A set of 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.
The Modi government made it mandatory for social media influencers to disclose all information such as gifts, hotel accommodation, equity, discounts and awards when endorsing any products, services or scheme, failing which strict legal action, including a ban on endorsements can be taken. The disclosures should be in simple and clear language, should be of a duration that is hard to miss, must be run with endorsements, including live streams and should be platform agnostic.
The regulations are part of continuing efforts to curb misleading advertisements as well as protect the interests of consumers amid the expanding social influencer market which is projected to grow 20 percent annually to reach ? 3000 crore by 2025.
In case of violation, the penalty prescribed for misleading advertisements under the Consumer Protection Act 2019 will be applicable. The Central Consumer Protection Authority (CCPA) can impose a penalty of up to ? 10 lakh on manufacturers, advertisers and endorsers. For subsequent offenses, penalty of up to ? 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.