Influencer Advertising and the ASCI Guidelines: Great Influence Brings Great Responsibility

Posted on July 23, 2021

Authored by Melita Tessy*

Image Source: Social Media Week

Introduction

In recent times, social media has evolved into a multipurpose platform that is not limited to just sharing content. Influencer marketing and advertising emerge as a creative approach to traditional marketing and advertising strategies. In 2020, the industry stood at USD 9.7 billion and it is expected to rise to USD 13.8 billion in 2021. On a global scale, influencer advertising is already proving more effective than traditional advertising. Nielsen’s Consumer Trust Index states that 92% of consumers trust influencer marketing over traditional advertising. This trust can be attributed to the belief of customers that influencers are authentic, engaging and relatable while traditional advertisements fail to embody these characteristics.

Acknowledging the trends in influencer marketing and venturing into this uncharted territory, the Advertising and Standards Council of India (“ASCI”), a self-regulating voluntary organization for Indian advertising issued the ‘Guidelines for Influencer Advertising in Digital Media, 2021’ (“Guidelines”) in February 2021 for monitoring and regulating this contemporary practice of advertising. This article analyses the Guidelines and their effectiveness in addressing the problem of misleading influencer advertisements in India. Additionally, the author discusses the legal sanctity and enforceability of the Guidelines vis-à-vis the existing legislations and judicial precedents in this regard.

Level of Reliability of Influencer Advertising?

With emerging trends in influencer marketing and growth of “micro-influencers”, there is a lack of accountability which can be potentially harmful to customers who are susceptible to false and misleading claims that may be made by influencers when promoting a certain product or service. In India, the problem of misleading claims is further aggravated by the fact that 65% of the population is rural and 25% of the population suffers from illiteracy.

Therefore, it is evident that a comprehensive legal framework is essential to protect the interests of Indian consumers from misleading influencer advertisements. In this background, the Guidelines (effective from 14 June 2021) take a proactive step towards consumer protection and consumer awareness and ensure transparency and accountability in influencer marketing. The ASCI has partnered with French Technology Provider Reece to monitor violations of the Guidelines using Artificial Intelligence.

The Guidelines

A) Defining 'Influencer'

The scope of the term ‘influencer’ under the Guidelines is extremely wide since there is no minimum number of audience members prescribed for one to qualify to be an influencer. Anyone with an audience who can influence the decisions or opinions of the audience falls under the ambit of the term. Separately, in an earlier case before the Bombay High Court - Marico Limited v. Abhijit Bhansali[1] – the Court identified “social media influencers” as individuals who’ve acquired considerable followership and credibility on social media. It also noted the importance behind imposing legal responsibilities upon them to prevent the abuse of their audience’s trust.

‘Virtual influencer’ refers to a fictional computer generated person or avatar with the characteristics and features of a human. For example, certain “robots” like Lil Miquela, Shudu and Bermuda have garnered significant attention and may possibly be regarded as ‘virtual influencers’. Lastly, ‘digital media’ refers to a means of communication that can be transmitted over the internet or digital networks. This includes social media platforms, TV channels and radio stations.

B) Disclosure

The Guidelines mandate upfront and prominent disclosure of an advertisement in case of a ‘material connection’ even if the advertisement originates from the influencer and is not biased. ‘Material connection’ refers to the connection between an advertiser and influencer, capable of impacting the weight or credibility of the statements the influencer makes and is not limited to a monetary compensation. The idea is essentially that if an advertiser has given anything of value to the ‘influencer’ to mention or talk about its product or services (for example, giving free or discounted products in exchange for social media posts about it), the influencer will have to label such content or sponsored or advertised. For example, a sponsored Facebook post must clearly disclose its sponsored nature either through a superimposed label or through the accompanying description. This high-standard of disclosure is a game-changer because it informs the consumer that the influencer has received commercial gain for promoting a certain product or service even if such promotion is impartial.

The mandate requiring the disclosure of the fictional nature of the virtual influencer is necessary to provide much-needed protection against deception to susceptible sections of the populations such as minors. The Guidelines encourage the advertiser to require influencers to follow these Guidelines, which may impact the way influencer agreements are structured going forward. This way, the advertisers cannot claim ignorance and be completely absolved of the failure of the influencer to comply with the disclosure requirement.

Further, the time requirements prescribed for disclosure in different types of influencer advertisements is commendable. Likewise, the requirements for disclosure, where the need arises, through superimposition in images, in the beginning of an audio advertisement, in the text accompanying an advertisement post, etc. are laudable.

The Guidelines suggest various permitted labels such as ‘Advertisement’, ‘Ad’, ‘Sponsored’, ‘Collaboration’, ‘Partnership’, ‘Employee, ‘Free gift’. Some of these may not be practically feasible. For instance, if the label ‘free gift’ is added to the title of a blog post, for example, it can become the very thing it intends to defeat by serving as clickbait.

