This article is written by Karan Gautam of 4^th Semester of Delhi Metropolitan Education

Abstract

Influencers on social media have grown in significance over the past few years. Influencers, or people with a huge following on social media, are people who have a considerable influence over a large audience and who filter information, advertise goods and services, provide advice, and support political ideologies. However, the literature has mostly ignored them and their deeds continue essentially unchecked.

Given their sizable fan bases, influencers are very good at both generating online engagement for the businesses that hire them and manipulating the opinions and purchasing decisions of their followers, who frequently cannot tell the difference between legitimate and sponsored marketing advice. Although Instagram or YouTube “prosumer” endorsements are covered by advertising regulations, influencers often seem to violate these restrictions, and national authorities have had trouble.

Keywords: Social Media, Influencers, Regulations, prosumer, political ideologies

Introduction

There is no denying that India’s influencer marketing industry has a brilliant future. According to the Influencer Benchmark Report 2021, this sector is predicted to increase to over $13.8 billion in 2021. This one of the newest kinds of marketing is so promising that it has even been acknowledged by several Indian courts. Due to the overwhelming good feedback from practically all sides, influencer marketing has grown significantly, which has elevated the legal concerns in this area.

Under the influence of his favorite Instagram model, who claimed that the expensive detoxification drink had helped her lose weight, an unidentified Instagram user made a pricey purchase. Instead of decreasing weight after utilizing the product, she gained 8 kg and experienced additional health problems. This user’s experience is not unique; there are numerous more cases when consumers have fallen for fraudulent claims made by influencers or were duped by commercials, which frequently occurs to make the advertisement appealing.

Additionally, influencers are also impacted by brand misconduct, so it’s not just the followers who suffer. The fact that they aren’t paid as promised has been brought up by numerous 

influencers. As a result, influencer marketing raises several legal concerns. As a result, regulatory agencies and advertising watchdogs have identified the issue and begun to take action to legislate and safeguard the interests of consumers and business stakeholders

Legal steps are taken in India (for protecting the interests of the consumers)

Consumer Protection Act, 2019

A replacement for the Consumer Protection Act, of 1986 was introduced by the Indian government on August 9, 2019. In comparison to the previous act, some rules that addressed deceptive advertising and celebrity endorsements (including those by social media influencers) were included. Additionally, this legislation places a focus on influencer marketing and tailored advertising.

Following the act’s requirements, if an influencer knowingly misrepresented a product while being unaware that it was a sponsored advertisement, fans may bring a lawsuit against the influencer. If found guilty, the influencer will be required to pay a fine of up to INR 10 lakh as compensation, and INR 50 lakh.

The draft Central Consumer Protection Authority, 2020

The Government of India decided that passing laws to protect consumer interests was far from sufficient after introducing the Consumer Protection Act 2019 (CPA). Therefore, to keep an eye on all types of advertisements and advertisers regardless of the medium being utilized, the Ministry of consumer affairs developed a regulation on the avoidance of misleading advertisements and unnecessary due diligence for endorsement of commercials.

With 265 million active YouTube users in India, it has become difficult for the relevant ministry to monitor consumer interests as numerous micro-influencers advertise products solely for financial gain, disregarding the interests of the consumers. Consequently, it has been mandated to undertake due before making any product recommendations or advertisements exercise caution.

The code for self-regulation of advertising

The Advertising Standards Council of India (ASCI) has established the code for self-regulation with the ultimate goal of safeguarding consumer interests and achieving the acceptability of fair advertising practices. Regarding the legitimacy of the advertising content, rules, and restrictions have been established under the code. Additionally, the ASCI is developing several disclosure guidelines for online influencers that promote items on social media. These laws and regulations are also framed by certain international standards.

Several rules established by the Ministry of Consumer Affairs (to safeguard influencers’ interests)

1. It is crucial for the social media influencer to conduct due diligence and verify the product’s quality, quantity, and legitimacy before deciding to endorse a specific product.
2. It is advisable to verify any claims made about a product that has an impact on the general public’s health to see if they are supported by scientific research.
3. It is usually advisable to make clear whether a partnership is paid for or not to avoid legal liabilities.
4. For the consumer to be fully informed of the situation and to conduct independent research before purchasing a product, it is recommended that the influencer include a disclaimer on a personal choice while endorsing or advertising any product.
5. It is advisable to have a written contract with the relevant brand, and the contract should explicitly state all of the parties rights and obligations.
6. Always check to see if the promotion or endorsement complies with all applicable laws and isn’t in any manner deceptive.

New Guidelines for Influencers on Social Media

Consumers are protected by the CCPA from deceptive marketing and unfair business practices. At a press conference, Consumer Affairs Secretary Rohit Kumar Singh unveiled the rules. According to the CCPA, those who support deceptive advertising may face bans of up to one year and three years for repeat offenses.
There is currently a Rs. 10 lacks for the Central Consumer Protection Authority (CCPA). maximum fine for producers, advertising, and endorsers. For additional crimes, a fine of up to Rs. 50 lakhs may be imposed.
Over 1 lakh social media influencers in the nation, according to Mr. Singh, have large followings.’ Regulating deceptive social media advertisements is necessary since social media influence is here to stay and will only continue to increase rapidly. Influencers on social media are required to act responsibly when it comes to disclosing to customers if they have a material link to the brand they want to promote.
The right to know is one of the most significant principles in consumer law. Consumers should be aware of whether the person or organization sponsoring something in digital media has accepted payment or if they have any affiliation with the business.
Singh said people could approach the authorities to seek guidance in cases of non-compliance.
According to Nidhi Khare, chief commissioner of the CCPA, the rules cover rewards and incentives, including monetary and other compensation; free products, including those obtained without a request; discounts; gifts; entries into competitions and sweepstakes; travel and accommodations; media bartering; coverage and honours; and any ties to family, friends, or employers.
Individuals or organizations that have access to an audience and can influence that audience’s opinions or purchasing decisions regarding a good, service, brand, or experience are required to disclose whether or not the promotion is paid. The recipients, timing, and methods of disclosure are all outlined in the new regulations.

