Are influencers legally liable for promoting products without mandatory disclosures as per ASCI guidelines?

Influencer marketing has become one of the most powerful tools in advertising today, especially with the rise of social media platforms like Instagram, YouTube, and Twitter. Influencers are often paid or incentivized to promote products and services to their followers. However, as influencer marketing grows, so do concerns about transparency, consumer protection, and the ethics of undisclosed promotions.

In India, the Advertising Standards Council of India (ASCI) has put in place guidelines to ensure that all paid endorsements and promotions are clearly disclosed to consumers. These guidelines mandate that influencers disclose when they are being compensated or incentivized to promote products. Failure to do so may result in legal action or penalties. But how serious are these legal liabilities, and what are the consequences for influencers who fail to disclose such promotions?

ASCI Guidelines for Influencer Marketing

• The Advertising Standards Council of India (ASCI) is a self-regulatory organization that governs advertising content to ensure that it adheres to ethical standards and doesn't mislead consumers.

Mandatory Disclosures

• They are paid to promote a product or service.
• They have been gifted the product or service.
• They are endorsing a product due to a brand partnership or any business relationship.

Types of Disclosures:

• #Ad, #Sponsored, or #PaidPartnership in a visible and clear manner.
• The disclosure should be placed at the beginning of a post (whether a video or image) to ensure that it’s not missed by the audience.
• Influencers are also required to mention any material connection with the brand, which could include free products or services provided in exchange for promotion.

Influencer Responsibility

• Influencers are responsible for ensuring that the disclosures are made according to the ASCI guidelines, even if the brand provides the product or oversees the promotion. The responsibility of disclosure lies with the influencer, and they cannot rely solely on the brand’s marketing team to take care of it.

Consumer Protection

• The goal of these guidelines is to prevent misleading advertising and ensure that consumers know when they are viewing an advertisement. Without clear disclosures, influencers risk deceiving their followers into believing that they are receiving unbiased opinions rather than sponsored content. This could lead to consumer complaints, fines, or legal action.

Legal Liabilities for Influencers

Legal Framework under the Consumer Protection Act

• Under the Consumer Protection Act, 2019, if an influencer promotes a product without proper disclosure, they could be seen as misleading consumers. The law empowers consumers to file complaints against misleading advertisements. Influencers may be subject to:
• Fines: Influencers who fail to disclose paid promotions could face penalties. For example, Rs. 10 lakh fine or more for misleading promotions under the Consumer Protection Act.
• Jail Time: In extreme cases, the act provides for imprisonment for up to two years if found guilty of misleading consumers or promoting unsafe products.

Penalties from ASCI

• While ASCI itself cannot directly impose fines or criminal penalties, it plays a significant role in regulating advertisements and ensuring ethical practices:
• Reprimand and Warning: ASCI can issue warnings or reprimands for influencers who fail to follow the guidelines.
• Removal of Content: Influencers may be asked to remove or correct posts that do not adhere to the disclosure requirements.
• Public Blacklisting: Influencers who repeatedly fail to comply with ASCI's rules can be publicly blacklisted, potentially damaging their career and reputation.

Brand Liability

• Brands also share the legal responsibility for ensuring that influencer campaigns are compliant with advertising laws. If a brand is found guilty of using influencers to promote products without the proper disclosures, the brand could face legal action, including fines and consumer lawsuits. As a result, both influencers and brands are equally liable for failing to disclose paid promotions.

Influencers as Advertising Agents

• Influencers are often considered advertising agents in this context. If they fail to disclose the nature of the promotion, it could lead to accusations of fraudulent advertising, where consumers are misled into thinking that the influencer’s endorsement is genuine. Influencers could then be held accountable under various consumer protection laws.

How Influencers Can Protect Themselves

Ensure Clear and Visible Disclosures

• Influencers must make sure that disclosures such as #Ad, #Sponsored, or #PaidPartnership are placed at the beginning of posts, and that they are clearly visible to followers, not hidden or at the end.
• Disclosures should also be easily understandable for the target audience, avoiding vague terms or unclear statements.

Verify Brand Agreements

• Influencers should ensure that they have a written agreement with the brand regarding the terms of the promotion, including clear guidelines on how the product will be promoted, what disclosures are required, and what content needs to be shared.
• Reviewing these agreements with a legal professional can help prevent future issues related to non-compliance with advertising laws.

Educate Themselves on ASCI Guidelines

• Influencers should familiarize themselves with the ASCI guidelines and other related advertising laws. ASCI provides resources to help influencers understand their responsibilities and ensure compliance.
• It’s also helpful for influencers to keep track of any changes in regulations and adapt their practices accordingly.

Transparency with Followers

• Aside from legal obligations, maintaining transparency with followers helps build trust. Influencers should regularly educate their audience about how product recommendations work and why they make certain endorsements.
• Being honest about sponsored content not only keeps influencers legally safe but also helps retain audience credibility.

Example

• Let’s say an influencer on Instagram posts a photo of a new skincare product they were gifted by a brand. The influencer shares positive feedback about the product without disclosing that it was gifted, nor does the post include any hashtag like #Ad or #Sponsored.
• In this case, the influencer could face:
• Legal Action: A consumer who feels misled by the post could file a complaint under the Consumer Protection Act, leading to penalties or fines.
• ASCI Action: ASCI could issue a reprimand and ask the influencer to remove or correct the post to include proper disclosures.
• Brand Liability: If the brand is found responsible for not guiding the influencer on the disclosure requirement, it could also face legal consequences or fines.
• To protect themselves, the influencer could immediately update the post to include a clear disclosure like #Gifted or #Ad and ensure that they provide this information in future promotions.

Conclusion

• Yes, influencers can be legally liable for promoting products without adhering to the mandatory disclosure requirements set by ASCI guidelines. They may face penalties, fines, and lawsuits under the Consumer Protection Act, 2019, and may be subject to actions from ASCI. To protect themselves, influencers should ensure transparent, clear disclosures in all paid promotions, adhere to the ASCI guidelines, and maintain proper agreements with brands. Compliance with these requirements not only protects influencers from legal issues but also fosters trust with their audience.