ADVERTISING IN THE ERA OF SOCIAL MEDIA

INFLUENCERS: A SOCIO-LEGAL ANALYSIS OF THE INDIAN

DIGITAL LANDSCAPE

ABSTRACT

Attention grabbing, perception driven advertising, forms a part of the marketing strategy of
every business model. But, gone are the days when advertising was limited to televised and print
media; now digitized advertising has taken over. There has been a paradigm shift in advertising,
from the traditional media to a non-traditional one. Websites and social media platforms are
flooded with advertisements to catch the attention of as many potential customers as possible, in
the least possible time. An individual might visit an e-commerce website, only to find his social
media feed flooded with advertisements from that website, the next time. Social media
algorithms and the ethics surrounding them, form part of a reciprocal discussion.This paper
deals with the socialand legal aspect of advertisements and endorsements, made by social media
influencers on social media platforms,and how they affect the buying behaviour of consumers.
.
Furthermore, the line between paid endorsements and a simple recommendation is getting
blurred, day by day,When an advertisement does not look like an advertisement, the consumer
can easily be misled.Through this paper the author has attempted to address the issues which
have arisen of off unregulated advertising by social media influencers,while also trying to
establish the legal and ethical limitations that must be adhered to, by this nascent category of
professionals to ensure that consumer rights remain protected.The author has conducted an
empirical study to analyse how advertising by social media influencers affect consumer choices
and accordingly, the argument that author has made by way of a policy recommendation is that
labeling of online ads is necessary and should be made legally binding upon advertisers and
influencers, both.The author has made certain other suggestions at the end of the paper.

Keywords: Social media, advertisements, labeling of ads, social media influencers, consumer
protection
I. INTRODUCTION
The role played by advertisements as a marketing tool for businesses since the very inception of
media and its many platforms, cannot be emphasizedenough. With the advent of the internet, and
more so, the rage that social media has become in the past decade, advertising has now expanded
beyond television and print media, and has entered and very rapidly caught roots in the digital
world.

The ever increasing competition in the global market finds reflection in the ever increasing
number of advertisements, both offline and online, that competitors invest millions in, to leave
the deepest imprint in the minds of their consumers of their goods or services. This is done by
hiring promising advertising companies, which, hire famous faces (depending on the type of
product or services), shoot in good locations and venues and use catchy jingles for good sound
branding. For decades, corporations have hired film and television celebrities or athletes to be the
face of their brands, to achieve a foothold in the market. However, advertisements through the
medium of television and print media are slowly becoming passé as social media platforms now
seem to have taken over.There is a growing trend of social media networking, blogging and
content sharingbeing used as an effective marketing tool by almost all brands, big and small, to
build awareness and recognition for their respective brands and also by private individuals
around the world to promote their products and themselves, through advertisements on websites
and through social media influencers.1

Social media influencers are a rising set of professionals who garner followers or “social media
influencees” over a period of time through unique and varied content, on the many social media
platforms currently available and earn money, initially through monetization of views of their
content and once they gain a considerable number of followers, also through advertising projects.
They use their “influence on social media” which is the ability of a person to affect the thinking
of others in an online social community, to gain followers, grab advertising projects and increase
customer engagement in the most commercially viable manner and make huge amount of money
in the process.Depending on the popularity of their field of expertise, their following can range
from thousands to even millions. These influencers often employ the goodwill they enjoy

1
S. Gunelius, Minute Social Media Marketing (McGraw Hill Publication, New York, 2011) 3.
amongst their followers or viewers to even support a cause or persuade them to do or omit doing
an act. 2

Considering that these social media platforms currently boast of membership running in millions,
these platforms have turned into a robust digital ecosystem for business marketing.

2
Marico Limited v. Abhijeet Bhansali, COMIP No. 596 of 2019 (15 January 20201).
The emergence of social media influencers fits within the broader framework of peer-to-peer
services, the sharing economy, the ‘gig-economy’ and the ‘do-it-yourself trend’ that grew
dramatically in the past decade.3 While peer-to-peer networks and social media have received a
great deal of attention from academia throughout the spectrum of social sciences, the same
cannot be said about social media influencers.4

In India, there are regulatory agencies established under different laws to ensure that advertisers
do not mislead consumers. There are also a number of legislations to regulate advertising in
various sectors such as food products, drugs and medicines, cosmetics, etc. For example, the
Food Safety and Standards Act, 2006, Pharmacy Act, 1948, Drugs and Magic Remedies
(Objectionable Advertisements) Act, 1954, The Cable Television Network Regulation Act, 1995,
Drugs and Cosmetics Act, 1940 among others but a uniform legislation to regulate all the
sectors, currently does not exist. Furthermore, these legislations are not in consonance with the
changing nature and dynamics of advertisement industry, one important facet of which is
advertising in the digital or cyber world through social media influencers.

