Social Media Influencers and the amended Consumer Protection Rules – Whom does the law Protect?

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The Consumer Protection law that was amended in 2019 has introduced several measures to strengthen the law with regard to consumer protection in India. One of these measures include those which will have a significant impact on social media influencers like vloggers, bloggers, celebrities and any person using their social media following to endorse brands.

Social media influencers have acquired immense popularity, and this popularity has been used for marketing products. With their ability to get their followers and fans into buying products or services, social media marketing has seen a rise with the involvement of these influencers. The main reason for the rise of this form of marketing or promotion of goods and services is that the brands have a general understanding that the public believe the social media influencer that they follow. Moreover, social media posts endorsing a product by an influencer does not particularly seem or look like a traditional advertisement. For these reasons, brands have relied on influencers to market their products or services. However on occasion, there certainly have instances where its difficult to tell the difference between an honest recommendation set against a commercial, paid advertisement.

Prior to the 2019 amendment of the Consumer Protection Act, an express legislative framework was absent in order to regulate disguised advertisements. Even though the Advertising Standards Council of India framed some codes to promote honesty along with the quality of the contents of advertisement, they were for self-regulation, and since the Council is not a regulator, the codes did not have the force of law.

The Consumer Protection Act of 2019 has looked into these areas of advertising and marketing through influencers. Now, influencers, and the brands that approach them must give due regard to these changes with respect to the legislation in order to avoid liability. The act not only strengthens the definition of ‘misleading advertisement’, but also authorizes authorities to impose penalties with regard to false and misleading advertisements. According to the amendment, a ‘misleading advertisement’ is one that falsely describes a product or service; or gives false guarantees or is likely to mislead consumers as to quality of a product or service; or conveys a representation that would constitute an unfair trade practice; or deliberately conceals important information. 

The consumer protection authorities have the power to conduct investigation s into advertisements, and they can also issue directions to stop misleading advertisements. Additionally, the authorities also have the power to impose penalties upto INR 1 million and upto INR 5 million for subsequent violations. These penalties can also be imposed on an endorser of a product, and in case of repeated contraventions, these endorsers may also be prohibited from endorsement activities for a period of 1 to 3 years. Given this amendment, social media influencers and brands who advertise products must ensure transparency in the endorsements they make. This includes disclosure regarding paid endorsements and details of the brand or business involved. These disclosures must be made in a manner that the followers or public are easily able to detect paid endorsements or advertisements from genuine recommendations. In addition to the responsibilities of influencers, the brands should also be careful enough to ensure that the rules are complied with. 

The influencers should also be diligent with respect to the background check and research on the brand and the product being endorsed or advertised, so that they do not end up endorsing a fraudulent or misleading product. The influencer, while endorsing or advertising, should also put up a disclaimer concerning the personal preference, so that consumers are well aware of the product, and they can do further personal research on the product or service.

The 2019 amendment has the power to primarily change the manner in which the agreements or contracts between influencers and brands are phrased. Due to the increase in the responsibility of liability of influencers because of the amendment, influencers will be forced to access more details from the brands regarding the product quality, compliance standards and advertisement related regulations. They will also have to seek strong indemnification provisions from the brands in order to cover any probable penalties and legal costs that might incur in the future.

The 2019 Consumer Protection Act, thus, aims at providing a more transparent means of advertisement to ensure the well-being of consumers in given the different methods of marketing through channels like social media. It is also safe to conclude that the amendment will not only increase the importance of endorsements made by social media influencers in the future and thereby protecting consumers but also balancing the interests of the Brand Owners.

This article has been authored by Ms. Anjana Gopinath.

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