NEW DELHI: Celebrities and social media influencers now will require to disclose their material connections with a brand, service or company, including free products, contests and sweepstakes entries, trips or hotel stays, media barters, coverage and awards, consumer affairs ministry said in a fresh policy on ‘endorsements-know-hows’ announcement on Friday.
“The whole issue is centred on the consumer’s right to know. It is the responsibility of the endorsers, celebrities and influencers or other advertisers to truthfully disclose whatever information the consumer must know before making any decision for purchase,” the ministry said.
The ministry further stated that when there is a material connection between an advertiser and celebrity/influencer that may affect the weight or credibility of the representation made by the celebrity/influencer.
The size of social influencer market in India in 2022 was of the order of Rs 1,275 crore and by 2025, it is likely to rise to Rs 2,800 crore with a compound annual growth rate of about 19-20 per cent.
The regulations are part of continuing efforts to curb misleading advertisements as well protect the interests of consumers amid the expanding social influencer market which is projected to be grow 20 per cent annually to reach Rs 2,800 crore by 2025.
The new guidelines named 'Endorsement Know Hows -- for celebrities, influencers and virtual media influencers (Avatar or computer generated character) on social media platforms' has been issued by the Department of Consumers Affairs.
In case of violation, the penalty prescribed for misleading advertisement under the Consumer Protection Act 2019 will be applicable.
The Central Consumer Protection Authority (CCPA) can impose penalty of up to Rs 10 lakh on manufacturers, advertisers and endorsers. For subsequent offences, penalty of up to Rs 50 lakh can be imposed.
The CCPA can prohibit endorser of a misleading ad from making any endorsement for up to 1 year and for subsequent contravention, prohibition can extend up to 3 years.
These connections include monetary or other forms of compensation, free products, contests and sweepstakes entries, trips or hotel stays, media barters, coverage and awards, or any personal, family or employment relationship.
“Celebrities/influencers are always advised to review and satisfy themselves that the advertiser is in a position to substantiate the claims made in the advertisement. It is also recommended that the product and service must have been actually used or experienced by the endorser,” said the ministry said in the statement.
Also laying down a note of caution for influencers or celebrities, the ministry noted should they fail to disclose any material connection or noncompliance with the Consumer Protection Act 2019 and the Rules made thereunder would make such violators liable for strict action under the law.
Influencers need to disclose material link with brand
A government statement said when there is a material connection between an advertiser and celebrity/influencer that may affect the weight or credibility of representation made by a celebrity/influencer. These connections include monetary or other forms of compensation.
(With inputs from PTI)