India also hasthe Code for Self-Regulation of Advertising Content in India [“Code”]issued by
the Advertising Standards Council of India [“ASCI”] that lays down the ethical guidelines to be
adhered by the stakeholders involved in an advertising campaign. The newly passed Consumer
Protection Act of 2019 [“CP Act”]that has replaced the Consumer Protection Act of 1986has
tried to deal with the issue of protection of consumer rights in the age ofdigitized advertising. It
has, undoubtedly, broadened the paradigm of consumer rights and their protection.

But before delving deeper into the legal and ethical aspects of advertising by social media
influencers, it’s relevant to understand what makes social media platforms such a lucrative
medium for business marketing.

3
Vanessa Katz, ‘‘Regulating the Sharing Economy’’ (2015) 30 Berkeley Technology. L.J. 1067, 1073.
4
Catalina Goanta and Sofia Ranchordas, The Regulation oOf Social Media Influencers (Edward Elgar Publishing
2020) 2.
II. SOCIAL MEDIA INFLUENCE-WHERE DID IT ALL START?
Unlike television or print media which primarily aims at dissemination of information to, and
entertainment of, the general masses, social media, as the name itself suggests, primarily aims at
socializing through the medium of the internet and has become an integral part of the lives of
people around the world. According to the global networking giant Cisco, the number of internet
users in India will reach 829 million or 59 percent of the population in 2021, from 373 million
people or 28 percent of the population in 2016.5

The Internet as we experience today has gone through exhaustive upgradations from time to
time. The first email was sent in 1971, the first chat system was established in 1988 but, it was
the emergence of blogging in the 1990s, that helped usher in the age of social media. It allowed
any person to log on to the web, and express themselves on a myriad of topics, open for the
perusal of all, at any given time.The website which is considered to be the first in its league of
social networks as we know of today is Six Degrees. It was launched in 1997, and allowed
people to sign up with their email address, make a profile and add friends to their network. In
2002, a website called Friendster, emerged to compete with Six Degrees with an analogous
design and certain additional features by virtue of which, one could share messages, photos and
videos with other users, while also being able to drop comments on profiles, within their
personal network. And within a few months itself, it had over 3 million users6.

Friendster was followed by MySpace (2003), Facebook (2004), YouTube (2005), LinkedIn
(2006), Twitter (2006), WhatsApp (2009), Instagram (2010) and Snapchat (2011). What makes
these platforms appealing to the public are the features that they dispense, are almost always
free,they have a user-friendly interface design and they provide a platform for expanding
professional and personal network with seemingly endless opportunities. This is the reason that
social media has become an inseparable part of the lives of people all over the globe. There are

5
‘Internet Uusers in India to Ddouble by 2021: Cisco VNI’ (ETCIO, 2017)
<https://cio.economictimes.indiatimes.com/news/internet/internet-users-in-india-to-double-by-2021-cisco-
vni/59066697https://cio.economictimes.indiatimes.com/news/internet/internet-users-in-india-to-double-by-2021-
cisco-vni/59066697> accessed 2 October 2020.
6
Matthew JonesKeith Terrell, ‘The Complete History of Social Media: From the First Online Network to Today’
(History Cooperative, 2015) <https://historycooperative.org/the-history-of-social-
media/https://historycooperative.org/the-history-of-social-media/> accessed 8 January 2021.
already about 2.62 billion users of one or the other social media platforms all over the world, and
this number is projected only to rise in the coming years.7

III. THE EMERGENCE OF SOCIAL MEDIA INFLUENCERS

Collaborations with social media influencers seems to be a market strategy that emerged only
recently, but influencer marketing has been in existence for centuries, dating back to 1760, when
a potter by the name of Wedgwood first made a tea set for the then Queen of England and gained
instant fame since the monarchy was and still is the symbol of luxury and opulence. Then in the
20th century, Coco Chanel influenced the fashion industry with her exquisite taste in fashion. 8 In
1984, Mike Jordan signed a multi-million dollar contract with the shoe brand Nike that included
custom-made Air Jordans.

