CCPA may fine influencers up to ₹50 lakh in upcoming advertising norms

The union government is set to come out with new norms for social media influencers which will include a fine of up to ₹50 lakh over non-disclosure of association with brands, Central Consumer Protection Authority (CCPA) Chief Commissioner Nidhi Khare said at the sideline of a press conference.

As per certain estimates, the Indian influencer marketing industry is valued at nearly ₹900 crore and could surpass a size of ₹2,000 crore by 2025. Personal care, fashion and jewellery, and mobile and electronics are among the largest categories that contribute to influencer marketing.

“Guidelines for social media influencers are ready and will be released shortly. Influencers will have to put out a disclosure while marketing a product, failing which they will be fined up to ₹10 lakh. For a subsequent offence, it will be ₹20 lakh and it can go up to ₹50 lakh,” CCPA Chief Commissioner Nidhi Khare said at the sideline of a press conference.

Khare explained that currently, a lot of social media influencers are subtly inserting brand names into their posts making them look like authentic posts. The brand and the influencer are in agreement with each other but just because the influencer is not a celebrity these things pass by, she added.

While prohibiting surrogate advertising, the government had earlier made it mandatory for celebrity endorsers to disclose stakes in companies or brands. The Consumers Affairs Ministry had also notified ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’ which are applicable to advertisements across all media platforms.

In June last year, the Advertising Standards Council of India (ASCI) released a draft code to identify and label advertising and promotions by influencers on social media. Those guidelines also said that specific claims made by influencers should be substantiated by advertisers and brand owners.

However, some industry sources said that these guidelines haven’t made much impact on how the industry functions. They said that the industry needs to move from guidelines to laws in order to make a real impact.

Shudeep Majumdar, founder of influencer marketing firm Zefmo, welcomed Khare’s comments and said that it’s the right step to turn the industry into an organized sector. He added that the unorganized sector could be in trouble if such rules are enforced by the government, but it’s good news for the organized side, which includes influencers with mass follower-base, brands and influencer marketing firms.

“If this becomes a law, it will push the trio (brands, influencer marketing firms, and influencers) to ensure that the guidelines are adhered to in the form of collective responsibility,” he said.

Further, social media platforms may have to take note as well, as there aren’t adequate methods of disclosure. The ASCI, for instance, had accepted the ‘paid partnership’ tag, offered by social media platform Instagram, as adequate disclosure for influencer advertising firms. However, it’s unclear whether the CCPA’s guidelines will require newer and clearer methods.