The digital age is upon us, and there seems to be no stopping it. India is no longer a stranger to social media, with both urban and rural sections of the country tapping into the internet and being rewarded with all categories of content. Start-ups in India have recognised this development and invested their time and attention in utilising the unbridled potential of social media for meeting their own needs.
At a time when start-ups are aplenty and there runs a risk of the market being saturated, a solid marketing plan is essential for one to stand out. Companies are now looking to capture the attention of consumers quickly and effectively and have their communication spread far and wide. The best way to leverage this is social media, which is far pervasive, cost-effective, and delivers an instant impact. The prevalent trend is the increased use of celebrities and influencers as the face of start-ups for their big marketing strategies, to catch the eye of the consumer.
However, there are legal implications to be considered in lieu of such social media marketing, with the increased risk of consumers being misled by such advertisements, which could be seen as start-ups engaging in unfair trade practices. The Consumer Protection Act, 2019 (Act), is the overarching central legislation that start-ups need to be mindful of when implementing their marketing plans on social media platforms.
The Central Consumer Protection Authority (CCPA), established under the aegis of the Act, issued the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 (Guidelines), to protect consumers from deceptive advertisements and endorsements that are run by celebrities and influencers on behalf of start-ups. This was followed up by the release of the endorsements know-hows! (Endorsements), a guide issued by the Department of Consumer Affairs specifically for celebrities, influencers and virtual influencers on social media platforms. Compliance with these legislations is mandatory by celebrities and influencers acting for start-ups to protect the interests of the consumers. Certain disclosures are to be made while endorsing any product or service to ensure transparency, while also providing for the accountability of such celebrities and influencers in this regard.
A perusal of the two legislations reveals the guidelines to be more generic in nature and applicable to all advertisements regardless of the format, while the endorsements are specifically focused on celebrities and influencers, due to their impact on the purchasing decisions of their audience in relation to the products and services endorsed by them. This is not the first time that there has been an attempt at promoting responsible and ethical advertisements in India. In 2021, the Advertising Standards Council of India published guidelines for influencer advertising in digital media in a similar attempt to regulate digital advertisements, particularly on social media. The issue, however, was that it lacked any statutory backing, leading to a situation where such rules could not be legally enforced. The endorsements and the guidelines, on the other hand are enforced by the CCPA.
Social media has given a new dimension to start-ups regarding their marketing, resulting in various trends that have now been established in our daily life. The influx of celebrities and influencers in these marketing strategies may prove to be beneficial for start-ups, but never to the detriment of the consumers. With the enactment of these legislations, it is envisaged that there shall be a revamping of endorsements by several influencers in the manner they are made and disclosed to the consumers. There has now been a responsibility placed on the influencers and celebrities to perform their own due diligence on the product and services offered by start-ups, before endorsing the same. As a result, it is necessary for start-ups to keep themselves up to date on the legal implications of using social media marketing, where they must look contractually safeguard themselves when entering into arrangements with influencers for endorsements, specifically in relation to claims made for the concerned products and services. The Act has laid down penalties for non-compliance, and if start-ups are not careful about their social media marketing approach, they could find themselves subject to hefty fines and penalties levied upon them by the applicable authorities.
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