Social media influencers may have to pay up to ₹50 lakh fine for not following rules

In order to curtail the growing number of fake product reviews and advertisements in India, the ministry of consumer affairs on Friday released a slew of guidelines for content creators and social media influencers. Titled as the "Endorsements Know-hows!", the guidelines aim to ensure that individuals do not mislead their audiences when endorsing products or services and that they are in compliance with the Consumer Protection Act. The guidelines were released by Rohit Kumar Singh, secretary of the department of consumer affairs.

"With 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 influencers, in addition to celebrities and social media influencers. This has led to an increased risk of consumers being misled by advertisements and unfair trade practices by these individuals on social media platforms," the ministry said in a statement. 

The domestic social media influencer market is projected to rise to ₹2,800 crore with a compound annual growth rate of about 19% to 20%, according to the consumer affairs ministry.

As per the guidelines, disclosures must be prominently and clearly displayed in the endorsement, "making them extremely hard to miss." The ministry said that any celebrity, influencer or virtual influencer who has access to an audience and can influence their purchasing decisions or opinions about a product, service, brand, or experience must disclose any material connection with the advertiser. 

The details that need to be disclosed to the audience must include benefits and incentives received by the influencer from the advertiser, monetary or other compensation, trips or hotel stays, media barters, coverage and awards, free products with or without conditions, discounts, gifts and any family or personal or employment relationship.

"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 and service in which due diligence has been done by them or that they have not personally used or experienced," the ministry said. 

The violations of the guidelines will attract a fine of ₹10 lakh on manufacturers, advertisers and endorsers, whereas a penalty of ₹50 lakh can be imposed on subsequent offences. Meanwhile, the endorser can be prohibited from making any endorsement for up to one year and on subsequent offences, the prohibition can be extended to three years. 

The penalty and guidelines are in alignment with the guidelines set by the Consumer Protection Act of 2019 for protecting consumers from unfair trade practices and misleading advertisements. Notably, the department of Consumer Affairs in June last year published guidelines for the prevention of misleading advertisements and endorsements for misleading advertisements. 

"The guidelines outline the criteria for valid advertisements and the responsibilities of manufacturers, service providers, advertisers, and advertising agencies. These guidelines also touched upon celebrities and endorsers. It states that misleading advertisement in any form, format or medium is prohibited by law," the ministry said.