Legal Considerations for Influencer Marketing in India

Influencer marketing in India has emerged as a powerful tool for brands to engage with their target audiences and promote their products or services. With the rapid growth of social media platforms and the influence that it holds in the minds of the general public, influencer marketing in India has gained much momentum. Influencer marketing refers to the practice of collaborating with individuals who have a substantial online following and influence to promote or endorse products, services or brands through various digital platforms.

 

Understanding the Law

Influencer marketing in the Indian law, falls under the purview of several regulations and guidelines that govern advertising, consumer protection, data privacy and intellectual property rights. It is crucial to understand and comply with these legal requirements to ensure transparency, protect consumer rights and maintain ethical practices. 

 

Consumer Protection Laws: 

Consumer Protection Laws play a vital role in influencer marketing in India to safeguard the interests and rights of consumers. The primary legislation in this domain is the Consumer Protection Act, 2019. The Act establishes consumer rights and outlines the responsibilities of businesses and influencers in ensuring fair trade practices. Influencers should adhere to the following provisions:

Under Section 2 (18) of the Consumer Protection Act, 2019, the terms “endorsement” in relation to an advertisement, means— (i) any message, verbal statement, demonstration; or (ii) depiction of the name, signature, likeness or other identifiable personal characteristics of an individual; or (iii) depiction of the name or seal of any institution or organisation, which makes the consumer to believe that it reflects the opinion, finding or experience of the person making such endorsement;

As per the Endorsement Guidelines, the following shall come under the definition of Influencers:

‘Influencers’ are those who have access to an audience and the power to affect their audiences’ purchasing decisions or opinions about a product, service, brand, or experience, because of their authority, knowledge, position, or relationship with their audience.

‘Virtual influencers’ are fictional computer-generated ‘people’ or avatars who have the realistic characteristics, features and personalities of humans and behave in a similar manner as influencers.

‘Celebrities’ are famous personalities, including those in the entertainment or sports industry who have the power to affect the decisions or opinions of their audience.

Under Section 2(47) “unfair trade practice” means “a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice….”

Such practices may include making false or misleading statements about product quality, composition or sponsorship, offering misleading warranties or guarantees, misrepresenting market prices, spreading false information discrediting other goods or services, false advertising, offering gifts or incentives without intention to provide them as advertised, withholding final results of schemes, selling non-compliant goods, hoarding or destroying goods to inflate costs, manufacturing or selling counterfeit goods, refusing to issue proper sales documentation, not taking back defective goods or discontinuing deficient services and unlawfully disclosing consumer’s personal information. All these actions can be viewed as violations of consumer rights and fair trade practices.

Under Section 10: Establishment of the Central Consumer Protection Authority to be known as the Central Authority to regulate matters relating to the violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interest of the public and consumers and to promote, protect and enforce the rights of consumers as a class.

Advertising Guidelines: 

In addition to consumer protection laws, influencers must comply with advertising guidelines issued by regulatory authorities. The Advertising Standards Council of India (ASCI) is a self-regulatory organization that monitors and regulates advertising practices in India. Influencers should adhere to the ASCI’s guidelines, specifically:

• Clear Disclosure of Promotional Content: Social media influencers should clearly mark promotional content, using tags such as #ad, #sponsored, #partnership etc. This is to ensure that the audience is aware that the content is an advertisement.
• Due Diligence for Product Claims: Influencers should conduct due diligence to verify the claims made about a product or service in their endorsement, ensuring that the product or service can deliver on the promised claims.
• Honest Reviews: Influencers should provide honest and unbiased reviews of products and services. They should not promote anything that they have not personally experienced or found to be effective.
• Disclosure of Material Connection: If there’s a material connection between the influencer and the advertiser, such as a free product or a sponsorship agreement, it needs to be clearly disclosed to the audience.
• Image and Video-Based Disclosures: In the case of video content, the disclosure should be visible on the screen long enough for the viewer to recognize it. In images, the disclosure should be superimposed on the image in a manner that is easily visible.
• Audio and Live Stream Disclosures: For audio content, the disclosure should be clearly stated at the beginning and end of the audio. For live streams, the disclosure should be repeated periodically during the stream.
• Record of Endorsements: Influencers are required to keep a record of their endorsements or advertisements for a period of 6 (six) years.

It is essential for businesses and influencers to remain updated with the evolving legal landscape and any amendments or new regulations in consumer protection, advertising and data privacy domains. Seeking legal advice and guidance from media law firms in India or Media lawyers specializing in influencer marketing in India can help ensure compliance with relevant laws and regulations and avoid legal implications.

 

India’s New Endorsement Guidelines for Celebrities and Social Media Influencers

The world of advertising in India has taken a crucial step towards transparency and consumer protection. On January 20, 2023, the Department of Consumer Affairs under the Ministry of Consumer Affairs, Food and Public Distribution, released a guideline aptly named ‘Endorsement Know-hows!’. The aim is to ensure that celebrities and influencers do not mislead their audiences while endorsing products or services and to ensure alignment with the Consumer Protection Act of 2019 and associated rules. This comes in light of the rising influence of digital platforms such as Facebook, Instagram and Twitter, which has not only increased the reach of advertisers but also heightened the risk of consumers being misled by advertisements and unfair trade practices by influencers.