C) Due Diligence

The due diligence clause advises influencers to review and satisfy themselves that the advertiser is in a position to validate the advertisement’s claims. This provision is merely advisory and not directory in nature. It also leaves much to uncertainty by not laying down a framework explaining what it means for an influencer to review and be satisfied of an advertisement’s claims.

While the wide ambit of this advisory clause can be considered to be an advantage, it may also give rise to adverse effects. That is, the non-specificity of the terms ‘review’ and ‘satisfy’ can be exploited as a loophole. Interestingly, due-diligence has been explained with greater specificity in the original draft of the Guidelines, but the same has been removed from the final draft. The original draft had required influencers to do their due-diligence on performance and technical claims and had noted that evidence of due diligence is the correspondence received by the influencer from the advertiser, stating that the advertisement’s claims are capable of scientific substantiation.

D) Complaints

With regard to the complaints, the ASCI will send notice to brands and influencers in the event of violation of the guidelines either through a consumer complaint or by taking suo moto cognizance of the violation.

Legal Sanctity of the Guidelines

The ASCI is not a law-making body. Its members are subject to contractual and not statutory obligations to follow its Guidelines. Unlike many media houses and advertisers, many social media influencers and social media intermediaries are not members of the ASCI. These factors have given rise to the question of the legal viability of the Guidelines. While the above points may have their merit, the Guidelines are certainly not toothless. They find their legal validity under existing legislations, regulations as well as court decisions.

One such important legislation is the Consumer Protection Act 2019 which states that it is an unfair trade practice to makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services. Section 21 of this statute allows the Central Consumer Protection Authority to pass orders requiring the removal or alteration of the advertisement in question, impose penalty and award sentences in the case of false and misleading advertisements. The fine may go upto Rs. 10 Lakhs and imprisonment may extend upto 1 year for initial violations and may extend upto 3 years for subsequent violations.

Additionally, under Rule 3(1)(b)(vi) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, where significant social media intermediaries are ‘promoting’ certain posts to increase their visibility, they have to clearly identify such information as sponsored. The larger category of ‘intermediaries’ is also mandated to require their users to refrain from knowingly and intentionally communicating any information which is patently false or misleading in nature but may reasonably be perceived as a fact. The Central Consumer Protection Authority Draft Guidelines (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements), 2020 provide for due diligence and disclosure of material connection by the endorser of a product or service. It also requires actual usership and expertise in relation to the product or service if such usership or expertise is claimed in the endorsement. Furthermore, the Apex Court and the Delhi High Court have held that advertisements should not be misleading in the cases of Tata Press Ltd v. Mahanagar Telephone Nigam Ltd.,[2] and Dabur India v. Colortek Meghalaya Pvt. Ltd.[3] respectively.

Conclusion

The Guidelines are indeed a step in the right direction, capable of benefiting consumer experience on various online portals by curbing misleading advertisements. However, the Guidelines do suffer from a lack of clarity in certain parts. It would be a welcome move if the Guidelines are accompanied by an exhaustive list of fines and other suitable punitive actions for violations specific to the Guidelines. The threat of such measures will act as a deterrent against misleading advertisements. It is recommended further that the Guidelines be accompanied by an official report containing indications as to the mechanisms of enforceability of the Guidelines through relevant parliamentary laws, regulations, case laws and the judicial system. This would bestow greater legitimacy and reliability upon the Guidelines, while at the same time, making sure that the ASCI acts within the scope of its powers as a self-regulating voluntary organization.

It is further suggested that the scope of requisite due diligence under the Guidelines must be specified with greater precision. Standards and tests for what qualifies as ‘review’ and ‘satisfaction’ of the position of the advertiser to substantiate claims must be provided. This will empower influencers to make the right decisions while choosing to work with an advertiser. It will also benefit the consumers who can be assured that the influencer’s review of the advertiser’s position has been subjected to a clear and non-arbitrary standard.

The original draft of the Guidelines had also included a clause which provided for the non-application of filters to social media advertisements if such filters exaggerate the effect of the claim that the brand is making, such as making hair shinier, teeth whiter, etc. Such a provision, if brought into law, has the capacity to radically change the nature of influencer advertising and set a precedent worth following around the world. In Norway, a similar law has been passed mandating the disclosure of usage of filters and/or retouching by content creators.

Despite the short-comings, it will be interesting to see how the Guidelines will change the existing nature of influencer advertising in India by contributing towards addressing the problem of misleading advertisements and by placing responsibility upon those with the power and privilege of influence.

[1] 2020 (81) PTC 244 (Bom) [2] (1995) 5 SCC 139. [3] 2010 SCC OnLine Del 391

*Melita is a Researcher at IntellecTech Law and a law student at CHRIST (Deemed to be University), with a keen interest in IP and TMT law. She published her novel ‘Battle of the Spheres’ when she was 15 and is one of India’s youngest TEDx Speakers.