Centre Issues New Endorsement Guidelines For Celebs, Social Media Influencers; Know The Steep Fine For Not Abiding

New Delhi: As part of continuing efforts to curb misleading advertisements as well as protect the interests of consumers amid the expanding social influencer market which is projected to grow 20 per cent annually to reach Rs 2,800 crore by 2025, the government on Friday 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 a ban on endorsements, can be taken.

The disclosures should be in simple and clear language, should be of a duration that is hard to miss, must be run with endorsements, including live streams and should be platform agnostic, according to a PTI report.

The new guidelines named ‘Endorsement Know Hows – for celebrities, influencers and virtual media influencers (Avatar or computer generated character) on social media platforms’ has been issued by the Department of Consumers Affairs.

In case of violation, the penalty prescribed for misleading advertisements under the Consumer Protection Act 2019 will be applicable.

Launching these guidelines at a press conference, Consumer Affairs Secretary Rohit Kumar Singh said the guidelines have been issued under the ambit of the CCPA that provides a framework for the protection of consumers against unfair trade practices and misleading advertisements. He hoped that the guidelines would act as a deterrent for social media influencers.

“It’s a very important subject. The size of social influencer market in India in 2022 was of the order of ₹ 1,275 crore and by 2025, it is likely to rise to ₹ 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,” Singh was quoted as saying.

The secretary said the social media influence is here to stay and will only grow exponentially and therefore the need to regulate misleading ads on social media.

“Today’s guidelines are aimed at social media influencers which have material connection with the brand they want to promote on various social media platforms. This is an obligation for them to behave responsibly as far as the disclosure is concerned to the consumers.

“One of the biggest paradigm of the consumer law is the consumers right to know and this falls in that purview. Consumers should know if something is thrown at him/her from digital media, the person or the entity which is sponsoring it have they taken money or any form of connection they have with the brand,” Singh added.

What is the penalty?

• The Central Consumer Protection Authority (CCPA) can impose a penalty up to Rs 10 lakh on manufacturers, advertisers and endorsers.
• For subsequent offences, a penalty of up to Rs 50 lakh can be imposed.
• The CCPA can prohibit the endorser of a misleading ad from making any endorsement for up to 1 year and for subsequent contravention, prohibition can extend up to 3 years.

What material connection could include, according to  CCPA Chief Commissioner Nidhi Khare:

Material connection could include but is not limited to benefits and incentives, such as monetary or other compensation; free products, including those received unsolicited, discounts, gifts; contest and sweepstakes entries; trips or hotel stays; media barters; coverage and awards; or any family, personal or employment relationship.

Who all need to disclose, when to disclose and how to disclose:

Individuals/groups who have access to an audience and the power to affect their audiences’ purchasing decisions or opinions about a product, service, brand or experience, because of the influencer’s/celebrity’s authority, knowledge, position, or relationship with their audience will have to disclose.

About the disclosure:

• It 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.”
• It should be in such a manner that it is “hard to miss” and should be in simple language.
• It should be placed in the endorsement message in such a manner that they are clear, prominent and extremely hard to miss.
• They 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 a 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 a live stream, disclosures should be displayed continuously and prominently during the entire stream.
• On limited space platforms like Twitter, terms such as ‘XYZAmbassador’ (where XYZ is a brand) are also acceptable.

The secretary said that these guidelines are being issued under the overall ambit of the Consumer Protection Act and one of the main underlining principles of the law is the prevention of unfair trade practices.

“There are many ways in which unfair trading practices take place, one of the important unfair trading practices is the menace of misleading advertisements, by trying to sell something which is not exactly as it is being portrayed in the ad.

“While it has been ably handled in the conventional media — which is TV, print and radio, the social and digital media platforms are turning out to be different ball game,” Singh was quoted as saying.