Legal Consequences of Social Media Influencers: Disclosures and Endorsements in India

Author: Abhikalp Tomar, Amity Law School, Noida (Amity University Uttar Pradesh)

INTRODUCTION

India's advertising industry has seen a dramatic shift due to the rise of social media influencers. Digital platforms such as Instagram, YouTube, Twitter (now “X”), and others are now crowded with content producers that promote goods, services, or social causes. These endorsements, however, frequently slip into the blurry line between paid marketing and genuine judgments. Therefore, Indian law (explained here) requires influencers to make known every time they endorse a brand in exchange for cash, gifts, or any other advantage in order to safeguard the interests of consumers. The legal framework governing social media influencer advertising in India is also intended to be outlined in this article. This includes information on influencer responsibilities, non-compliance penalties, enforcement difficulties, and a few significant case studies that illustrate the regulatory environment.

The Laws Controlling Influencer Promotions

The Consumer Protection Act, 2019 ("CPA") is the main piece of law that controls social media influencer advertising in India. It forbids deceptive advertising and offers a thorough process for safeguarding consumer rights.The CPA's Section 21 gives the Central Consumer Protection Authority ("CCPA"), which was created under Section 10 of the CPA, the authority to take action against deceptive, untrue, or likely to deceive ads. Under this clause, concerned merchants, producers, endorsers, advertisers, publishers, and social media influencers who make misleading claims or promote a product or service without conducting adequate due diligence may be held accountable. The CPA's regulations require all influencers and endorsers to do due diligence, meaning they must confirm the veracity of claims before endorsing a product. Up to Rs. 50 lakhs in fines and even the inability to make further endorsements are possible outcomes of noncompliance. Furthermore, an influencer may be subject to criminal prosecution for intentionally promoting deceptive or dangerous goods, which could last up to five years for repeat offenders.Additionally, the CCPA published "Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements" in 2022 ("CCPA Guidelines") to support the CPA's requirements. The comprehensive standards for endorsements provided by the CCPA Guidelines include the need that endorsements be founded on sufficient knowledge or expertise with the products being promoted and represent the endorser's or influencer's true, reasonably current opinion.

Newly Expanded Liability: Who Is Responsible?

In contrast to previous, more restrictive frameworks, CPA 2019 throws a wider reach. Influencers, celebrities, bloggers, and any other social media user endorsing products or services are now explicitly included in the Act's definition of "endorsers," which is defined in Section 2(32) as an "electronic service provider."

The legislation establishes accountability for the following parties in addition to the maker or seller:

• Influencers or endorsers,

• Ad agencies and advertisers; • Electronic platforms that make the ads possible.It basically means that anyone who spreads or facilitates a misleading advertising message could be held responsible.

Influencers' Liability and Due Diligence

One innovative feature of CPA 2019 is the requirement that influencers do their research before disseminating promotional material. They must make certain that: • The assertions they make are accurate and supported by evidence,

• If applicable, any disclaimers mandated by law or guaranteed by the nature of the product are made explicit, such as "Results may vary" or "Consult a physician before use."

If they make efficacy claims, they have the proper proof (clinical studies, test results, certifications), and they declare any significant affiliation with the brand (paid promotion, for example).They risk being placed in the same category as the advertising and facing penalties if they don't comply.

Mechanisms for Enforcement and Penalties

CPA 2019 creates the Central Consumer Protection Authority (CCPA), which has the authority to investigate, make orders, and punish deceptive advertising. By issuing cease-and-desist orders, Section 21 gives the CCPA the authority to require that deceptive advertisements be stopped or corrected.

• Organizations that do deceptive advertising may be fined up to ₹10 lakh.

• Penalties for recurring crimes might reach ₹50 lakh.

The Corporation-level executives may also be held personally liable.Influencers are not exempt from scrutiny and punishment if proved to be at fault. They might also have to publicly recant fraudulent claims or be barred from future collaborations.

Typical Situations

Imagine an influencer marketing a product that promises to help people lose 10 kg in 7 days without providing any proof, warnings, or information about the unique nature of the outcomes.

It is probably deceptive if the claim is unsupported and misrepresents anticipated results. CPA 2019 may impose liability on the platform, the maker, and the influencer.In another case, a skin-whitening lotion is recommended by an influencer with the statement, "Safe for all skin types," even though darker skin tones may find the product irritating. In this case, creating a generalization and leaving out information about risks turns into a deceptive advertisement that can result in liability.

A proactive checklist for compliance

To help influencers (and brands) stay clear of CPA 2019, the following checklist provides helpful advice:

1. Preserve the evidence: Always back your statements with reliable information, such as research, test results, or certificates. Documentation should be kept.

2. Clearly identify partnerships by using hashtags like #Ad and #Sponsored to identify posts as sponsored or paid marketing.

3. Add Disclaimers: If there are hazards or different results, add obvious disclaimers (clear positioning, readable type).

4. Steer clear of absolute claims: Unless established, avoid claims like "miracle cure" or "works for everyone."

5. Examine the Content Carefully: Verify claims for correctness and completeness before publishing.

6. Get Legal Advice: If you're unsure about compliance, get advice from an agency or legal representative.

Responsible Influencing and Wider Consequences

The 2019 CPA framework gives ethical influence more weight. Transparency is now a legal obligation rather than simply a moral obligation. To protect consumers and maintain trust, it is imperative that brands, agencies, and influencers work together. Acting as a responsible influencer reduces your potential for legal liability and creates trust and ultimately establishes loyalty. The next challenge is that although CPA 2019 is a big step forward, there will be practical challenges in enforcing this legislation. One of the key challenges is the volume of content to monitor on social media.

