New Guidelines for Social Media Influencer and Celebrity Endorsements in India

The Centre has released on Friday the endorsement guidelines for celebrities and social media influencers that mandates compulsory disclosure of monitory or material benefits of a product or a brand they are promoting through their social media platforms. Failing to do so will attract a penalty up to ? 50 lakh.

Reasons for the guidelines

• Releasing the guidelines at a press conference, Union Consumer Affairs Secretary Rohit Kumar Singh said the disclosures must be prominently and clearly displayed in the endorsement and terms such as ‘advertisement’, ‘sponsored’ or ‘paid promotion’ should be used for all sort of endorsements.
• The step, he said, is after considering the increased use of social media for promotional activities that goes beyond advertisements or advertorials in print or electronic media.

Purpose of the guidelines

• The guide ‘Endorsements Know-hows!’ is for celebrities, influencers and virtual influencers on social media platforms and also aims to ensure that individuals do not mislead their audiences when endorsing products or services and that they are in compliance with the Consumer Protection Act and any associated rules or guidelines.
• “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 Union Consumer Afffairs Ministry said in a release.

Disclosure requirements

• The guidelines specify that disclosures must be prominently and clearly displayed in the endorsement, making them “extremely hard to miss”. Benefits and incentives, and monetary or other compensation, trips or hotel stay, media barters, coverage and awards, free products with or without conditions, discounts, gifts and any family or personal or employment relationship come under material benefits according to the guidelines.
• “Endorsements must be made in simple, clear language and terms such as ‘advertisement,’ ‘sponsored,’ or ‘paid promotion’ can be used. They should not endorse any product or service and service in which due diligence has been done by them or that they have not personally used or experienced,” the Centre said.

Penalties for non-compliance

• If there are any violations, the penalty prescribed for misleading advertisements under the Consumer Protection Act 2019 will be applicable. In that case, the Central Consumer Protection Authority (CCPA) can impose a penalty of up to ? 10 lakh on manufacturers, advertisers and endorsers and for repeated offences, a penalty of up to ? 50 lakh can be imposed. The CCPA can also prohibit the endorser of a misleading advertisement from making any endorsement for up to one year and for subsequent contravention, prohibition can extend up to three years.

Impact on the market

• Singh said the size of the social media 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%. “The social media influencer of substance, which means those having good number of followers, are in excess of one lakh in the country,” Mr. Singh said.

Synopsis

The new guidelines have specified 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. 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”. This is to protect the consumer from being misled and ensure transparency in the influencer and celebrity endorsement market.