The rise of social media influencers
Social media has become an indispensable part of our everyday lives. We spend much time scrolling through apps like WhatsApp or Instagram, keeping in touch with family and friends. However, social media’s influence is no longer limited to communication; people are now using Instagram as a shopping platform and also to promote their businesses. Owing to the connection that content creators have established with their audience, they now wield considerable power, with the ability to nudge consumers to purchase products that they would not have purchased otherwise. As a result, social media has altered not only the face of communication and personal interaction but also our purchasing habits and patterns.
The value of the influencer marketing industry, globally, stands at 16.4 billion USD. It experienced significant growth between the years 2019 to 2022 which can be partially attributed to the COVID-19 pandemic. While the coronavirus affected all sectors of the country, the social media industry is an exception. Due to stringent lockdowns, the only source of entertainment for people was social media. Businesses capitalised on the situation and took to widespread advertising with the help of influencers. Sideqik claims 7 out of 10 consumers trust influencers’ recommendations just as much as the opinion of real-world friends.
The value of the influencer marketing sector in India
As per a report, the Indian influencer market is valued at over 12 Billion INR. ‘The State of Influencer Marketing 2019: Benchmark Report’ by Influencer Marketing Report revealed that the outlook for influencer marketing is extremely positive. It further showed that 92% of consumers believed that influencer marketing was an effective form of marketing.
We cannot deny the fact that influencer marketing has now become a necessity because of the audience it attracts and targets. The businesses leverage influencers’ bond with the audience for their product’s advertisement. For instance, Lenskart, with over 659k followers on Instagram, has a strong foothold in social media. Launching various campaigns such as the “I’m hooked” campaign, in which they leveraged Katrina Kaif’s audience, suits best to understand how influencers can impact purchasing patterns.
Marico Ltd vs Abhijeet Bhansali
The Bombay High Court’s decision in the case of Marico Limited v. Abhijeet Bhansali (2020) determined the nature of social media influencers’ relationships with marketers and followers.
The YouTube video of influencer Abhijeet Bhansali was removed for disparaging Marico’s Parachute Coconut Oil (hereinafter ‘Parachute’) and causing irreparable harm and injury to the company. The influencer claimed and demonstrated, using dubious methods, that Parachute was not completely pure. As the Court discovered, the techniques used in the video were based on questionable material. The Court also pointed out that Bhansali was promoting products that competed with Parachute, making the content in the video commercial speech.
The Single Bench stated that because the defendant is a “social media influencer,” he bears a greater burden to ensure the truthfulness of his statements and that a social media influencer cannot deliver statements with the same impunity as an ordinary person. Hence, Bhansali was asked to take down the video and a temporary injection was made against him.
With the Division Bench’s decision, we can conclude that YouTubers have the right to free expression; however, if the expression is based on an unknown/derogatory fact, it may result in defamation. The influencer must be able to back up the facts stated, simply labelling a statement as an opinion does not protect the person from defamatory charges.
It is evident through this case that consumers’ rights cannot be neglected as they might be exposed to unverified content which may lead consumers to make uninformed purchases. Furthermore, it affects the reputation of brands. Hence, keeping the best interest of consumers and businesses in mind the Central Consumer Protection Authority issued guidelines in June 2022 for the Prevention of Misleading Advertisements.
Consumer Protection Act and Central Consumer Protection Authority
To protect the interests of consumers, Parliament passed the Consumer Protection Act, 1986.
According to section 10 of this Act, the Central Government shall establish an authority (CCPA) to “regulate matters relating to violations of consumer rights, unfair trade practises, and false or misleading advertisements that are prejudicial to the interests of the public and consumers, as well as to promote, protect, and enforce the rights of consumers as a class.” The CCPA is majorly focused on protecting and enforcing consumer rights.
Amazon Seller Services Private Limited vs CCPA
Central Consumer protection authority, acting suo-motu under the powers conferred by the Act, recently investigated a matter pertaining to pressure cookers that were violative of BIS standards and were sold by Amazon. Though the order is challenged by Amazon, the Authority imposed a penalty of INR 1 lakh.
Kesari Tours Private Limited vs CCPA
In this case, the petitioner, a reputed company engaged in the business of travel and tourism, challenged the order of the CCPA on the grounds of working without jurisdiction. The petitioners were directed to refund 75% of the tour cost to the consumers. The Delhi High Court stayed the operation of the order of CCPA till the next date subjecting the petitioners to deposit a sum of Rs.25 lakhs with the Registrar General of the Court within four weeks.
Honey Adulteration
The Department of Consumer Affairs, considering the reports on honey adulteration by various companies, has asked the CCPA to look into the matter. The CCPA, extending cooperation in the investigation, has referred the matter to the FSSAI, the food regulator, to take appropriate action.
As social media marketing grew in popularity, CCPAs recognized the impact that a false or illegal endorsement could have on consumers and became more vigilant in making necessary changes. To increase transparency and protect consumers, it is now mandatory to publish clear disclosures about brand associations. Influencers who do not comply risk being fined up to 50 lakh rupees or being barred from endorsing products for up to six years. Consumer Affairs Secretary Rohit Kumar Singh said “One of the biggest paradigms of the consumer law is the consumer’s right to know and this falls in that purview. Consumers should know if something is thrown at him/her from digital media, the person or the entity sponsoring it has taken money or any form of connection they have with the brand.”
The need to curb misleading advertisements and protect consumers is felt across the world. The Australian government released guidelines similar to that of India. The Australian Competition and Consumer Commission (ACCC) said “Influencers posting misleading reviews that fail to disclose a relationship could be in breach of the Australian consumer law, which can carry penalties of up to $2.5m for individuals” influencers in Australia are subject to the ethics code Australian Association of National Advertisers (AANA).
Implications for consumer protection
Influencer marketing has numerous advantages for a brand, but it has the most impact on the sales of its goods. However, influencers, brands, and consumers should familiarise themselves with the pertinent legal concerns. The protection of intellectual property, contractual duties, marketing rules, and disclosure obligations are the most crucial challenges. Organisations such as The International Financial Consumer Protection Organization (FinCoNet) play a major role in consumer protection with efficient and effective financial market conduct oversight, it encourages solid business practices and robust consumer protection.
