the social media influencer market in India in 2022 was Rs 1,275 crore.

This figure is likely to rise to Rs 2,800 crore with a CAGR of 19-20 percent by 2025.

Social media influencers of substance (who have substantial influence or followers) number in excess of one lakh, said Rohit Kumar Singh, the secretary of the Department of Consumer Affairs.

Major categories employing influencers

The category where maximum money is involved with respect to influencer marketing is personal care. 

Influencers also have significant pull in selling clothes, said Singh.

Disclosure requirements necessary

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 (Advertising Standards Council of India).

“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 council’s guidelines for influencers already had set the tone for regulating this vertical of endorsements, noted Chandrima Mitra, Partner, DSK Legal.

Containing the menace

“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) had issued rules for Prevention of Misleading Advertisements and Endorsements.

Don’t misuse influence

They mention that ads must not only contain truthful and honest representations but also not mislead by way of exaggeration.

Disclaimers have to be added in case there is risk to the consumer’s personal security.

These guidelines are applicable and mandatory for any group or individual who has access to an audience and the power to affect their audience’s purchasing decision.


Shreya Bose
Shreya Bose
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