Review: Government Releases Guidelines for Celebrities, Influencers, And Virtual Influencers, "Endorsements Know-hows!"
Sai Krishna Muthyanolla
March 21, 2023
Recently, The Department of Consumer Affairs released a set of guidelines called “Endorsements Know-hows!” for celebrities, influencers, and virtual influencers on social media platforms. The guidelines have been made as per the rules notified under the Consumer Protection Act, 2019 in June 2022.
Celebrities endorsing products in advertisements is a very common form of marketing. Across all audio and visual media platforms, there are many advertisements featuring actors, influencers, sportspersons, and other famous personalities who generally have a high degree of recognition and trust among the larger audience, endorsing some brand or a product. There are celebrities endorsing motor vehicles, cosmetics, electric equipment, clothing, food and beverages, banking and finance, education, and health-related products among others. This list is endless. The strategy of using a ‘well-known’ or famous personality helps not only in reaching out to a large audience but is also considered to be the fastest and safest way for brands to develop an association and a bond in the mind of their consumers.
In recent years, social media has emerged as a key platform for marketing. Along with the growing number of users, there has also been a rise in social media and virtual influencers who are approached for endorsement, in addition to celebrities from the entertainment and sports industries who were typically roped in for brand endorsements. As a result, people are more at risk of getting misled through advertisements and unfair trade practices on these platforms. The influencers endorsing or promoting these products may not be fully aware of the legitimacy, quality, and other related aspects of the product they endorse, and misleading consumers in the process.
‘Endorsement Know-hows’ was released by the Union Government
Recently, The Department of Consumer Affairs, under the Ministry of Consumer Affairs, Food and Public Distribution released a set of guidelines called “Endorsements Know-hows!” for celebrities, influencers, and virtual influencers on social media platforms. The guidelines have been made as per the rules notified under the Consumer Protection Act, 2019 in June 2022. The purpose of these guidelines is to ensure that these individuals do not mislead their audiences when endorsing products or services and that comply with the Consumer Protection Act and any associated rules or guidelines. Adherence to the guidelines is essential for celebrities and influencers to maintain transparency and authenticity with their audience. Not only is this supposed to hold the endorsers responsible but also helps the consumers make informed decisions.
Explicit disclosure of sponsorship or collaboration in endorsement by influencers is mandatory
The guidelines state that individuals or groups who have access to an audience and the power to affect their audiences’ purchasing decisions or opinions about a product, service, brand, or experience, because of the influencer’s or celebrity’s authority, knowledge, position, or relationship with their audience must disclose to the audience if the endorsement is a result of benefit or incentive from the advertiser. That is, if the endorser (including celebrities and influencers) is endorsing a product for which they have received some monetary compensation or any other form of sponsorship from the advertiser, the endorsement must clearly and prominently disclose the same.
With respect to different formats used for endorsement, the guidelines stipulate the following rules for disclosure:
For images: Disclosures should be superimposed over the image enough for viewers to notice.
For videos: Disclosures should be placed in the video and be made in both audio and video format.
For live streams: Disclosures should be displayed continuously and prominently during the entire stream.
The disclosure must be made in simple and clear language.
The disclosure must be made in simple and clear language. Terms such as “advertisement”, “sponsored”,  “collaboration” or “paid promotion” can be used. Further, the disclosure should be made in the same language as the endorsement. Also, disclosures should not be mixed with a group of hashtags or links. The guidelines specify that individuals must not endorse any product or service that they have not personally used or experienced or in which due diligence has not been done by them.
Endorsers are liable for legal action if they do not disclose endorsement
The endorsers will be liable for legal consequences if they fail to disclose any material connection or if non-compliance with the Consumer Protection Act 2019 and the associated rules is established. According to the 2019 Act, if the Central Consumer Protection Authority finds any advertisement as false or misleading, it can ask the advertiser to discontinue the advertisement and can impose a penalty of up to Rs. 10 Lakhs on the manufacturer or endorser. The penalty imposed can be extended to Rs. 50 Lakhs if the offence is repeated. The Authority also has the power to ban an endorser from making advertisements for up to a year for the first offence and up to 3 years for repeated offence. If the endorser has exercised due diligence to verify the authenticity of claims made in the advertisement, they may be exempted from the penalty.
Emami was asked to pay Rs. 15 lakhs for misleading ads in 2015
Not only in recent times, but celebrities have been under the scanner even in the past for being part of misleading ads. For instance, in 2015, a resident of Delhi filed a complaint in the District Consumer Disputes Redressal Forum of Central Delhi about the ‘Fair and Handsome Cream’, (World’s No.1 Fairness Cream for Men) being manufactured by Emami. The complainant contended that he had used the product as per directions for use mentioned on the labelling and packaging of the product, but it had failed to show any results as claimed. He also argued that Emami had been using Shahrukh Khan as its brand ambassador for the promotion of the product and made false claims and promises that the product provides fairness in just three weeks. The court ruled that the ads by Shahrukh Khan were misleading and directed Emami to pay an amount of Rs. 15 lakhs as punitive damages to the consumer welfare fund. It also directed the company to pay the complainant a sum of Rs.10,000 and withdrawal of the advertisement.
Apart from this, there have also been many media reports of cases filed against Amitabh Bachchan, Madhuri Dixit, and Preity Zinta for promoting Nestle’s Maggi Noodles when the product was banned when found to contain taste enhancer MSG and the chemical Lead beyond permissible limits, which are harmful to humans.
Considering explosion of e-commerce & social media users, the guidelines are much needed
The guidelines are a way forward to hold influencers and celebrities responsible for endorsement considering the wide reach and influence they have on consumers. The guidelines have been released at a time when there is an explosion of e-commerce and social media users. Many other countries also have their own set of rules and guidelines with respect to endorsements. The US’s Federal Trade Commission clearly holds both the advertiser and the endorser responsible for the advertisements. Likewise, France’s legislation also calls for clearly specifying if the influencers’ communication results from a partnership with a brand or a trader and that they are paid to promote the products they present.
Featured Image: Celebrity endorsements