Attention influencers. You may soon be fined lakhs for false ads, or not disclosing paid content

In New Delhi: The Ministry of Consumer Affairs is anticipated to release a set of probable guidelines for digital publicity this month in an effort to get rid of deceptive advertisements on social media platforms, according to ThePrint. These guidelines are likely to include mandatory disclosure of paid promotions and no false promotions without the support of authentic data.

The rules will encompass the sponsored content that social media influencers post, celebrity endorsements, and the activity of influencer marketing firms that collaborate with businesses to create influencer campaigns and manage influencers.

According to Nidhi Khare, additional secretary for the Ministry of Consumer Affairs, those found to be breaking the rules will have the opportunity to defend their actions before the ministry and provide justification, but they risk receiving fines of between Rs 10 lakh and Rs 50 lakh if found guilty.

The issue of some well-known education technology (ed-tech) companies and cryptocurrency companies making false claims in their advertisements was brought up by the advertising industry watchdog, the Advertising Standards Council of India (ASCI), in June of this year.

The ASCI published its own “Guidelines for Influencer Advertising in Digital Media” the previous year, and it recommended that social media posts that were connected to paid content or adverts be labelled as such, otherwise it would be considered wilful deceit.

The ASCI, however, is a self-policing organisation and lacks the authority to impose sanctions. According to sources in the ministry and the organisation, it has been assisting the government in identifying and creating a positive ecosystem where “misleading statements” are significantly reduced, if not eliminated altogether.

The ASCI is now hoping that the new ministry regulations will help the government protect consumers from being duped by paid advertisements that are distributed without the necessary disclosures.

Before being made public, the guidelines must first receive permission from the Ministry of Information and Broadcasting (I&B), according to sources who spoke with ThePrint. The I&B Ministry must be involved even if the directive was issued by the Ministry of Consumer Affairs because it is responsible for monitoring communication channels.

“We are specifically interested in disclosures. We want organisations and influencers to disclose when they have received funds to promote or endorse services and products,” Rohit Kumar Singh, secretary, Ministry of Consumer Affairs, told ThePrint.

While claiming to be prepared to exercise caution, social media influencers and influencer management companies asserted that the severity of fines for negligence should be determined by the company’s financial standing and industry.

“We must draw a line.”
According to ministry insiders who spoke with ThePrint, the standards were created after multiple discussions between ministry officials, self-regulatory organisations, and advertising professionals. While the ministry claims it wants to foster creativity, it also asserts that everyone must “draw a limit” in order to prevent customers from being duped.

“There will be people in the industry who will keep innovating ways to circumvent laws. We understand the needs of the advertising industry, but there is a line to draw especially for those who mislead the public. The intention here is not to be an impediment to the business or stifle any voice, but there is always a line which should not be crossed,” said Kumar.

He added: “With increasing digitalisation, there is a need for disclosures. Social media intermediaries also have a role to play here since those platforms have many misleading ads. Paid content on television still conforms (to the need for disclosure), but not many social media influencers do and hence these guidelines need to be enforced.”

The guidelines will also extend to digital news media.

“Digital news organisations who don’t follow the rule and disclose ‘advertorials’ will also come under the purview of these guidelines and will have to be penalised. Some of them still don’t disclose if they are endorsing a product or service after receiving money, and hence will be warned against such malpractices,” Kumar claimed.

While those in the business admit that regulations are needed, the penalties for flouting the guidelines are what some are worried about.

“There is a great need for regulations in this industry since it is growing at a rapid pace, and we want consumers to be more aware of influencers like Bollywood celebrity endorsements on Indian TV, newspaper and billboards,” said Amit Mondal, founder, Pulpkey, influencer marketing company.

He added: “According to me, fines could be based on the size and type of influencers rather than a fixed amount for all influencers. Everyone in the industry should know about this news, especially micro-influencers. Due to their lower income, micro-influencers should be fined less than celebrities.”

‘29% complaints pertained to this sector’

Meanwhile, Manisha Kapoor, CEO and Secretary General of ASCI, told ThePrint that the organisation was “well placed to support the government” in this agenda, if needed.

“ASCI has been finetuning our AI-based surveillance system for social media influencers. Almost 29 per cent of our complaints last year pertained to this sector. Given our expertise in this area, we are well placed to support the government in this agenda should they need it. ASCI has both the ability to identify such possible ads and agility in dealing with them,” she said.

The main idea the ASCI emphasised in its previous reports — in June and last year — was “voluntary compliance”.

“Voluntary compliance should remain the first line of resolution as it is speedy, effective and does not cost the taxpayer any money. However for serious and repeat offences, stricter and punitive measures add an extra layer of protection for consumers. So long as the guidelines are in line with global standards, and have considered the views of different stakeholders, we don’t believe there will be a disproportionate burden on the ecosystem,” said Kapoor.

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