Disclosure is required, in Ms. Khare’s opinion, “where a meaningful link between an advertiser and celebrity/influencer may have an impact on the credibility of the endorsement.
The revelation ought to be “hard to miss,” to put it bluntly.

Make sure the disclosures in the endorsement message are crystal obvious, noticeable, and impossible to overlook.

Disclosures shouldn’t be jumbled in with links or hashtags.
For people to notice picture endorsements, they should be placed over the photographs.
Audio and video formats should also be used for video disclosures, not just the description.
Live streaming should prominently and continuously convey disclosures.
On platforms with limited space, it is also appropriate to use “XYZ Ambassador” (where XYZ is a brand).
The Consumer Protection Act, which these regulations fall under, has as one of its fundamental tenets the elimination of unfair business practices.

The New Rules’ Effect on Social Media Influencers
The sector has been greatly impacted by the new regulations governing social media influencers. Influencers must exercise extra caution while advertising or endorsing goods and services due to the tougher laws and regulations.
The ramifications of a company’s relationship with an influencer must also be considered, and companies must make sure that their content conforms with the new rules. As a result, there is now a bigger emphasis on influencers’ authenticity and transparency about their content. With these new regulations in place, influencers will have to work harder to keep their audiences’ confidence now that they can no longer rely on false endorsements. The new rules have ultimately increased the bar for social media influencers and the companies they work with, producing a win-win scenario.

Significant case law

Marico Limited v. Abhijeet Bhansali

Is Parachute Coconut Oil 100% Pure? a YouTube video, had recently received a landmark ruling from the Bombay High Court.  Using the pseudonym “Bearded Chokra” by YouTuber Abhijeet Bhansali.

Background

In February 2019, Marico Limited, represented by Khaitan and Co., filed a lawsuit in the Bombay High Court seeking preliminary injunctions against the allegedly false and deceptive YouTube video in question. The lawsuit also claimed that the video had improperly used the plaintiff’s registered trademarks. The defendant asserted that the aforementioned video upholds his inviolable right to freedom of speech and expression and fairly expresses his perspective as a customer. The film is an attempt by the defendant to inform viewers about the quality of coconut oil, and viewers have the right to use their discretion, according to the defendant, who claims he is neither a trader nor a rival of the plaintiff. Additionally, he attempted to argue that the video’s substance is supported by study and evidence and that, once the facts and defense have been presented, no decision can be made without a trial.

Decision 

The court determined that the respondent made careless statements in his video, which was manufactured and uploaded without doing any study or due diligence. The Respondent purposefully altered the facts and presented them to the viewers, the Court found. The court noted that the respondent’s video displayed many instances of malice at various points in the recording. According to the Court, the aforementioned video caused the plaintiff significant harm because it appeared to have discouraged certain customers from buying the plaintiff’s items, as evidenced by the comments left on the defendant’s video, which resulted in the complainant suffering financial loss. The court determined that the plaintiff had met all requirements for proving a case of defamation, malicious falsehood, and property slander. The defendant was not a competitor of the plaintiff’s company, the defendant’s lawyer said, but the court rejected that claim and said it made no difference that the defendant was an individual rather than a business. The court additionally determined that the defendant’s video, which purported to educate the public, actually targeted the plaintiff’s goods and contained untrue material that denigrated and discredited the maker of that product.

Additionally, the trademarks of the applicant were unlawfully exploited in the film in a way that damaged their reputation and uniqueness and was contrary to ethical business practices. The Court ruled that the right to free speech [Article 19(a)] is not unqualified and cannot be used to refute reckless assertions. The defendant was unable to prove it in good faith, and the comparison shown in the video was not proven on the merits, so the court determined that the Bonnard principle did not apply to the facts of the case.

As a result, the court ruled that social media influencers must take care to ensure that their posts are neither detrimental nor objectionable because they have such a significant impact on their followers and the public’s lives. As a result, the court mandated that the defendant take the video down from YouTube and any other websites where it was placed.

Conclusion

The government of India has taken the aforementioned actions, and numerous 

regulatory authorities have made it apparent that they will stop at nothing to 

defend the interests of consumers. The subsequent legal structure not only imposes responsibility and obligation 

but also, a punishment in the event of default. For the government of India’s regulations to be successful, both the advertisers 

and the influencers would ultimately need to cooperate to follow the rules. Written agreements should be advocated to remove any room for doubt and to 

limit the potential for legal repercussions. Agreements should be comprehensive enough to include every aspect of the 

parties.

Therefore, to prevent any legal liability, social media influencers and brands must maintain compliance with the aforementioned norms and regulations.

References

1) ipleaders. Accessed July 16, 2023. https://blog.ipleaders.in/checklist-legal-issues-social-media-influencers-marketing-campaigns-accordance-consumer-protection-guidelines-2020/.

2)  Regulations – Influencer Marketing: A Research Guide – Research Guides at Library of Congress. Accessed July 16, 2023. https://guides.loc.gov/influencer-marketing/regulations.