Author: Vrinda Bhardwaj, a student at O.P Jindal Global University
To the Point
With social media becoming an everyday part of our lives, influencer marketing has now become powerful tool for brands to promote their products and connect with people especially through Instagram. However, with this fast-paced digital growth, there has also been an increase in ads, endorsements and sponsored content which is very misleading to the consumers. This article takes a closer look at how advertising by influencers is regulated in India especially on platforms like Instagram and looks into who is really responsible when consumers get misled.
Abstract
In today’s digital era, influencers hold a powerful place in our lives. Whether it is fashion, finance, fitness or food, these influencers have the ability to influence what we buy, believe and support. In India, their growing fame has made it difficult for the consumers to differentiate between their entertainment and advertising for financial gains. However, with so many followers comes a great responsibility and a big legal question that “What happens when an influencer promotes something that turns out to be false or misleading?”
This article looks into this issue and checks the current laws and guidelines that try to regulate influencer advertising especially on social media apps like Instagram. Also, it explores who gets held responsible when things go wrong as in not just the influencer but also the brands, agencies and platforms behind them.
Use of Legal Jargon
This article engages with key statutes like the Consumer Protection Act, 2019, the Advertising norms Council of India (ASCI) guidelines and recent regulations by the Central Consumer Protection Authority (CCPA). It involves legal principles like duty of disclosure and vicarious liability. Terms such as material connection, misrepresentation and due diligence are also discussed in this article.
The Proof
There have been multiple complaints against celebrities and influencers. In 2023 several high-profile celebs were fined for promoting online gaming apps and crypto products without proper warnings or disclaimers. One major case involved a fraudulent crypto platform that ended up scamming people out of more than ₹80 crore. The CCPA responded by sending show-cause notices to over 20 influencers that year which shows just how serious and widespread the problem has become.
Legal framework
Consumer Protection Act, 2019 (CPA)
The CPA is India’s main law for protecting consumers from unfair trade practices. It treats influencers as “endorsers” which is a term used in the Act and endorsement is defined in Section 2(18) of the Act. If an influencer promotes a product with fake claims and has not checked the facts properly then they can be fined up to ₹10 lakh under Section 21. Under this law, the consumers can take such cases to consumer courts.
The Act also defines a “misleading ad” under Section 2(28) as anything that falsely describes or guarantees a product that can mislead people. So, if an influencer has a material connection like being paid or receiving gifts by the brand and still promotes something with fake claims then they liable under this law.
CCPA Guidelines, 2022
To make things even clearer, the Central Consumer Protection Authority (CCPA) issued special rules in 2023 specifically for influencers. These say that any connection with a brand like cash, gifts, free trips or barter deals must be clearly mentioned. It should not be hiding it in tiny text or behind a “read more” button. It is important so that the viewers should instantly know when that influencer is doing an advertisement instead of thinking that the influencer is telling a genuine opinion about the product. Influencers are also expected to perform basic due diligence. That means checking if the product works as it claims and if there is proof behind those claims especially when promoting health, financial or lifestyle products.
ASCI Guidelines
The Advertising Standards Council of India (ASCI) despite being a non-governmental body plays a key part in overseeing and guiding ethical advertising practices in India. It laid down rules in 2021 that require influencers to tag posts with #ad or #sponsored when they are promoting something. Although ASCI can not impose fines but it can ask for ads to be taken down and even publicly name influencers who do not follow the rules which will have an impact on the image and followers of that influencer.
IT Rules, 2021
As per India’s IT rules, social media platforms are considered “intermediaries”. So these apps are not liable for every post that the influencer makes under Section 79 of the IT Act, 2000 but under Rule 3(1)(d), IT Rules, 2021 they must act when someone reports to them about misleading or harmful content. If they ignore such warnings then they could lose legal protection.
Case Laws and Compliance Actions
Re: Baba Ramdev and Patanjali (2023) [Indian Medical Association v. Union of India]
In 2023 Patanjali Ayurved was held liable in the Delhi High Court for making unverified health claims in their advertisements. Although this case did not invlolve Instagram or influencers directly but it showed that promoting something that risks public health whether it is a brand or a public figure that is doing it then they can be held accountable for it. The court made an important point that everybody has freedom of speech but that right does not cover commercial promotions that can mislead consumers especially on sensitive topics like health and medicine.
