INTRODUCTION
Influencer marketing has transformed digital advertising but raises concerns about misleading endorsements, lack of transparency, and ethical dilemmas. Unlike traditional advertising, influencers blur the line between personal opinions and paid promotions, making regulatory oversight challenging. India has introduced regulations under the Consumer Protection Act, 2019, and ASCI Guidelines, but enforcement remains inconsistent.
Key issues include:
- Are existing regulations effective in curbing deceptive influencer marketing?
- How do India’s regulations compare to global standards?
- What are the gaps in implementation and compliance?
Addressing these concerns is crucial for ensuring transparency, consumer protection, and ethical advertising practices. A critical analysis of the above-mentioned has been done in the following components.
EVOLUTION OF INFLUENCER MARKETING [Critical Analysis]
Influencer marketing has existed for centuries, dating back to 1760 when British potter Josiah Wedgwood used royal endorsements to boost sales. By the 19th and early 20th centuries, brands leveraged celebrity figures, including doctors endorsing tobacco, to build consumer trust. The digital era revolutionized this strategy, with bloggers emerging as the first digital influencers in the early 2000s.
With the rise of Facebook, Twitter, Instagram, and YouTube, influencer marketing evolved into a dominant advertising strategy. According to Ernst & Young (EY), India’s influencer marketing industry is projected to reach ₹3,375 crore by 2026, growing at 18% CAGR.1 The rise of micro-influencers (1,000–10,000 followers) has driven this growth, offering brands higher engagement rates than macro-influencers.
Looking ahead, AI-driven influencer selection and authenticity-focused marketing will shape the industry. However, as influencer marketing expands, India’s regulatory framework must evolve to prevent deceptive marketing and align with global standards.
REGULATORY FRAMEWORK GOVERNING INFLUENCER ADS IN INDIA
With the rapid expansion of influencer marketing, India has introduced multiple regulatory frameworks to ensure transparency and consumer protection. The Consumer Protection Act, 2019 (CPA) and the Advertising Standards Council of India (ASCI) Guidelines, 2021, serve as the primary regulatory mechanisms, while newer developments like the Guidelines for Prevention of Misleading Advertisements, 2022, strengthen accountability.
Consumer Protection Act, 2019. Holding Influencers Accountable
The CPA explicitly addresses misleading advertisements and holds influencers accountable for deceptive promotions. Section 2(28) defines a misleading advertisement as any false or deceptive representation likely to mislead consumers. To tackle such instances, Section 21 grants the Central Consumer Protection Authority (CCPA) the power to investigate and penalize offenders, including influencers who fail to comply with disclosure norms. Additionally, Section 89 imposes monetary penalties and potential bans on endorsers found guilty of non-compliance.
ASCI Guidelines, 2021. Transparency in Digital Promotions
With the exponential rise in digital and social media consumption, the Advertising Standards Council of India (ASCI) recognized the need for clear, enforceable guidelines to regulate influencer marketing. Consumers today rely heavily on product and service reviews from influencers before making purchasing decisions, but the lack of transparency between paid promotions and organic content has led to consumer deception. To address this, ASCI introduced the Guidelines for Influencer Advertising in Digital Media in 2021, which established key disclosure and accountability requirements for influencers and brands.
One of the most significant provisions of the guidelines is the mandatory disclosure of material connections between influencers and brands. If an influencer receives any form of compensation—monetary or non-monetary, such as free products, event invitations, or brand sponsorships—they must clearly indicate that the content is an advertisement. Common disclosure labels include “#ad,” “#sponsored,” “#paidpartnership,” and must be prominent, upfront, and easily visible rather than buried in captions or hashtags. These disclosures also apply across various digital formats, including images, videos, audio promotions, and live streams. In video advertisements, for instance, ASCI mandates that disclosures remain visible for a sufficient duration to ensure they are noticed by the average viewer.
Additionally, the guidelines extend beyond human influencers to virtual influencers, who must disclose that they are AI-generated and not real individuals. This provision aims to prevent consumers from being misled into believing they are engaging with a real human when interacting with such digital personas.
Furthermore, ASCI places shared responsibility on both influencers and advertisers. Brands must ensure that influencers adhere to disclosure norms, and if an influencer fails to comply, the advertiser can be held accountable for misleading consumers. ASCI actively monitors compliance and publishes a list of non-compliant influencers and brands, reinforcing the need for vigilance within the industry.
Beyond disclosure, the guidelines emphasize truthful advertising. Influencers must conduct due diligence before making claims about a product or service. They should personally experience or thoroughly research the product before promoting it. Misleading claims, exaggerated benefits, or endorsements of unverified products—especially in sectors like healthcare, finance, and skincare—are strictly prohibited.
