Guidelines to social media influencers for promotions

The Centre has released the endorsement guidelines for celebrities and social media influencers that mandate compulsory disclosure of monetary or material benefits of a product or a brand they are promoting through their social media platforms.

• The regulation aims to ensure that individuals do not mislead their audienceswhen endorsing products or services and that they are in compliance with the Consumer Protection Act and any associated rules or guidelines.
• Objective: The main underlining principle of the law is prevention of unfair trade practice.
• Need:
  • Due to an increased risk of consumers being misled by advertisements.
  • The size of the social media influencer market in India in 2022 and it is likely to rise to ? 2,800 crore.
• Key points:
  • The guidelines specify that disclosures must be prominently and clearly displayed in the endorsement, making them ‘extremely hard to miss’by the audiences.
  • 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 in which due diligence has been done by them or that they have not personally used or experienced.
• Stakeholders’ involved:
  • 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 representationmade by the celebrity/influence.
• Rules for disclosures:
  • 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.
  • 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 prominentlyduring the entire stream.
• Penalties and Punishments:
  • The penalty prescribed for misleading advertisements under the Consumer Protection Act 2019will be applicable.
  • 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. 
  • With this, the CCPA can also prohibit the endorserof a misleading advertisement from making any endorsement for up to one year and for subsequent contravention, prohibition can extend up to three years.