Marico Ltd. v. Abhijit Bhansali (2019)
This case involved a popular YouTuber who posted a video criticising one of Marico’s hair oils. Marico sued him for defamation in the Bombay High Court. The court carefully differentiated between a genuine personal opinion (like a regular user sharing their experience) and a commercial endorsement (where money or other benefits are involved). So, it was finally held that if influencers are being paid or compensated then they need to make that clear as the audiences deserve to know the difference between a genuine personal review and an ad for which the influencer is being paid.
Consumer Unity & Trust Society v. Colgate Palmolive (2008)
The National Consumer Disputes Redressal
Commission (NCDRC) ruled that all product claims made in advertisements must be backed by solid evidence. This case laid the foundation for how we interpret misleading ads under Indian consumer law today. It set the standard for future judgments by reminding everyone including the brands, advertisers and influencers that honesty in advertising is not just good practice but it is also legally required in order to protect the consumers from being misled.
ASCI Public Warnings and Compliance Actions
Against Influencers Regarding Cryptocurrency and Betting App Endorsements (2022)
In 2022 the Advertising Standards Council of India (ASCI) found out that many of the big bollywood celebs and influencers endorsing cryptocurrency platforms and online betting apps but did not warn their followers about the risks involved and also did not make it clear that these were paid promotions. ASCI issued public warnings and reminded everyone that transparency is not optional but it is a responsibility especially for famous people with a lot of followers. This case showed how influencers or celebs can be held accountable when financial products are endorsed by them without proper disclaimers.
Conclusion
Carefree influencer marketing is now deeply scrutinised with stricter rules and growing awareness among consumers and social media stars can no longer hide that their videos are sponsored as they can be held accountability for it in order to prevent consumers from being misled. However, for this to really work, we need more than just laws. There should be stronger enforcement, better public understanding of rights and also ASCI’s influencer guidelines should be turned into actual law in order to protect the consumers.
Also, responsibility should not fall on influencers alone. Brands and social media apps like Instagram and even consumers all play a role in keeping the social media apps transparent and honest. Also, India would benefit from public campaigns that teach people how to spot and report misleading ads because Indian market is very large and there are a lot of consumers in this country so even a dedicated tribunal to quickly handle social media-related disputes would be helpful.
FAQS
Q1) Can there be imprisonment of influencer due to misleading advertisements?
No, an influencer cannot be jailed under Section 21 of the Consumer Protection Act, 2019 for misleading advertisements. They can only face fines and be banned from endorsements but not imprisoned.
Q2) Are disclaimers enough to escape liability?
Not always. Disclaimers must be clear and not misleading but the product being promoted should also be safe for the consumers. Courts have also held that disclaimers (or sponsorship message) hidden in illegible formats are not legally enough and the consumers should be instantly be able to see that the influencer is doing an ad.
Q3) Can a consumer sue an influencer directly?
Yes. Under the CPA, a consumer can file a complaint before a consumer forum if they have suffered harm due to misleading advertisements. In cases of financial loss, criminal proceedings may also be initiated under applicable penal provisions.
Q4) What if the influencer did not know the ad was fake?
The law requires influencers to exercise due diligence. Ignorance is not an acceptable defence under the CCPA guidelines. Influencers must actively verify the claims they promote because they have a lot of responsibility to not affect consumers negatively just because of the product they were endorsing.
Q5) How can influencers protect themselves legally?
Influencers should protect themselves by adding strong indemnity clauses in their contracts, keeping proof of due diligence and asking brands for written evidence of any claims they promote. They must clearly disclose in their social media post if they arre being paid, gifted or given anything in return by the brand to endorse their product.
SOURCES:
WESBITES
https://indiankanoon.org/doc/79649288/
https://indiankanoon.org/doc/68252745/
https://www.ascionline.in/wp-content/uploads/2022/09/press-release-influencer-guidelines-2021.pdf
https://timesofindia.indiatimes.com/city/hyderabad/ed-to-probe-role-of-celebrities-in-promoting-online-betting-apps/articleshow/119269813.cms
STATUTES/ GUIDELINES
Consumer Protection Act, 2019, No. 35, Acts of Parliament, 2019 (India).
Section 2(18) — Definition of “Endorsement”
Section 2(28) — Definition of “Misleading Advertisement”
Section 21 — Penalty for False or Misleading Advertisements
Central Consumer Protection Authority (Guidelines for Influencer Endorsements), 2022, Ministry of Consumer Affairs, Government of India.
Advertising Standards Council of India (ASCI) Influencer Guidelines, 2021.
Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021
The Information Technology Act, 2000
CASES
Indian Medical Association v. Union of India, 2023
Marico Ltd. v. Abhijit Bhansali (2019)
Consumer Unity & Trust Society v. Colgate Palmolive (2008)
