I. Introduction

The size of the social media influencer market in India stood at Rupees 1,275 Cr in 2022 and is expected to grow at a CAGR of 19-20% to reach Rupees 2,800 Cr by 20271. The digital world today is rapidly growing, and advertisements today are no longer limited to traditional media like print, television, or radio. Due to 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 influencer in addition to celebrities and social media influencers. As a result, there is an increased risk of consumers being misled by advertisements by these individuals on social media platforms.

Presently, endorsements and advertisements in digital media are governed by the "Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022" ("Guidelines 2022"). The Guidelines 2022 were introduced in order to ensure that the consumers are not being deceived with unsubstantiated claims, exaggerated promises, misinformation and false claims and that the consumers are safeguarded against potentially unsafe products and services2.

Recently on January 20, 2023, the Department of Consumer Affairs, issued additional guidelines namely the 'Endorsement Know-how" (the "Endorsement Know-How Guidelines") with the specific aim to ensure that the celebrities, virtual influencers and influencers do not mislead their audiences when endorsing products or services on social media platforms and that such endorsements comply with the Consumer Protection Act, 2019 ("CPA") and the rules thereunder.

II. Endorsement Know-How Guidelines

The Endorsement Know-How Guidelines provides for the following guidelines:

  1. Applicability: The Endorsement Know-How Guidelines are applicable to celebrities and influencers, including virtual influencers, who have access to audience and the power to influence their purchasing decisions or opinion about a product, service, brand etc., owing to their authority, knowledge, position or relationship with their audience.

  2. Definitions: The Endorsement Know-How Guidelines define the terms "celebrities", "influencers" and "virtual influencers" as follows:

    (a) "Celebrities" are defined as famous personalities, including but not limited to entertainment or sports industry who have the power to affect the decisions or opinions of their audience.

    (b) "Influencers" are creators who advertise products and services with a strong influence on the purchasing decisions or opinions of their audience.

    (c) "Virtual Influencers" are fictional computer generated 'people' or avatars who have realistic characteristics, features and personalities of humans, and behave in a similar manner as influencers.

  3. When to disclose: Celebrities, influencers and virtual influencers are required to disclose any 'material connection' between themselves and the advertiser, which may impact the weight or credibility of the representation made by the celebrity/influencer.

    In this context, 'material connection' includes but is not limited to monetary or other compensation; free products with or without any conditions attached, 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.

    The Endorsement Know-How Guidelines specifies that in case any celebrity, virtual influencer or influencer does not disclose their material connection then in such event their opinion may be inferred as biased and/or misleading. However, if celebrities, virtual influencers and influencers disclose their material connection, the consumers will be able to make an informed decision.

  4. How to make disclosure: Celebrities, influencers and virtual influencers are required to make disclosures in a manner that is clear, prominent, and extremely hard to miss. The disclosures are not allowed to be mixed with a group of hashtags or links. Specific requirements have also been set out for endorsements made through different forms such as:
    • Endorsement in a picture: disclosures should be superimposed over the image enough for audience to notice.
    • Endorsement in a video: disclosures should be placed in the video and not just in the description and made in both audio and video format.
    • Endorsement in a live stream: disclosures should be displayed continuously and prominently during the entire stream.

    Further, the Endorsement Know-How Guidelines also sets out guidelines for such disclosures in terms of language of disclosure, use of simple and clear language, terms that are allowed and making of separate disclosures apart from platform disclosure tools.

  5. Due diligence: Celebrities, influencers and virtual influencers have been advised to undertake due diligence steps before endorsing a product or service of an advertiser to their followers/audience. For instance, celebrities and influencers have been advised to always review and satisfy themselves so that the claims made by an advertiser can be substantiated. In addition, it is recommended that the concerned celebrity, influencer or virtual influencer as the case maybe actually uses and experiences the product or service that they are endorsing.

  6. Consequences for non-compliance: The Endorsement Know-How Guidelines contains a 'warning' stipulating that "Failure to disclose any material connection or non-compliance of the Consumer Protection Act 2019 and Rules made thereunder would make such violators liable for strict action under the law". Consequently, due to the applicability of the CPA, celebrities, influencer or virtual influencer can be liable for penalties which may extend to Rupees. 10 Lakhs. They also as face the risk of getting prohibited from making endorsement of any product or service for up to one year, (which may be extended up to three years for every subsequent contravention)3.

III. Conclusion

Advertisement and endorsements through and social media by celebrities, influencers and virtual influencers are gaining immense popularity and customers tend to be strongly influenced by such endorsements. Thus, the mandatory Endorsement Know-How Guidelines that celebrities and influencers must comply with while endorsing products or services on social media platforms will definitely go a long way in ensuring that consumers are not misled and that consumer interests are protected. However, it is pertinent to note that the Endorsement Know-How Guidelines seems to apply only to endorsements made by celebrities, influencers and virtual influencers on social media platforms. It is ambiguous whether the Endorsement Know-How Guidelines will apply to endorsement by celebrities, influencers and virtual influencers through mediums other than social media platforms. In our view, therefore this aspect of applicability of the Endorsement Know-How Guidelines requires more clarity.

Footnotes

1. https://inc42.com/buzz/endorsement-guidelines-social-media-influencers-liable-to-pay-up-to-inr-50-lakh-fine/

2. https://pib.gov.in/PressReleasePage.aspx?PRID=1832906

3. Section 21 CPA

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.