On 20th January 2023, the Ministry of Consumer Affairs (“Ministry”) released a guide on ‘Endorsement Know-hows!’ for celebrities, influencers, and virtual influencers on social media platforms (“Guide”). The Guide has been introduced to address the issues relating to celebrity endorsements and misleading advertisements through social media platforms. The Guide requires all influencers, celebrities (famous personalities including but not limited to the entertainment and sports industry), and virtual influencers (fictional computer-generated ‘people’ or avatars who have realistic characteristics, features, and personalities of humans, and behave in a similar manner as influencers) that have the power to influence the purchasing decisions of their audience to provide relevant disclosures while endorsing products and services.
The Ministry Press Release to the Guide states that the same are in alignment with the Consumer Protection Act, 2019 (“CPA”), and its allied rules, the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 (“Guidelines on Prevention of Misleading Advertisements”), and that any endorsement by influencers/celebrities will have to comply with the same. It is worth noting that this Guide has not been notified by the Ministry under the CPA and therefore does not have the force of the law. However, given the recent scrutiny of the Advertising Standards Council of India and the Ministry over celebrity endorsements we anticipate that the Guide, read with the Guidelines on Misleading Advertisements will be referenced by ASCI and the Central Authority to regulate advertisements.
The salient features of the Guide are as follows:
- Disclosure of Material Connection – The Guide requires any person with access to an audience and the power to influence their audience’s purchasing decision with respect to a product, brand, or experience to disclose any “material connection” between the advertiser and the celebrity/influencer. The Guide defines “material connection” as any monetary or other compensation, free products with or without any conditions (such as gifts or discounts), contest and sweepstakes entries, trips or hotel stays, media barters, coverage and awards, or any family, personal, or employment relationship.
- Disclosures should be Hard to Miss – The Guide requires the celebrities/influencers to ensure that the disclosure of material connections is hard to miss, i.e., the endorsement message should be clear and prominent. Additionally, it should not be included with a group of hashtags or links. The Guide further provides disclosure requirements on the following types of media:
- Endorsement in a Picture: The disclosures are required to be superimposed on the image in a manner that viewers can notice it.
- Endorsement in a Video: Disclosures should appear in the video endorsing the product/service and not only in the description of the video. The disclosure to be both in audio and video format.
- Endorsement in a Live Stream: The disclosures should be displayed continuously and prominently in a live stream.
- Features of the Disclosure – The Guide prescribes specifications with respect to the form and manner of disclosures:
- Simple and Clear: The disclosure is required to be made in simple and clear language. Additionally, the Guide states that on limited space platforms, like Twitter, the celebrities/influencers should display terms such as “XYZ Ambassador”.
- Terms Allowed: In order to indicate disclosures of material connection, the use of terms such as “advertisement”, “ad”, “sponsored”, “paid promotion” or “paid” are allowed.
- Language: The Guide requires the endorsements and disclosure to be in the same language.
- Platform Tool: The disclosure of material connection by the celebrity/influencer/virtual influencer is required to be different from platform disclosure tools.
- Due-Diligence Requirements – The Guide further requires celebrities and influencers endorsing the product/service of an advertiser to review and assure themselves that the advertiser can validate the statements made in the advertisement. It further recommends that the product/service that the influencer/celebrity seeks to endorse must be used/experienced by them.
- Failure to Disclose Material Connection – In the event, a celebrity/influencer fails to disclose any material connection or does not comply with the CPA or its allied rules, then such celebrity/influencer can be liable for strict action under the law.
The Guide has been introduced with the aim of preventing unfair trade practices and misleading advertisements on social media platforms, especially considering the large number of users on these social media platforms that may fall prey to misleading promotions by celebrities and influencers that have some influence on the purchasing decisions of their audience. The Guide, read along with the CPA and Guidelines on Prevention of Misleading Advertisements will likely provide the regulatory framework to regulate celebrity endorsements on online platforms. Further, it appears that the Guide also provides teeth to the Advertising Standards Council of India’s Guidelines for Influencer Advertising on Digital Media.