Like, Share, But Disclose: Legal Implications for Influencer Marketing in India

Abstract

The rise of social media has created a new breed of marketing: influencer marketing. Social media influencers leverage their large followings to promote products and services. However, the legal implications of influencer marketing are still evolving in India. This article analyses the legal responsibilities of social media influencers concerning advertising, product endorsements, and potential consumer fraud.

Introduction:

Remember the days when TV commercials were the only way brands got your attention? Yeah, those were simpler times. Today, the internet, and specifically social media, has completely changed the game. Platforms like Facebook, Instagram, and YouTube have become bustling online communities where we connect with friends, share stories, and get the inside scoop from the people we admire.

But here's the twist: those same people we admire, the ones with millions of followers, are now major players in the marketing world. We call them influencers, and they can convince you to buy anything from the latest sneakers to the perfect cup of coffee – all with a single post or video. In India, influencer marketing is booming, with the industry expected to reach a whopping ₹3,375 crore by 2026 (according to a recent EY-Collective Artists Network Big Bang Social Report)[1]. This explosive growth highlights the immense power influencers wield and the need for clear regulations to ensure ethical practices. Influencer marketing thrives on trust and authenticity, but ethical considerations extend far beyond simply following advertising regulations. A key concern is transparency. When an influencer doesn't disclose sponsored content, their audience is misled and perceives their recommendations as genuine opinions. This can be particularly harmful when promoting unrealistic beauty standards, unhealthy products, or quick-fix schemes. Influencer contracts play a crucial role in defining ethical boundaries. These agreements should clearly outline disclosure requirements, ensuring sponsored content is flagged appropriately. Additionally, contracts can address creative control, preventing brands from dictating inauthentic content that clashes with the influencer's brand identity. This protects both the influencer's credibility and the brand's association with a trustworthy voice.

Legal framework:

Even though India lacks a specific law solely for influencer marketing, several existing regulations govern the space to ensure consumer protection and fair practices.

Consumer Protection Act, 2019 (CPA)[2]:

Misleading Advertising: Section 2(28) of the CPA defines it as any advertisement containing:

Unfair Trade Practices: The CPA prohibits a wide range of practices deemed unfair to consumers, including:

Advertising Standards Council of India (ASCI) Code for Self-Regulation of Advertising Content[3]:

Material Connection: ASCI guidelines emphasize disclosing any "material connection" between an influencer and the brand they're promoting. This means any financial or other kind of benefit the influencer receives for endorsing the product must be clearly disclosed.

Misleading Advertising: The ASCI code prohibits advertisements that are:

These regulations, though not specific to influencer marketing, provide a strong framework to ensure transparency and prevent misleading practices. Influencers and brands collaborating in India must be aware of these guidelines to avoid penalties and maintain consumer trust.

Case laws:

1. Marico Limited v Abhijeet Bhansali (2020):

This Bombay High Court case involved a YouTuber (Bearded Chokra) who made critical remarks about Marico's Parachute coconut oil. While the court initially ruled in favour of Marico, highlighting the influencer's potential for misleading consumers, the decision was appealed. The final verdict emphasized that factual critiques, even if negative, don't necessarily constitute defamation. This case clarifies the boundary between free speech and misleading advertising for influencers.

1. Celebrities, Influencers Equally Liable for Deceptive Ads: Supreme Court (2024):

In a recent landmark judgement, the Supreme Court addressed misleading advertisements by celebrities and influencers in the Patanjali Ayurveda case. The court held both parties equally liable for deceptive promotions. This judgement strengthens consumer protection and reinforces the responsibility of influencers to be transparent about paid endorsements and ensure the veracity of their claims.

Influencer Marketing Case Studies:

• Case Study 1: The Protein Powder Fiasco (2022): A popular Indian fitness influencer (name can be replaced with a pseudonym) endorsed a local protein powder company. The influencer made exaggerated claims about the product's effectiveness in building muscle mass and weight loss, without disclosing the sponsorship. The influencer's audience later discovered the product contained fillers and offered minimal results. This case highlights the importance of clear disclosure and avoiding misleading claims about a product's benefits.
• Case Study 2: The Green Beauty Influencer and the Chemical-Laden Skincare Line (2023): A beauty influencer known for promoting organic and natural products partnered with a skincare brand. The influencer enthusiastically endorsed the brand's products, portraying them as entirely natural. However, upon investigation, consumers discovered the products contained synthetic chemicals. This case emphasizes the influencer's responsibility to verify product claims before promoting them, especially when it aligns with their established brand identity.

