Endorsement Know-hows on Social Media platforms

Authored by Garima Mitra, Co-Founder, Treelife (an end to end legal and finance firm that caters to startups)

The Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution (vide press release dated January 20, 2023) has released guidelines for celebrities, influencers and virtual influencers specifically with respect to social media platforms. The said guidelines are called ‘Endorsement Know-hows!’ For Celebrities, Influencers & Virtual Influencers on Social Media platforms

These guidelines talk about the disclosure of certain information by such celebrities and influencers while they are advertising/ promoting certain products on social media platforms. These guidelines further aim to ensure that such celebrities and influencers do not mislead their audiences while endorsing products and services.

1) Let’s break down some key words and their respective meanings

Celebrities: Famous personalities (such as sportspersons or film-stars) have the ability to affect the decisions or opinions of their followers.

Influencers: Persons who advertise products and services and who have a strong influence on the purchasing decisions or opinions of their followers.

Virtual Influencers: Computer-generated ‘persons’ who behave in a manner similar to influencers.

Material connection: Includes but is not limited to benefits and incentives, such as:

Monetary or other compensation;
Free products with or without any conditions attached, including those received unsolicited, discounts, gifts;
Contest and sweepstakes entries;
Trips or hotel stays;
Media barters;
Coverage and awards; or
Any family, personal or employment relationship.

2) Who should be disclosing information?

Individuals/ groups who have access to an audience and the power to affect their purchasing decisions or opinions with respect to a product or a service because of the influencer’s / celebrity’s authority, knowledge, position, or relationship with their followers/ fans.

The influencers and celebrities, as a result of their position and image, can significantly sway their followers’ opinions and purchasing decisions. This level of influence becomes valuable to brands as it can drive brand awareness, preference, and ultimately, sales.

Brands collaborate with such influencers or celebrities, the follower-base of which aligns with their target audience. The collaboration can involve product endorsements, sponsored content, product reviews, etc., with the goal of increasing brand visibility and driving followers to purchase the products/ services.

As a result, since influencers and celebrities have built a certain level of trust and authority among their followers, it is necessary that they adhere to the endorsement guidelines so prescribed.

3) When should such information be disclosed?

A ‘material connection’ between an advertiser and celebrity/ influencer may affect the weight or credibility of the representation made by the celebrity/ influencer.

When a celebrity or an influencer has a material connection with the advertiser, such celebrity or influencer could be advertising or promoting the particular product or service only because of the incentives that such celebrity/ influencer is going to be receiving as a part of the engagement.

Such material connections, coupled with the influencer/ celebrity’s ability to sway the consumers’ buying decisions, would eventually amount to the influencer and the advertiser misleading the consumers.

These guidelines have thus, added a ‘material connection’ qualifier, in order to safeguard the best interests of the consumers.

4) How to disclose information?

Information should be hard to miss – The information shall clear, prominent and extremely hard to miss. Such information should not be mixed with a group of hashtags/ links.
In case of endorsement in a picture – The disclosures should be superimposed over the images in such a manner that the person viewing them can see them clearly and shall be of a size and font style that can be easily read. The disclosure shouldn't get lost or blend too much with the background image. There shall also be sufficient contrast between the text of the disclosure and the image it's placed upon.
In case of endorsement in a video – The disclosures shall be placed in the video and not only in the description. The disclosures shall be in both the audio as well as the video format.
In case of endorsement in a live stream – The disclosures shall be displayed prominently throughout the entire stream.
Use of simple and clear language.
Terms which are allowed while making disclosures: ‘advertisement’ or ‘ad’; ‘sponsored’; ‘paid promotion’ or ‘paid’.
Disclosures shall be in the same language as the endorsements.
Separate disclosures shall be made apart from platform disclosure tools.

5) Due Diligence

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 strongly recommended that the endorser of a product or service should have actually used or experienced such product or service before endorsing it.

The benefits of conducting a due diligence on part of the influencers or celebrities is as follows:

Credibility and Reputation: Celebrities’/ influencers’ endorsements carry weight, as the audiences place trust in them. By ensuring the accuracy of the claims made in advertisements they're associated with, celebrities can maintain and bolster their credibility.

Accountability: Celebrities and influencers, by virtue of their public personas, are accountable for the messages they share. If they promote misleading claims, they may face backlash, damage to their reputation, or even legal repercussions.

Substantiating Claims: Before endorsing any particular product/ service, celebrities and influencers should request and review evidence supporting any claims made by advertisers. For example, if a toothpaste promises to reduce plaque by 20% in 2 weeks, the brand should be able to provide reliable studies or tests confirming this.

Personal Experience: It's advisable for celebrities/ influencers to personally use or experience a product or service before endorsing it. This ensures that their endorsement is genuine and based on their own perceptions, which can make the endorsement more relatable and trustworthy to their audience.

Potential Conflicts: Conducting due diligence can also help celebrities identify any potential conflicts of interest. For example, endorsing a product that goes against their personal beliefs or previous endorsements could result in public criticism.

Long-Term Relationship with Brands: Building a relationship based on trust and integrity with advertisers can lead to long-term partnerships. By conducting due diligence, celebrities signal to brands that they're serious about maintaining high standards in their collaborations.

To briefly summarize the above points, when celebrities and influencers invest time to understand the brands and products they endorse, it not only protects their own reputation but also ensures that they provide genuine and trustworthy recommendations to their followers.

6) Consequences of non-compliance

Such celebs/ influencers shall be made liable under the Consumer Protection Act, 2019 for non-compliance or non-disclosure. Under the Consumer Protection Act, 2019, a Central Consumer Protection Authority has been established, which has the power to impose a penalty in respect of such false or misleading advertisement, on a manufacturer or an endorser which may extend to INR 10 lakhs. Where such authority deems it necessary, it may also prohibit the endorser of a false or misleading advertisement from making endorsement of any product or service for a period which may extend to 1 year.

Further, as per Section 89 of the Consumer Protection Act, 2019, any manufacturer or service provider who causes a false or misleading advertisement to be made (which is prejudicial to the interest of consumers) shall be punished with imprisonment for a term which may extend to 2 years and with fine which may extend to INR 10 lakhs; and for every subsequent offence, be punished with imprisonment for a term which may extend to 5 years and with fine which may extend to INR 50 lakhs.