The ‘Endorsement Know-hows!’ demand that celebrities, influencers and virtual influencers prominently display disclosures about the ‘material connection’ between the advertiser and themselves in their endorsements. A material connection can include monetary or other compensation, free products, contest and sweepstakes entries, trips or hotel stays, media barters, coverage and awards or any family, personal or employment relationship. Failure to disclose any such material connection or non-compliance with the Consumer Protection Act 2019 could attract a penalty of up to fifty (50) lakhs. The guidelines also stipulate that endorsements should be made in simple, clear language using terms such as ‘advertisement’ ‘sponsored’ or ‘paid promotion’ and the endorsers should have used or experienced the product or service they are promoting. This step towards transparency aims to foster trust and protect consumers from misleading advertisements.

 

Contractual Agreements and Relationships

When it comes to influencer marketing, the creation of formal, written contracts between influencers and brands is critical. These contracts (also known as influencer marketing contracts) help to ensure transparency and set clear expectations between both parties thus avoiding potential disputes.

Key elements to include in influencer marketing in India agreements:

• Scope of Work: This outlines exactly what is expected of the influencer—what kind of content they will create, how often they will post and on which platforms.
• Timeline: This details the timeline for content creation, submission for review,= and posting.
• Compensation: This section outlines how and when the influencer will be paid. It also includes information on additional benefits such as free products or services.
• Content Ownership: This sets out who owns the rights to the content after it has been posted. Some brands may want the ability to use the influencer’s content in their own marketing materials.
• Confidentiality: This clause prevents the influencer from sharing sensitive information about the brand or the campaign before it has been publicly released.
• Force Majeure: In the event of any situation which is beyond the control of the Influencer, such a clause can prevent the Influencer from doing any act which is impractical.
• Termination: This lays out the circumstances under which either party can end the agreement.

 

Considerations for disclosure of sponsored content and brand collaborations:

Disclosure is a critical part of influencer marketing contracts due to legal regulations and guidelines that require influencers to clearly state when their content is sponsored. The contract should therefore specify how and when disclosures should be made. For instance, influencers might need to use hashtags like #ad or #sponsored, or verbal disclosures in the case of video content. This is not only legal compliance but also helps maintain trust with their audience by clearly distinguishing between organic content and paid promotions. The contract may also require the influencer to provide the brand with advance notice or approval of the content before it is posted to ensure the disclosure is adequate and complies with the brand’s standards.

 

Data Privacy and Protection:

During influencer marketing campaigns, a vast amount of data is generated. This includes data about the influencers themselves, as well as their followers. Ensuring compliance with data privacy regulations means that any personal data collected should be:

• Collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with those purposes.
• Adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed.
• Accurate and up-to-date where necessary.

 

Protection of Personal Information of Influencers and Their Followers

Protection of personal information involves taking appropriate technical and organizational measures to ensure that data is securely stored, processed and transferred. This can include practices such as data encryption, access controls and regular security audits. In the case of a data breach, both parties should have a plan in place for notifying the relevant data protection authorities and the individuals affected.

 

Dealing with Disputes Arising from Influencer Marketing Campaigns

Influencer marketing in India campaigns are governed by contractual agreements and disputes can arise due to several reasons such as non-payment, non-delivery of services, misrepresentation or violation of terms. 

 

Legal Remedies Available in Case of Contract Breaches or Infringement Issues

If the dispute cannot be amicably resolved, legal action might be necessary. Here are the key legal remedies in India:

• Breach of Contract: If either party breaches the contract, the aggrieved party can file a civil suit seeking damages for the loss caused due to the breach. In some cases, they might ask the court to issue an injunction to prevent further violation of the agreement.
• Consumer Protection: Influencers, being service providers, fall under the ambit of the Consumer Protection Act, 2019. If an influencer’s actions lead to any unfair trade practice or mislead the consumers, a complaint can be filed before the relevant Consumer Dispute Redressal Commission.
• Defamation: If an influencer knowingly makes false statements that harm the reputation of the brand, a defamation suit can be filed.
• Intellectual Property Rights Violation: If there’s unauthorized use of a brand’s trademark or copyrighted material, the brand can seek protection under the Trademarks Act, 1999, and Copyright Act, 1957.
• Information Technology Act, 2000: If an influencer violates privacy laws or posts offensive content, legal action can be taken under the IT Act.

 

Conclusion

Navigating the realm of influencer marketing in India requires careful consideration of various legal and ethical aspects including contractual agreements, data privacy, compliance with local and international regulations and handling potential disputes. Clear, comprehensive contracts are fundamental in setting mutual expectations and defining responsibilities. Emphasizing transparency, especially in sponsored content helps maintain trust with audiences and complies with disclosure regulations. By focusing on these elements, brands and influencers can create effective, compliant marketing campaigns that benefit all parties involved.