Product promotions: Govt makes it mandatory for social media influencers to disclose material interest

Press Trust of India

New Delhi: The government on Friday made it mandatory for social media influencers to disclose their “material” interest in endorsing products and services and violations can attract strict legal action, including ban on endorsements.

The regulations are part of continuing efforts to curb misleading advertisements as well protect the interests of consumers amid the expanding social influencer market which is projected to be worth around Rs 2,800 crore by 2025.

The new guidelines named ‘Endorsement Know Hows -- for celebrities, influencers and virtual media influencers (Avatar or computer generated character) on social media platforms’ has been issued by the Department of Consumers Affairs. In case of violation, the penalty prescribed for misleading advertisement under the Consumer Protection Act 2019 will be applicable.

The Central Consumer Protection Authority (CCPA) can impose penalty of up to Rs 10 lakh on manufacturers, advertisers and endorsers. For subsequent offences, penalty of up to Rs 50 lakh can be imposed. The authority can prohibit endorser of a misleading ad from making any endorsement for up to 1 year and for subsequent contravention, prohibition can extend up to 3 years.

Launching these guidelines at a press conference, Consumer Affairs Secretary Rohit Kumar Singh said the guidelines have been issued under the ambit of the consumer law that provides framework for the protection of consumers against unfair trade practices and misleading advertisements. He hoped that the guidelines would act as a deterrent for social media influencers.

“It’s a very important subject. The size of social influencer market in India in 2022 was of the order of Rs 1,275 crore and by 2025, it is likely to rise to Rs 2,800 crore with a compound annual growth rate of about 19-20 percent. The social media influencer of substance, those having good number of followers, are in excess of 1 lakh in the country,” Singh said. Stating that the social media influencing is here to stay and will only grow exponentially, he said social influencers need to behave responsibly.

“The today’s guidelines are aimed at social media influencers which have material connection with the brand they want to promote on various social media platforms. This is an obligation for them to behave responsibly as far as the disclosure is concerned to the consumers.

“One of the biggest paradigm of the consumer law is the consumers right to know and this falls in that purview. Consumers should know if something is thrown at him from digital media, the person or the entity which is sponsoring it have they taken money or any form of connection they have with the brand,” Singh said.