By bridging the regulatory gap in influencer marketing, ASCI’s self-regulatory framework represents a significant step toward ethical advertising practices. However, since ASCI lacks direct enforcement authority, compliance remains voluntary. For greater accountability, the Central Consumer Protection Authority (CCPA) and other legal mechanisms must work alongside ASCI to strengthen oversight and impose penalties on violators.
Expanding Oversight: Guidelines for Prevention of Misleading Advertisements, 2022
To further strengthen regulations, the CCPA introduced the Misleading Advertisements Guidelines in 2022, expanding the scope of the CPA. These guidelines define permissible and prohibited advertisement practices, applying to influencers, advertisers, and brands alike. A key provision mandates due diligence by endorsers, ensuring that claims made in advertisements are substantiated with credible evidence. Non-compliance can result in fines of up to ₹10 lakh for first-time violations and ₹50 lakh for repeated offenses, along with potential bans on endorsements for up to three years.
ANALYSIS OF THE IMPACT OF UNREGULATED INFLUENCER ADVERTISING: ACTUAL INCIDENTS
The rapid expansion of influencer marketing has raised significant concerns, particularly in industries where misleading promotions can have serious consequences.
One major issue is the endorsement of financial and cryptocurrency products without adequate disclaimers. Many influencers, known as finfluencers, share financial advice on platforms like YouTube, Instagram, and Twitter. While some offer useful insights, others, lacking proper qualifications, may spread misleading or unverified information. In response, the Securities and Exchange Board of India (SEBI) has imposed restrictions on unregistered finfluencers. SEBI now prohibits:
- Providing investment advice without prior SEBI approval.
- Making claims about returns or performance without authorization. SEBI is also considering stricter regulations to ensure only qualified individuals provide financial guidance, reducing risks for retail investors.
Another area of concern is the health and wellness industry which has become a hotspot for influencer-driven marketing, with many promoting unverified supplements and alternative therapies without scientific validation. A recent study on German Instagram influencers found that a significant number advertised dietary supplements exceeding safe daily intake levels, often without disclosing potential health risks.
Researchers analyzed 105 dietary supplements from 78 posts and discovered that many exceeded the European Food Safety Authority’s (EFSA) tolerable upper intake levels (UL). For instance, vitamin A exceeded safe limits by 21%, while magnesium overdoses reached 61% above UL. Excessive intake of such supplements can lead to visual impairment, intracranial bleeding, reduced bone density, and gastrointestinal distress. Shockingly, only 2% of influencers and 21% of manufacturers disclosed potential side effects and contraindications. Instead, influencers prioritized branding tactics like discount codes and exaggerated claims over consumer safety. This raises the urgent need for stricter regulations to hold influencers accountable and minimize the spread of health misinformation.
Additionally, digital platforms hosting advertisements often escape scrutiny. While influencers face growing accountability, platforms amplifying misleading promotions lack clear regulatory oversight. Stronger policies are needed to ensure both influencers and digital platforms uphold transparency and consumer protection standards. The Supreme Court in Indian Medical Association v. Union of India2 emphasized celebrity and influencer liability in misleading ads, mandating self-declarations before advertisements air. The Consumer Protection Act, 2019, and CCPA guidelines impose strict penalties on false endorsements, ensuring greater accountability and ethical advertising practices.
COMPARATIVE ANALYSIS: INDIA VS. GLOBAL REGULATIONS
Influencer marketing regulations vary across jurisdictions, with some countries implementing strict enforcement mechanisms to ensure transparency and accountability. While India has introduced guidelines for influencer advertising, it still lags in rigorous enforcement compared to global standards.
In the United States, the Federal Trade Commission (FTC) imposes strict penalties on influencers and brands for failing to disclose material connections. The FTC also mandates training programs to educate influencers on compliance, ensuring they understand disclosure obligations and deceptive advertising risks.
Similarly, the Advertising Standards Authority (ASA) in the United Kingdom has adopted advanced AI-driven tools to detect undisclosed advertisements. These tools automatically scan social media platforms to identify paid promotions that lack proper disclosure. Influencers violating disclosure norms face warnings, fines, and potential bans.
The European Union’s Digital Services Act (DSA) takes regulatory oversight a step further by holding platforms accountable for misleading content. Unlike India, where individual influencers bear most of the responsibility, the EU mandates that social media platforms actively monitor and remove misleading advertisements, preventing large-scale consumer deception.
