Endorsement Guidelines: Social Media Influencers Liable To Pay Up To INR 50 Lakh Fine

The Consumer Affairs Ministry on Friday released new endorsement guidelines under which social media influencers would have to pay heavy fines for violations.

Social media influencers would be liable to pay a fine of up to INR 10 lakh for violation of the guidelines and the penalty can go up to INR 50 lakh for repeated violations.

The guidelines will be applicable to all social media influencers, including virtual avatars promoting products and services online and celebrities.

Influencers are defined as creators who advertise products and services with a strong influence on the purchasing decisions or opinions of their audience.

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

Quick Look At The Guidelines

As per the guidelines, influencers will have to put disclosures if there is a material connection between the advertiser and celebrity or influencer that may affect the credibility of the representation made by the celebrity or influencer.

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

Moreover, disclosures should be placed within the video and made in both audio and video formats. In case of live streams, the influencers need to run tickers throughout the video to convey the message continuously and prominently. They can use terms such as ‘advertisement’ or ‘ad’, sponsored’, ‘paid promotion’ or ‘paid’.

Besides, the disclosures should be in the same language in which the advertisement is being made.

Other than monetary deals and compensations, material connections will also include free products, contests and sweepstakes entries, trips or hotel stays, media barters, coverage and awards, and any family, personal or employment relationships.

Influencer Marketing In India

The size of the social media influencer market in India stood at INR 1,275 Cr in 2022 and is expected to grow at a CAGR of 19-20% to reach INR 2,800 Cr by 2027, Department of Consumer Affairs Secretary Rohit Kumar Singh said in a press conference.

When it comes to influencer marketing, maximum money is involved in the personal care segment, Singh said, adding that the biggest impact of social media influencers is noticeable in the purchase decisions for clothes.

It must be noted that influencers came into the limelight for many wrong reasons last year. Social commerce unicorn Meesho sent legal notices to certain social media influencers for posting negative reviews about the startup on social media. Online travel aggregator EaseMyTrip also said that it was targeted by such coordinated campaigns and announced that it would take legal action against the perpetrators.

Besides, the fall in prices of some of the cryptocurrencies promoted by social media influencers also raised a lot of questions about the checks and balances.

Considerably, the Securities and Exchange Board of India (SEBI) is reportedly looking at framing rules to govern influencers who dish out financial advice on social media platforms.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.