Central Government Guidelines for Social Media Influencers Decoded

Ever decided to buy a product or avail of a particular service because your favourite creator earnestly recommended it? The reach of social media influencers on the internet has boomed in the past decade. They are now being hailed as the new-age marketing tool for almost all types of brands globally. Their wide reach among consumers and their ability to influence consumer behaviour with content even as short as 15 seconds in well documented. The Indian influencer marketing industry is valued at close to Rs 900 crore and it is likely to surpass Rs 2,000 crore by 2025. The “creator economy” is a definite force to be reckoned with. It is a source of both employment and income generation. As is the case with any unregulated market, dubious market tactics have reigned supreme, with creators often failing to disclose paid partnerships and promotions to their ever-growing audience, sharing misleading endorsements, fake reviews or products, to influence fans to buy or spend their detriment. 

Guidelines governing social media influencers

In order to regulate the creator economy and develop a system of checks and balances, the Central Government has prepared a draft of guidelines for social media influencers. This development has been in the making for a while now. The Department of Consumer Affairs had a meeting on May 27^th 2022 with e-commerce firms and stakeholders to examine the “magnitude of fake reviews and outline the path ahead” after becoming aware of misinformation on e-commerce platforms. Amongst other do’s and don’ts, the guidelines make it mandatory for them to make disclosures regarding paid promotions or paid reviews. 

As per information received from sources at the Department of Consumer Affairs, a draft of the guidelines may be released within a week from now. The intent behind the guidelines is to prevent false advertising and misleading promotions. Additionally, the idea is to protect consumers’ interests and ensure that the influencers disclose their material connections with brands in their social media posts.

What do the guidelines entail? 

According to information obtained, a social media influencer will be required to disclose his or her relationship with a brand if they advocate it after receiving payment. This means that social media influencers will thus be required to reveal any vested interests, monetary or otherwise, in the products/brands/services that they’re promoting in the form of disclaimers. Additionally, influencers who post bogus reviews or even endorse goods and companies without the necessary controls and checks will be subjected to harsh punishment. The provisions of the Consumer Protection Act,1986 governing fraudulent and misleading advertisements will be applicable. 

Penalties for wrongdoing, for failing to follow these guidelines are steep. The law makes social media influencers liable for violations – up to Rs 10 lakh for a first offence. This fine could extend to Rs 20 to 50 lakh for recurring offences. They can also be prohibited from endorsing any products for up to three years. The strict nature of the penalties is expected to serve as a deterrent, in a largely unregulated ecosystem.

Previous attempts at regulation

It should be noted that this is not the first time that such an attempt is being made to introduce regulations to the influencer industry, the Advertising Standards Council of India (ASCI) released the final ‘Guidelines For Influencer Advertising In Digital Media’ on the 14^th June 2021

Amongst other things, these guidelines define the scope of the term influencer and who it entails, i.e. someone having access to an audience and power to affect such audiences’ purchasing decisions or opinions about a product, service, brand or experience, because of the influencer’s authority, knowledge, position, or relationship with their audience”.

According to the Guidelines, every post made on digital media by social media influencers or their agents must have a disclosure label that clearly states that it is an advertisement. Even issuance of free products or unsolicited gifts, discounts, contest and sweepstake entries, trips or hotel stays, media barters, coverage, awards, or any family or employment relationship between the advertiser and the influencer in addition to the typical benefits and incentives such as monetary or other compensation is labelled as ‘Material Connection’ and is to be identified as such by influencers in their posts, stories, reels, videos.

These guidelines are applicable to influencers and creators across all categories of digital media, encompassing all plausible forms of digital content and platforms for the delivery of such content. Labels including “Advertisement”, “Ad”, “Sponsored”, “Collaboration”, “Employee”, and “Free Gift” have been identified as permitted disclosure and have to be conspicuously displayed in posts of a promotional nature involving monetary compensation or paid partnerships, gifts etc

However, it is important to keep in mind that ASCI is a self-regulatory and voluntary governing body, therefore the Guidelines could not be statutorily enforceable. Thus, the guidelines released by the Central Government will achieve the initial goals of the ASCI guidelines along with having legal enforceability.

Impact on Social Media Influencers

Since the Indian influencer market is still in its early stages, Shweta Purandare, former secretary-general of the Advertising Standards Council of India (ASCI), claims that the decision could have broad repercussions.

According to a participant at one of the meetings, “the standards have been developed following significant consultation with all stakeholders, including firms, brands, and representatives from digital platforms where such influencers are known to be particularly active.”

Several content creators such as Aanchal Aggarwal, Nikhil Vijayendra Simha and Dolon Dutta Chowdhury have welcomed the advent of formal guidelines in the influencer market. 

The implication is clear as day. By drafting and releasing these guidelines, the Central Government is in fact taking a step towards formalising the creator economy, recognising its potential as a source of revenue generation. It is both a necessary and prudent move at this stage.