“With great influence, comes great responsibility” – this slightly modified adage, was used in the self-regulatory Guidelines for Influencer Advertising in Digital Media (“ASCI Guidelines”), published by the Advertising Standards Council of India1. Building upon this principle, the Department of Consumer Affairs has now released a binding guide on the disclosures to be made by celebrities, influencers and virtual influencers for advertisements on social media platforms (“Know-Hows”)2. We note that the key features of the ASCI Guidelines have been incorporated in the Know-Hows. The Know-Hows aim to ensure that individuals do not mislead their audiences when endorsing products or services and comply with the Consumer Protection Act, 2019 (“Act”) and the rules/guidelines made thereunder.
It is relevant to note that the Know-Hows are aligned with the Guidelines for prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 20223 (“Misleading Advertisement Guidelines”) released last year in June, which touched upon the obligations of endorsers. While the Misleading Advertising Guidelines focused on prohibited and misleading advertisements, the Know-Hows provide a comprehensive advertising guide to be followed by an endorser.
Applicability to Endorsers
The Misleading Advertisement Guidelines defined an “endorser” as an individual or a group or an institution making endorsement of any goods, product or service in an advertisement whose opinion, belief, finding or experience being the message which such advertisement appears to reflect. There was no mention of the categories of endorsers which would fall under the scope of the Misleading Advertisement Guidelines. Whereas, the Know-Hows identify the following endorsers who are required to make disclosures:
- Celebrities: Famous personalities, including but not limited to entertainment or sports industry who have the power to affect the decisions or opinions of their audience.
- Influencers: Creators who advertise products and services with a strong influence on the purchasing decisions or opinions of their audience. It is relevant to note that no minimum follower threshold which would qualify an individual as an influencer has been specified.
- Virtual Influencers: Fictional computer generated ‘people’ or avatars who have realistic characteristics, features and personalities of humans, and behave in a similar manner as influencers (For example, Lil Miquela, Shudu and Bermuda).
The Know-Hows mandate disclosures to be made when there is a material connection between an advertiser and an endorser that may affect the weight or credibility of the representation made by the endorser. The Know-Hows explain that the disclosure of an endorser’s material connection, allows the consumers to make an informed decision.
This material connection could be determined by benefits/incentives offered to the endorsers by the advertiser including (but not limited to): (a) Monetary or other compensation; (b) Free products with or without any conditions attached, including discounts and gifts; (c) Contest and sweepstakes entries; (d) Trips or hotel stays; (e) Media barters; (f) Coverage and awards; or (g) Any family, personal or employment relationship. If products are bought at the endorser’s own expense, and the endorser chooses to talk about it based on their experience, there is no material connection with the advertiser, and no disclosure is required.
Disclosures must be placed in a clear, prominent manner that makes it extremely hard to miss, and should not be mixed with a group of hashtags or links. While making the disclosures, simple and clear language should be employed. For instance, some terms allowed to be used as disclosure labels are ‘advertisement’, ‘ad’, ‘sponsored’ or ‘paid promotion’. Terms like ‘XYZ Ambassador’, wherein XYZ is the name of the brand is also acceptable on limited space platforms like Twitter. Additionally, these disclosures are required to be made in the same language as the post and must be separate from the disclosures made from any platform disclosure tools.
For endorsements in pictures, disclosures should be superimposed over the image enough for viewers to notice. In videos, disclosures should be placed in the video and not just in the description and should be made in both audio and video format. In live streams, disclosures should be displayed continuously and prominently during the entire stream.
Due Diligence by Endorsers
The Know-Hows suggest that endorsers should review and satisfy themselves that the advertiser is in a position to substantiate the claims made in the advertisement. This is only a recommendation and the extent or scope of the due diligence expected to be undertaken by an endorser has not been detailed. An important condition mentioned in this section is that the product and service must have been actually used or experienced by the endorser.
The Know-Hows include a ‘warning’, which states that failure to disclose any material connection or non-compliance of the Act and rules made thereunder would make such violators liable for strict action under the law. Thus, the penalties stipulated under the Act would be applicable for any non-compliance of endorsers with the Know-Hows.
While it is the endorser’s onus to comply with the Know-Hows, we would recommend that companies/individuals who have engaged endorsers for advertisements monitor the compliance of the advertisement with these Know-Hows. To this end, the guidelines in these Know-Hows could also be incorporated in the advertiser’s contract with the endorser.