The guidelines were issued under the CCPA, which provides a framework for protecting consumers from unfair trading practices and misleading advertising.
It is now mandatory for social media influencers to disclose all “material” interests such as gifts, hotel accommodations, shares, discounts and rewards when endorsing any product, service or program. If they don’t comply, they face severe legal consequences, including a ban on endorsements, the government said on Friday.
Disclosures should be made in plain and clear language, should be of a duration that is difficult to overlook, be made with endorsements, including live streams, and should be platform independent.
The rules are part of an ongoing effort to curb misleading advertising and protect consumers’ interests amid the expanding social influencer market, which is expected to grow at 20 per cent annually and reach Rs 2,800 crore by 2025.
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The new guidelines, called Endorsement Know Hows – for celebrities, influencers and virtual media influencers (avatar or computer generated characters) on social media platforms have been issued by the Department of Consumer Affairs.
Failure to do so will result in the Misleading Advertising Penalty under the Consumer Protection Act 2019.
The Central Consumer Protection Authority (CCPA) can impose fines of up to Rs 10 lakh on manufacturers, advertisers and endorsers. Further violations can result in a fine of up to Rs 50,000. The CCPA can ban the advocate of a misleading ad from making an endorsement for up to 1 year, and the ban can be extended up to 3 years for a subsequent violation.
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Consumer Minister Rohit Kumar Singh introduced these guidelines at a press conference and said the guidelines were issued under the CCPA, which provides a framework for protecting consumers from unfair trading practices and misleading advertising.
He hoped the guidelines would act as a deterrent to social media influencers.
“It’s a very important issue. The size of the social influencer market in India in 2022 was in the order of Rs 1,275 crore and is expected to grow to Rs 2,800 crore by 2025 at a CAGR of around 19-20 percent. The substance of social media influencers, i.e. those with a good number of followers, are more than 1 lakh in the country,” Singh said.
The Secretary said that social media influence is here to stay and will only grow exponentially, hence the need to regulate misleading advertising on social media.
“Today’s guidelines are aimed at social media influencers who have a material connection to the brand they wish to promote on various social media platforms. This is an obligation on them to behave responsibly in terms of disclosure to consumers.
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“One of the biggest paradigms of consumer law is the consumer’s right to information, and this falls within that area. Consumers should know if something is being thrown at them from digital media, if the person or company sponsoring it has taken money, or is affiliated with the brand in some way,” Singh said.
In the event of non-compliance, Singh said, there are statutory provisions under which people can contact the authority for legal action against non-compliers. The agency has the means to investigate, and it can also take up the suo moto case.
In drafting the guidelines, CCPA Chief Commissioner Nidhi Khare said the material link could include, but is not limited to, benefits and incentives such as financial or other compensation; free products, including unsolicited products, discounts, gifts; contest and sweepstakes entries; travel or hotel stays; media exchange; reporting and awards; or any family, personal or employment relationship.
The new guidelines have defined who must disclose everything, when and how it must be disclosed.
Individuals/groups who have access to an audience and the power to influence their audience’s purchasing decisions or opinions about a product, service, brand, or experience because of the authority, knowledge, position, or relationship of the influencers/ Celebrities reveal to their audience.
Disclosure should be made “when there is a material connection between an advertiser and a celebrity/influencer that may affect the weight or credibility of the celebrity/influencer’s portrayal,” Khare said.
She said the disclosure should be made in a way that would be “difficult to miss” and in plain language. The disclosures should be placed in the acknowledgment message in a manner that is clear, conspicuous and extremely difficult to miss. Disclosures should not be mixed with a group of hashtags or links.
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When acknowledging in an image, the disclosures should be superimposed over the image sufficiently for viewers to notice. In videos, disclosures should be placed in the video and not just in the description, and they should be in both audio and video format. For live streams, the information should be displayed continuously and prominently throughout the stream.
On platforms with limited storage space like Twitter, terms like XYZambassador (where XYZ is a brand) are also acceptable, she said.
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The Secretary said that these guidelines are issued within the general scope of the Consumer Protection Act and one of the Act’s key principles is the prevention of unfair trading practices.
“There are many ways that unfair trading practices take place, one of the main unfair trading practices is the threat of misleading advertising by attempting to sell something that is not exactly as portrayed in the ad.
“While it has been handled skillfully in the conventional media — television, print media and radio — the social and digital media platforms are proving to be a different ball game,” Singh said.
(With agency entries)