India’s approach, while evolving, lacks robust enforcement mechanisms. The Advertising Standards Council of India (ASCI) guidelines rely on self-regulation rather than legal mandates, and non-compliance does not always result in strict penalties. To enhance its framework, India could consider adopting global best practices, such as automated content monitoring, mandatory influencer training, and platform accountability measures. By strengthening its regulatory enforcement, India can ensure that influencer marketing remains ethical, transparent, and consumer-friendly.
RECOMMENDATIONS FOR STRENGTHENING INFLUENCER MARKETING REGULATIONS
To ensure greater compliance and consumer protection, India’s regulatory framework for influencer marketing must be more robust and proactive. Here are key recommendations:
1. Stronger Enforcement Mechanisms:
Currently, self-regulation by ASCI lacks legal enforceability, limiting its impact. The Central Consumer Protection Authority (CCPA) and ASCI should be granted greater monitoring powers, including the use of AI-driven real-time tracking systems to detect undisclosed advertisements across digital platforms. This would help automate detection and enforcement, reducing reliance on manual complaints.
2. Clearer and Stricter Penalties:
The penalties under existing regulations are relatively low, making non-compliance economically feasible for influencers and brands. To ensure deterrence, higher financial penalties should be imposed, along with potential temporary bans for repeat offenders. The progressive penalty structure should increase for subsequent violations.
3. Platform Accountability:
Social media platforms play a critical role in influencer marketing. Regulatory bodies should require platforms like Instagram, YouTube, and Twitter to auto-flag non-disclosed paid promotions and impose content takedown measures for violations. Holding platforms accountable would enhance systemic compliance.
4. Influencer Education Programs:
A significant portion of influencers remain unaware of legal obligations. Implementing mandatory training workshops on ASCI and CCPA guidelines would ensure influencers understand disclosure norms, false advertising risks, and ethical content practices. This would reduce unintentional violations.
5. Public Awareness Campaigns:
Consumers must be educated to identify misleading advertisements and report violations. Nationwide awareness initiatives, including advertisements, social media campaigns, and influencer participation, would empower users to make informed decisions and reduce exploitation risks.
By implementing these measures, India can strengthen influencer marketing regulations and ensure a transparent, accountable, and consumer-friendly digital advertising ecosystem.
REFERENCES
1. Advertising Standards Council of India (ASCI). (2023). Guidelines for Influencer Advertising in Digital Media. Retrieved from https://www.ascionline.in/wp-content/uploads/2023/08/GUIDELINES-FOR-INFLUENCER-ADVERTISING-IN-DIGITAL-MEDIA.pdf.
2. Central Consumer Protection Authority (CCPA). (2023). Notification on Consumer Protection (E-Commerce) Rules, 2020 and Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022. Retrieved from https://consumeraffairs.nic.in/sites/default/files/CCPA_Notification.pdf.
3. Securities and Exchange Board of India. (2023, August 25). Consultation Paper on Association of SEBI Registered Intermediaries/Regulated Entities with Unregistered Entities (including Finfluencers) retrieved from https://www.sebi.gov.in/legal/circulars/apr-2023/advertisement-code-for-investment-advisers-ia-and-research-analysts-ra-_69798.html
4. European Parliament. (2022). The impact of influencers on advertising and consumer protection in the Single Market. Retrieved from https://www.europarl.europa.eu/RegData/etudes/STUD/2022/703350/IPOL_STU(202 2)703350_EN.pdf.
5. Rehbein, L., Hamm, D., & Walther, S. (2024). Disinformation on dietary supplements by German influencers on Instagram. Naunyn-Schmiedeberg’s Archives of Pharmacology. Retrieved from https://link.springer.com/article/10.1007/s00210-024-03616-4.
6. Balducci, B., Marinova, D., & Utz, S. (2023). The Dark Side of Social Media Influencers: A Research Agenda for Analyzing Deceptive Practices and Regulatory Challenges. Psychology & Marketing, 40(5), 1021-1043. Retrieved from https://onlinelibrary.wiley.com/doi/full/10.1002/mar.22173.
7. Ernst & Young (EY). (2024, April 3). State of Influencer Marketing in India. Retrieved from https://www.ey.com/content/dam/ey-unified-site/ey-com/en-in/insights/media-entertainment/ey-state-of-influencer-marketing-in-india-03-04-2024.pdf.
8. AZB & Partners. (2023). The Regulatory Evolution of Influencer Advertising in India. Retrieved from https://www.azbpartners.com/bank/the-regulatory-evolution-of-influencer-advertising-in-india/
Notes:-
1 EY State of influencer marketing in India Impact of influencers on brands Survey findings: India 2023
2 Indian Medical Association v. Union of India, Writ Petition (Civil) No.645/2022.
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