• The Department of Consumer Affairs has made it mandatory for social media influencers to disclose all “material” interests such as gifts, hotel accommodation, equity, discounts and awards when endorsing any products, services or scheme, failing which strict legal action, including ban on endorsements can be taken.
• The regulations are part of continuing efforts to curb misleading advertisements as well as protect the interests of consumers amid the expanding social influencer market.
• The new guidelines named ‘Endorsement know-hows! — for celebrities, influencers and virtual media influencers on social media platforms’ has been issued by the Department of Consumers Affairs.
• In case of violation, the penalty prescribed for misleading advertisement under the Consumer Protection Act, 2019 will be applicable.
• The Central Consumer Protection Authority (CCPA) can impose penalty of up to Rs 10 lakh on manufacturers, advertisers and endorsers. For subsequent offences, penalty of up to Rs 50 lakh can be imposed.
• The CCPA can prohibit endorser of a misleading ad from making any endorsement for up to one year and for subsequent contravention, prohibition can extend up to three years.
Why the govt has issued guidelines?
• The size of social influencer market in India in 2022 was of the order of Rs 1,275 crore and by 2025, it is likely to rise to Rs 2,800 crore with a compound annual growth rate of about 19-20 per cent. The social media influencer of substance, which means those having good number of followers, are in excess of 1 lakh in the country.
• With the increasing reach of digital platforms and social media, such as Facebook, Twitter and Instagram, there has been a rise in the influence of virtual influencers, in addition to celebrities and social media influencers.
• This has led to an increased risk of consumers being misled by advertisements and unfair trade practices by these individuals on social media platforms.
• The guidelines have been issued under the ambit of the CCPA that provides framework for the protection of consumers against unfair trade practices and misleading advertisements.
• The new guidelines have specified who all need to disclose, when to disclose and how to disclose.
Who should disclose?
i) Celebrities: Famous personalities, including but not limited to entertainment or sports industry who have the power to affect the decisions or opinions of their audience.
ii) Influencers: Creators who advertise products and services with a strong influence on the purchasing decisions or opinions of their audience.
iii) Virtual Influencers: Fictional computer generated ‘people’ or avatars who have realistic characteristics, features and personalities of humans, and behave in a similar manner as influencers.
When to disclose?
• The disclosure should happen “when there is a material connection between an advertiser and celebrity/influencer that may affect the weight or credibility of the representation made by the celebrity/influencer”.
• The disclosure should be in such a manner that it is “hard to miss” and should be in simple language.
• The disclosures should be placed in the endorsement message in such a manner that they are clear, prominent and extremely hard to miss. Disclosures should not be mixed with a group of hashtags or links.
• In endorsement in a picture, disclosures should be superimposed over the image enough for viewers to notice.
• In video, disclosures should be placed in the video and not just in the description and they should be made in both audio and video format.
• In the case of live stream, disclosures should be displayed continuously and prominently during the entire stream.