Centre mandates social media influencers to disclose material gains

Centre mandates social media influencers to disclose material gains

Jan 21, 2023, 04:27 pm
3 min read

Centre has issued new rules for social media influencers which has provision of strict legal action including up to Rs. 50-lakh fine

The Central government issued new guidelines for social media influencers making it mandatory for them to disclose the “material” gains received when they endorse any products, services, or scheme, PTI reported.

The new rules have a provision of strict legal action, ban, and fine of up to Rs. 50 lakh in case the influencer fails to follow them.

Why does this story matter?

  • The government says the regulations are part of continuing efforts to curb “misleading advertisements” as well as protect the interests of consumers amid the expanding social influencer market.
  • The market is projected to grow 20% annually to reach Rs. 2,800 crore by 2025, per Centre.
  • Notably, the government had already announced strict guidelines for social media platforms under IT rules 2021, and subsequent amendments.

What do the new rules say?

The new guidelines named ‘Endorsement Know Hows-for celebrities, influencers and virtual media influencers (Avatar or computer generated character) on social media platforms’ has been issued by the Department of Consumers Affairs.

They have been mandated to disclose all material interests such as gifts, hotel accommodation, equity, discounts, and awards when endorsing any products, services, or scheme.

Provision of strict action in case of violation

In the event of a breach, the Consumer Protection Act 2019 penalty for misleading marketing shall apply.

Manufacturers, marketers, and endorsers can face fines of up to Rs. 10 lakhs from the Central Consumer Protection Authority (CCPA).

A fine of up to Rs. 50 lakh can be levied for successive violations. A ban of three-year can also be imposed.

Deterrent for social media influencers 

Consumer Affairs Secretary Rohit Kumar Singh said that the new rules would act as a deterrent for social media influencers for indulging in the wrong promotional and endorsements.

While announcing the rules in a news conference, he noted that they fall under the purview of the CCPA, which offers a framework for protecting consumers against deceptive advertising and unfair business practices.

Who comes under new rules 

People or organizations that have access to an audience and the ability to influence them come under its purview.

Such people can influence the audience’s decisions to buy or form opinions about a good, service, brand, or experience due to the influencer’s or celebrity’s position, expertise, or relationship.

The new criteria also outline who must disclose what, when, and how.

Influence market will be worth Rs. 2800cr by 2025 

Singh said the influence market was an important subject due to its size.

“The size of the social influencer market in India in 2022 was of the order of Rs. 1,275 crores and by 2025, it is likely to rise to Rs. 2,800 crore with a compound annual growth rate of about 19-20%,” he said.

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