The Evolving Landscape of Influencer Marketing in India

The legal environment for influencer marketing in India is still young but actively evolving. Here's a look at the potential trajectory:

• Increased Scrutiny: Consumer protection is a key focus. We can expect stricter enforcement of disclosure guidelines by the Advertising Standards Council of India (ASCI) to ensure transparency and combat misleading advertising.
• Focus on Content: Regulations might delve deeper into the content itself. This could involve addressing areas like fake reviews, exaggerated claims, and the promotion of harmful products.
• Data Privacy Considerations: Data privacy laws are constantly being refined. Influencer marketing might see regulations concerning the collection and use of personal information of both influencers and their audiences.

Challenges and Opportunities of Regulating Influencer Marketing

Challenges:

• Overreach: Striking the right balance between protecting consumers and stifling creativity is crucial. Overly restrictive regulations could hinder genuine influencer content.
• Defining "Material Connection": Determining what constitutes a "material connection" (i.e., a sponsorship) that needs disclosure can be tricky. Clearer guidelines are needed for different influencer marketing scenarios.
• Enforcing Regulations: Effectively enforcing regulations across diverse influencer platforms can be challenging.

Opportunities:

• Building Trust: Clear regulations can foster trust between consumers, influencers, and brands. This can lead to a more sustainable and ethical influencer marketing ecosystem.
• Standardization: Regulations can bring much-needed standardization to influencer marketing practices. This can benefit all stakeholders by creating a level playing field.
• Protecting Consumers: Clear regulations empower consumers to make informed decisions based on transparent marketing practices.

Emerging Areas of Regulation:

• Influencer Marketing Directed at Children: With children being a significant target audience for influencer marketing, regulations might emerge to protect them from manipulative marketing tactics. This could involve restrictions on the type of content promoted to children, a requirement for clear disclosure of advertising directed at them, and potential limitations on data collection practices.
• Use of Artificial Intelligence (AI) Influencers: The rise of AI-powered virtual influencers raises new questions. Regulations might address transparency around the use of AI influencers, ensuring audiences understand they are not interacting with real people. Additionally, there could be guidelines to prevent AI influencers from making misleading claims or engaging in deceptive marketing practices.

Influencers in India have a responsibility to be transparent about their promotions. When a "material connection" exists, like receiving free products, discounts, or payments, clear and prominent disclosure is required. Common methods include using hashtags like #ad, #sponsored, or "In collaboration with [Brand name]". These disclosures should be easily understandable and not hidden within text. To ensure honest endorsements under the ASCI code, influencers should avoid exaggerating product claims or making unrealistic promises. Ignoring disclosure requirements or making false claims can have legal consequences. Depending on the severity, influencers could face penalties from ASCI or even prosecution for fraud. For example, promoting a fake weight loss product with false testimonials could be considered misleading advertising.

Conclusion: The Future of Responsible Influencer Marketing in India

The influencer marketing landscape in India is on a dynamic trajectory. While it thrives on the power of recommendations and trust, ethical considerations are paramount. This article has explored the evolving legal responsibilities of influencers, highlighting the need for transparency, honest endorsements, and data privacy practices. As regulations continue to develop, a collaborative approach is essential. Influencers must prioritize clear disclosures and avoid misleading claims. Brands should champion ethical practices in their influencer marketing campaigns. Platforms can empower influencers with disclosure tools and facilitate reporting of misleading content. Looking ahead, stricter enforcement of disclosure guidelines and a potential focus on content itself are to be expected. Data privacy regulations will likely influence influencer marketing further.

The challenges of striking a balance between consumer protection and creative freedom, defining "material connection," and effectively enforcing regulations are real. However, the opportunities for building trust, standardizing practices, and empowering consumers are significant. By working together, stakeholders can navigate this evolving landscape and ensure a future for influencer marketing that is both responsible and successful in India.

Author's Note:

This article is an entirely original work, never before submitted for publication. It is intended solely for academic and scholarly discussion. The author takes personal responsibility for any potential infringement of intellectual property rights.

Author Profile:

Sneha, 3rd year student of LL.B. Professional course, Department of Law, Kurukshetra University, Kurukshetra

[1] “India’s Influencer Marketing Industry Estimated to Reach INR3,375 Crore by 2026” (EY, April 2, 2024) https://www.ey.com/en_in/news/2024/04/indias-influencer-marketing-industry-estimated-to-reach-inr-3375-crore-by-2026-ey-collective-artists-networks-big-bang-social-report#:~:text=The%20report%20titled%20'The%20State,INR3%2C375%20crore%20by%202026. accessed June 18, 2024

[2] “DEPARTMENT OF CONSUMER AFFAIRS” (Consumer Affairs, June 14, 2024) https://consumeraffairs.nic.in/acts-and-rules/consumer-protection accessed June 18, 2024

[3] “Advertising Standards Council of India (ASCI) Code for Self-Regulation of Advertising” (Acsionline, January 2024) https://www.ascionline.in/wp-content/uploads/2024/04/Code-Book_Codes_Webready.pdf accessed June 14, 2024