The Obstacles to Overcome

Practical enforcement presents difficulties even though CPA 2019 represents significant advancements. Monitoring on social media is challenging due to the overwhelming amount of content. Influencers usually work across platforms and territories. The implementation of the law's provisions will require technological tools, awareness campaigns, and training (such as automatic ad-monitoring software).

India's Supreme Court's ruling against deceptive advertising endorsers and providers:

Everyone responsible for the publication of misleading and fraudulent advertisements is equally liable.Public figures, influencers, and celebrities are important. It emphasized how important it is for these people to advocate products in a responsible manner.It highlighted the Central Consumer Protection Authority's (CCPA) laws regarding transparency, which highlight the importance of disclosure in relation to influencer endorsements that are paid for.

Guidelines 8 and 12 address ads that feature or discuss minors and the responsibilities of marketing companies, suppliers, and producers, respectively. By doing this, it is certain that clients' confidence won't be violated or misused due to ignorance.

Guideline 13 requires that advertisements be prepared carefully, that the person promoting a product is knowledgeable enough about the food product in question, and that the product is not deceptive.The duties of broadcasters: According to the court, broadcasters are required to submit their self-declarations through the Broadcast Seva portal of the Union Ministry of Information and Broadcasting.

Leading India in Advertisement

Advertising is essential to building a brand in the marketplace. However, they become troublesome when they contain inaccurate information and use deceptive brand information to manipulate buyers' emotions. In 2023–2024, the Advertising Standards Council of India evaluated 8,299 ads and discovered that 81% of them were misleading, with proactive monitoring identifying 94% of the violations.Because a huge portion of the public is social media connected and consumes content through phony news stories or social media postings, online platforms are especially essential in the dissemination of deceptive marketing. In India, influencers and celebrities also disseminate deceptive ads. An average of 70% of Indians were exposed to deceptive marketing during the pandemic via social media or other internet sources, according to a poll done by the community media social media site LocalCircles. Following their viewing of these commercials, they frequently buy the goods or services offered by the specific brand being promoted.

What is at issue with the Patanjali advertisement?

The World Health Organization certified and approved Patanjali's medication, Coronal, to be effective in curing COVID-19 during the pandemic. The WHO later disputed and challenged this assertion, though. In his subsequent attacks on the medical pharmaceutical business, Patanjali claimed that its medications were adequate, appropriate, and capable of curing a number of illnesses. A 1000 crore defamation notice under Section 499 of the Indian Penal Code 1860 was sent by the Indian Medical Association in May 2022 as a result of this incident. Subsequently, in August 2022, the Indian Medical Association petitioned the Supreme Court on the inaccurate advertisement. The Supreme Court threatened and advised Patanjali during the initial hearing in November 2023 not to use phrases like "permanent relief" from the Drugs and Magic Remedies Act, 1954, to market its goods. In a previous statement, Patanjali promised not to release any more deceptive ads. The court documented this undertaking in its ruling. The business nevertheless keeps running deceptive ads for medical treatments. The court issued a contempt of court notice for violation of court order after determining that Patanjali had violated the undertaking. They were also directed to respond within two weeks. Additionally, the court warned them not to say anything negative about any medical system in any way. Baba Ramdev and Balkrishna were summoned by the Supreme Court to appear in person before the court on March 19 after the company did not reply to the contempt of court order. The managing director of the company, Balkrishna, apologized categorically on March 21. The Supreme Court chastised Baba Ramdev and Balkrishna for their "absolute defiance" in not filing a proper affidavit in response to the misleading advertisements during a follow-up hearing on April 2 and warned them about breaking the law. They were told to provide an affidavit within a week after the Supreme Court dismissed their apologies. Under Rule 159(1) of the Drugs and Cosmetics Rules, 1954, the Supreme Court suspended the manufacture licenses of 14 items owned by Patanjali Ayurvedic Ltd. and Divya Pharmacy on April 15 with immediate effect. The court also directed the Uttarakhand State Licensing Authority to submit an affidavit by April 29. The Supreme Court's ruling on May 7, 2024, This case holds significance as it instructed the Center to notify all advertising companies to provide a self-declaration certificate before airing any kind of print or internet advertisement. Influencers and celebrities are also equally responsible for pushing and endorsing deceptive web ads. This case significantly contributed to the enforcement of existing laws and the targeting of numerous large corporations that deceive customers under the guise of authenticity. This case paved the way for legislation to create new standards and regulations to address practical issues and safeguard the rights of consumers.

Conclusion

As the scope of digital marketing extends and consumer savvy increases, the Consumer Protection Act of 2019 provides significant and timely protections conducive to protecting against dishonesty in advertising. Notably, influencers are legally recognized as de facto endorsers or advertisements whose recommendations can significantly influence the decision-making of consumers. They are responsible and can be liable if they are deemed to be involved in bad advertising or dishonest advertising. Consumer protection and honest advertising are essentially two sides of the same coin. Both influencers and the brands they are representing need to be cautious in their persuasive influence by being fully transparent, accountable, and respecting consumer rights. In present day India, not only is this legal compliance, this is one of the at the core of ethical practice in digital marketing. Ultimately, following these guidelines would enhance the legitimacy and sustainability of the influencer industry, while simultaneously protecting the consumer.