This article is written by Shraileen Kaur, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho.
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There is no denial of the fact that the future of influencer marketing in India is scintillating. The Influencer Benchmark Report 2021 also stated that this industry is expected to grow to approximately 13.8 billion $ in 2021. Even various courts in India have stated that this one of the youngest forms of marketing is absolutely promising. With such a positive response from almost all the ends, there has been a tremendous increase in influencer marketing leading to the elevation of legal issues in this regard.
An anonymous Instagram user bought an expensive detoxifying drink under the influence of his favorite Instagram model who claimed that it helped her to lose weight. On using the product, rather than losing weight she gained 8Kgs of weight and developed other health ailments. This is not just the story of this user but there are many such instances where consumers have become the victim of false claims by the influencers or ended up being misled by the advertisements which often happens in order to make the advertisement attractive.
Also, it is not just the followers who are affected, there are influencers too who become victims of malpractices by the brands. Many influencers have raised the issue that they aren’t paid as promised. In this way, there are various legal issues arising from influencer marketing.
Hence, the regulatory bodies and advertising watchdogs have unraveled the problem and started taking various steps to regulate and protect the interest of the consumers and industry members.
Legal steps taken in India (for protecting interests of the consumers)
Consumer Protection Act, 2019
On 9 August 2019, the government of India came up with a successor to the Consumer Protection Act, 1986. As compared to the previous act, certain provisions were introduced in the act which focused on misleading advertisements and endorsements by celebrities (including social media influencers). Adding to it, this legislation also emphasizes marketing campaigns through influencers and targeted advertising.
According to the provisions of the act, if there is an influencer who has not been informed that it is a paid promotion and he/she has intentionally lied about the product, followers can sue the influencer for such a misleading advertisement. If found guilty, the influencer will have to pay as compensation up to INR 10 lakh and repeated offenders can be fined up to INR 50 lakh.
The draft Central Consumer Protection Authority, 2020
After introducing the Consumer Protection Act 2019, the Government of India somewhere felt that just introducing laws concerning the protection of the interest of the consumer is not at all enough. Hence, the ministry of consumer affairs introduced a draft on the prevention of misleading advertisements unnecessary due diligence for endorsement of advertisements to keep a watch on all kinds of advertisements and advertisers irrespective of the medium being used.
With YouTube having approximately 265 million active users in India, it became a challenge for the concerned ministry to keep a tab on the interest of the consumers as various micro-influencers are marketing just for the sake of monetary benefits, ignoring the interest of the consumers. Hence, it has been made mandatory to conduct due diligence before any endorsement or advertisement of any product.
The code for self-regulation of advertising
With the ultimate objective of protecting the interests of the consumers and achieving the acceptance of fair advertising practices, the Advertising Standards Council of India (ASCI) has instituted the code for self-regulation. Rules and regulations have been set up concerning the authenticity of the advertising content under the code. Also, the ASCI is undertaking the formation of several disclosure rules for the social media influencers who are promoting the products on the internet. Various international guidelines are also taken into reference while framing these rules and regulations.
Several guidelines as prescribed by the Ministry of Consumer Affairs (For protecting the interest of the influencers)
- Before taking the decision of endorsing a particular product, it is very important for the social media influencer to perform due diligence and check the quality, quantity, and authenticity of the product.
- For a product that affects the health of the public at large, it is advisable to check the claims being made and whether they are backed with scientific evidence or not.
- In order to avoid legal liability, it is always advisable to mention if it is paid partnership or not.
- While endorsing or advertising any product, it is advisable to put a disclaimer by the influencer with regard to a personal choice so that the consumer is well aware of the scenario and can do personal research before buying a product.
- It is advisable to have a written contract which the concerned brand and the contract should clarify all the rights and liabilities of both parties.
- Always ensure that the advertisement or endorsement does not violate any legal provisions and it’s not misleading in any way possible.
Significant case law
Marico Limited v. Abhijeet Bhansali
Bombay High Court had recently passed a landmark judgment in respect of a YouTube video titled, “Is Parachute Coconut Oil 100% Pure?” by a Youtuber- Abhijeet Bhansali under the alias “Bearded Chokra”.
In February 2019, Marico Limited represented by Khaitan and Co. filed a suit in Bombay High Court seeking interim reliefs against the concerned YouTube video on the grounds that the content of the video was false and misleading in nature and it also made unauthorized use of the plaintiff’s registered trademarks.
Defendant argued that the video above represents his point of view as a consumer in good faith and is protected by his fundamental right to freedom of speech and expression. It is the defendant’s case that he is not a trader or a competitor of the plaintiff; The video is his attempt to educate customers about the quality of coconut oil and consumers have the right to exercise their judgment. He also sought to assert the Bonnard Principles, that the content of the video is based on research and documentation and that once he states the facts/justifications as a defense, no order is given out without a trial.
The court found that the respondent’s video was created and published without due diligence or research and that his statements in the video were recklessly made. The Court also found that the respondent intentionally distorted the facts and showed the same to the viewers. The court observed that at more than one point, it was clear that the respondent’s video contained several signs of malice. As the Court observed, the aforementioned video caused particular harm to the plaintiff as it appeared to have prevented some customers from purchasing the plaintiff’s products, as can be seen from the comments posted on the defendant’s video leading to financial loss to the complainant. The court ruled that the plaintiff had passed all the tests which are necessary to establish a case of property slander, malicious lying, and defamation. The court also denied the argument stated by the defendant’s representative that he is not the competitor of the plaintiff’s company and stated that it did not matter that the defendant was an individual and not a competitor. The court further ruled that the defendant’s video, under the guise of educating the public, primarily targets the plaintiff’s product and contains false information that discredits and disparages the said product. The video also illegally used the applicant’s trademarks in a manner that was prejudicial to its distinctiveness as well as reputation and was inconsistent with the honest practice in industrial or commercial matters. Regarding the argument for the right to free speech [Article 19 (a)], the Court held that this right is not absolute and cannot defend irresponsible claims. The court also ruled that the Bonnard principle (The pre-publication of any material that is defamatory cannot be censored in case the publisher is making fair comment in the public interest and bona fide intention) did not apply to the facts of the case because the defendant was unable to demonstrate in good faith and the comparison shown in the video was not proven on the document that was filed with the court.
Hence, it was stated by the court that social media influencers have a powerful impact on the lives of viewers and people in general, and they have to ensure that what they post is not harmful or offensive. Therefore, the court ordered the defendant to remove the video from YouTube and any other platform on which it was posted.
The above-listed steps were taken by the government of India and various regulatory bodies clearly indicate that they don’t want to leave any stone unturned to protect the interests of the consumers. The following legal framework not just imposes a penalty in case of default but responsibility and duty too.
Ultimately, for the success of these laws prescribed by the government of India, both the parties i.e., Influencers and the advertisers will have to work upon the things together to adhere to the guidelines. Written agreements should be encouraged in order to avoid ambiguity and to narrow down the scope of legal implications. Agreements should be detailed enough to cover all the things with respect to the parties.
Hence, it is vitally important for social media influencers and brands to ensure compliance with the above-mentioned rules and regulations in order to avoid any legal liability.
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