Influencer Marketing and Laws

Note: The statutes mentioned in article relates to Indian Jurisdiction.

Influencer marketing is increasingly a common type of online advertising. For a long time, it’s been a buzzword, and it’s widely used in the mainstream press. Even so, some people are still confused about what influencer marketing is all about. Indeed, some people are perplexed when they hear the term for the first time and wonder, “What is influencer marketing?”

Influencer marketing is when a company collaborates with an online influencer in order to promote one of their products or services.[1] This marketing strategy usually mixes social media marketing and content marketing. The majority of influencer marketing efforts have a social media component, with individuals expected to spread the word through their own social media networks. It’s a fusion of classic and modern marketing strategies. It integrates the idea of celebrity endorsement with a content-driven marketing strategy. The key difference in influencer marketing is that the campaign results in collaborations between companies and influencers. Many influencer marketing campaigns have a content component, in which you either offer the influencers with content or have them create it themselves. Despite the fact that social media and content marketing are regularly employed in influencer campaigns, they are not the same.[2]

Influencer marketing, on the other hand, isn’t just for celebrity individuals. Rather, it focuses on influencers, many of whom would never be considered famous in the traditional sense.

Businesses are increasingly turning to influencer marketing as a novel strategy to increase brand awareness and client loyalty. As a result, firms must be aware of the complicated legal structure around influencer marketing in order to avoid breaking the law. This article will go over the most important legal considerations in influencer marketing so that you can make sure your company is abiding by the law.

Legal steps taken in India:

1. Consumer Protection Act, 2019:

The Indian government issued a successor to the Consumer Protection Act of 1986 on August 9, 2019. In comparison to the previous act, new clauses were added to the statute that focused on deceptive ads and celebrity endorsements (including social media influencers). Furthermore, this legislation places a strong emphasis on influencer marketing and tailored advertising. If an influencer does not declare that it is a paid promotion and deliberately lies about the product that it is good when it is not, followers can sue for up to Rs 10 lakh in damages, with repeat offenders facing fines of up to Rs 50 lakh. The Government has long felt that marketing by celebrities and other significant people may go wrong and harm consumers, therefore this is the first regulation that emphasises targeted advertising and marketing campaigns using influencers. There have been cases where commercials have been deceptive while yet appealing to customers.[3]

2. The Central Consumer Protection Authority (CCPA) Draft :

The Indian government realised that simply creating legislation to protect consumers’ interests was insufficient after passing the Consumer Protection Act of 2019. As a result, the Ministry of Corporate Affairs (MCA) produced a draft on the prohibition of deceptive ads and unnecessary due diligence for commercial endorsement in order to keep a tight eye on all sorts of advertisements and marketers, regardless of the medium chosen .Google owned YouTube, a social media platform which has over 265 million active users in India. With the advent of the influencer sector, many micro influencers have been advertising for personal gain and money, ignoring the interests of the buying public. To keep track of this, the Government has made it mandatory to conduct due diligence on a product, or at the very least study the facts about it, before endorsing or advertising it, with the explicit objective of assuring its authenticity and the best interests of the public.

3. The Code for Self-Regulation of Advertising:

The Advertising Standards Council of India (ASCI) published the latest guidelines for influencer marketing on social media on May 27, 2021. The proposed standards were first announced in February, and all stakeholders were requested for feedback, including businesses, agencies, influencers, and users. The restrictions will apply to commercial messages and advertising issued on or after June 14, 2021. Influencers must adhere to the criteria while sharing promotional content.

Besides the regulations, ASCI intends to develop an educational plan that will aid in the development of the influencer advertising narrative. As a result, ASCI is developing the ASCI.Social platform, which will provide as a one-stop shop for all guidelines-related information. Dos and don’ts, Queries, and information about the standards will all be part of the interactive web platform. Over time, ASCI, hopes to establish a network of social media influencers, buyers, advertisers, and talent management companies.[4]

Every player in the marketing sector, including users, producers, and businesses, is now part of the Influencer Marketing Sector. An influencer promotes a brand, and the influencer publicises to persuade a consumer to buy something, and so on. As a result of being a part of such a fast – changing world, social media users must evaluate a range of variables when deciding which brands to support or advertise.

The Ministry of Consumer Affairs has issued several guidelines (In order to safeguard the influencers’ interests):

• A social media influencer should undertake background check and evaluate the product’s quality, quantity, and legitimacy before promoting it.
• When it comes to a product that affects the public’s health, it’s a good idea to double-check the claims being made and see if they’re supported up by scientific data.
• When endorsing or advertising a product, it’s a good idea for the influencer to provide a disclaimer regarding a personal choice so that the buyer is aware of the situation and may do their own research before buying it.
• It is usually advisable to declare whether or not it is a paid partnership in order to avoid legal liabilities.
• Always double-check that the commercial or endorsement does not break any laws and is not misleading in any manner.
• A written contract with the concerned brand is recommended, and the contract should lay out all of the parties’ rights and responsibilities.[5]

Conclusion:

Influencer marketing is an excellent technique for companies to increase brand awareness and client loyalty. Businesses, on the other hand, should be aware of the legal framework around influencer marketing in order to avoid costly consequences.

Businesses should ensure that the influencers they work with are not participating in fraudulent or misleading advertising. The most effective approach to accomplish this is by full disclosure of the compensated collaboration. Moreover, they should also establish properly drafted Influencer Agreements that clearly define each party’s rights and obligations under the agreement. Furthermore, they should preserve their intellectual property rights while engaging in influencer marketing.

The government of India and other regulatory agencies have showed that they are willing to go to any extent to safeguard the interests of consumers, as can be seen by measures described above. The following legal framework imposes not only a punishment, but also liability and duty in the event of a breach.

Finally, for the government of India’s legislation to succeed, both sides, i.e., influencers and advertisers, will need to work together to meet the criteria. To reduce confusion and limit the scope of legal implications, written agreements should be encouraged. Agreements should be detailed enough to include all of the parties’ best interest.

As a result, in order to avoid legal liability, it is indispensable for influencers and corporations to adhere to the aforementioned norms and regulations.

References:

[1] https://influencermarketinghub.com/what-is-influencer-marketing/, visited on 23^rd Oct. 2021

[2] https://www.tapinfluence.com/blog-what-is-influencer-marketing/, visited on 23^rd Oct. 2021

[3] https://www.mondaq.com/india/social-media/996054/social-media-influencer–legal-implications, visited on 23^rd Oct. 2021

[4] https://www.financialexpress.com/brandwagon/asci-issues-final-guidelines-for-influencer-advertising-on-digital-media/2260148/, visited on 25^th Oct. 2021

[5] https://blog.ipleaders.in/checklist-legal-issues-social-media-influencers-marketing-campaigns-accordance-consumer-protection-guidelines-2020/, visited on 25^th Oct. 2021