With rampant growth of social media across the country, on January 20, 2023, the Department of Consumer Affairs released new regulations in accordance with Consumer Protection Act, 2019 (“Act”), which require social media influencers to disclose their endorsements/representations (“Regulations”). An overview of the Regulations is as outlined below:-
- Definition of Material connection: Material connection include but is not limited to (i) monetary or other compensation; (ii) free products with or without any conditions, including those received unsolicited, discounts, gifts; (iii) contest and sweepstakes entries; (iv) trips or hotel stays; (v) media barters; Coverage and awards; or (vi) any family, personal or employment relationship.
- Who should disclose: Famous personalities i.e. Celebrities, influencers who are creators/advertise products and services as well as virtual influencers such as Avatars (hereinafter collectively referred as “Influencers”) who behave in a similar manner as influencers who have access and power to affect their audiences’ purchasing decisions/opinions about a product/service/brand or experience.
- When to disclose: Influencers shall disclose their endorsements in case of a material connection with an advertiser and that may affect the credibility/weight of the representation/endorsement made by them.
- How to disclose: A disclosure of the endorsement shall be (a) in simple and clear language (b) contain the terms; “paid/ paid promotion/ad/advertisement/sponsored; (c) in same language as that of the endorsement (d) displayed clearly and prominently; as well as (e) separate, in addition to the platform disclosure tools. Regulations also provide specific formats for disclosure of endorsement in different mediums :-
- Picture: Disclosures should be superimposed over the image so that viewers can notice;
- Videos: Disclosures should be in both audio and video format. It should be placed in the video and not just in the description of the video;
- Live stream: Disclosures should be displayed continuously and prominently during the entire stream.
- Due Diligence: Influencers are advised/recommended to endorse a product and/or service, once they have (i) satisfied themselves/reviewed whether the advertiser is able to substantiate the claims made in the advertisement; (ii) used and/or experienced the said product and/or service.
- Failure of non-disclosure: As per the Regulations, any failure to disclose the material connection (as mentioned in pt. 1) and non-compliance of the Act alongwith the rules would attract a strict action against the Influencers under the law. As per the Act, a penalty of ten lakhs rupees alongwith prohibition from any type of endorsement for one year may be imposed on the endorser, which may extend to fifty lakh rupees and three years of ban on endorsement, for every subsequent violation in case of misleading advertisements.
After the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 which inter alia, touched upon the issues of endorsers and celebrities; these Regulations outlines a code of conduct for Influencers while dealing with endorsements over the internet and are aimed to safeguard interests of internet users who are often deceived by the Influencers’ promotional content under the garb of personal opinions.