Centre’s crackdown on booming market of social influencers

• Centre mandates social media influencers to disclose material gains
• The Consumer Protection Act 2019 penalty for misleading marketing shall apply
• Manufacturers, marketers, and endorsers can face fines of up to Rs. 10 lakh

In a major development, social media influences will have to disclose their material gains failing which a penalty of up to R 50 lakh can be imposed on them.

Critics call development a crackdown on the booming market of social influencers.

According to the new rules, the celebrities and social media influencers will have to disclose the benefit that they receive in exchange for promoting a product or a brand through their social media platforms.

Consumer Affairs Secretary Rohit Kumar Singh said that the new rules would act as a deterrent for social media influencers for indulging in the wrong promotional and endorsements, as per media reports.

It must be noted that the Union government had had already announced strict guidelines for social media platforms under IT rules 2021, and subsequent amendments.

The argument behind the latest order is said to an attempt to curb “misleading advertisements” as well as protect the interests of consumers amid the expanding social influencer market. The market is projected to grow 20% annually to reach Rs. 2,800 crore by 2025, as per Centre.

People and organizations that have access to an audience and the ability to influence them come under its purview since they can influence the audience’s decisions to buy or form opinions about a good, service, brand, or experience due to the influencer’s or celebrity’s position, expertise, or relationship.

The new guidelines, “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. They have been mandated to disclose all material interests such as gifts, hotel accommodation, equity, discounts, and awards when endorsing any products, services, or scheme.

Three key components

1. In the event of a breach, the Consumer Protection Act 2019 penalty for misleading marketing shall apply.
2. Manufacturers, marketers, and endorsers can face fines of up to Rs. 10 lakhs from the Central Consumer Protection Authority (CCPA).
3. A fine of up to Rs. 50 lakh can be levied for successive violations. A ban of three-year can also be imposed.