Social media influencers started to emerge with the launch of social media platforms such as
Facebook, Instagram and YouTube since these platforms gave the opportunity to the common
man to showcase his talent to a worldwide audience and gain followers and subscribers in return.
A number of people who currently enjoy celebrity stature as social media influencers started
small and eventually became famous with their hard work and consistency. There are examples
of people like Huda Kattan, who started as a blogger and a YouTuber and eventually launched
her own beauty line Huda Beauty; Lilly Singh from Canada was a YouTuber who posted
comedy videos and is currently one of the top earning YouTubers in the world and is also the
Goodwill ambassador of UNICEF and has brand partnerships with Coca-Cola, Pantene, among
other huge brands; Bhuvan Bam and Prajakta Kole were also just common people before they
shot to fame as YouTubers; Kusha Kapila and Dolly Singh are two of the most sought after
Indian social media influencers on Instagram with 1 million plus followers. Therefore,
advertising that was restricted to use of celebrities and royalty as brand ambassadors, has now
7
iIbid.
8
.Peter Sucio, ‘History oOf Influencer Marketing Predates Social Media bBy Centuries – bBut iIs There Enough
Transparency iIn tThe 21st Century?’ (2020) <https://www.forbes.com/sites/petersuciu/2020/12/07/history-of-
influencer-marketing-predates-social-media-by-centuries--but-is-there-enough-transparency-in-the-21st-century/?
sh=a4f0ef40d707https://www.forbes.com/sites/petersuciu/2020/12/07/history-of-influencer-marketing-predates-
social-media-by-centuries--but-is-there-enough-transparency-in-the-21st-century/?sh=a4f0ef40d707> accessed 10
March 2021.
expanded to social media influencers.So much so, that the term “influencer” has now been added
to the English dictionary.9Companies hire them to help expand their social reach, become more
relatable and sponsor products or services. According to Prashant Puri, the chief executive of
digital marketing firm AdLift, nano influencers and micro influencers who have less than 5,000
and 30,000 followers, respectively, the rates that they charge per post, has gone up from Rs.
3000-8000 to Rs.7000-18,000 in the year 2019 and for influencers on Instagram having more
than 500,000 followers (macro influencers), rates per post have gone up from 1.5 lakh per post in
2018 to Rs. 7 lakh per post in 2019.10 This is one reason that companies are now turning to micro
influencers. Moreover, micro influencers have smaller followings but they are more responsive,
unlike mega or macro influencers who are largely disconnected from their followers.Social
media influencers enjoy a degree of credibility in their respective spaces. This is what gives them
the power to influence consumer buying behaviour. The industries that benefit the most from
social media influencer marketing are Fashion and Beauty, Travel and Lifestyle, Entertainment
and Media, Food and Beverages and Health and Fitness since influencers creating content in
these fields have the highest number of followers. One reason for this could be the fact that a
large population who use social media platforms are millenials and Generation Z. Some of the
most famous social media influencers from these industries are Huda Kattan (Brand name:
HudaBeauty) is a makeup artist and blogger having 47.8M Instagram followers and 4.15M
YouTube subscribers. James Charles is a celebrity makeup artist and vlogger with 25.7M
YouTube subscribers and 27.1M Instagram followers.Kayla Itsines is a fitness vlogger and
entrepreneur having 29+M Facebook followers and 12.8M Instagram followers.Cassey Ho
(handle name: blogilates) is also a fitness vlogger and entrepreneur having 5.5M YouTube
subscribers and 2M Instagram followers.Jamie Oliver is a Chef, restaurateur and TV host with
8.5M Instagram followers and 7.2M Facebook followers.Komal Pandey is an influencer in the
field of fashion and has 1.3M Instagram followers. Richa Hingle (handle name: veganricha) has

9
Influencer <https://dictionary.cambridge.org/dictionary/english/influencer> accessed on 11 March, 2021.
10
Anumeha Chaturvedi, ‘Influencers Score as Brands Step Up Social Media Play’ The Economic Times (2019)
<https://economictimes.indiatimes.com/tech/internet/influencers-score-as-brands-step-up-social-media-
play/articleshow/70506845.cms#:~:text=%E2%80%9CFor%20influencers%20who%20have%20over,Rs
%207%20lakh%20per%20post.%E2%80%9Dhttps://economictimes.indiatimes.com/tech/internet/influencers-score-
as-brands-step-up-social-media-play/articleshow/70506845.cms#:~:text=%E2%80%9CFor%20influencers%20who
%20have%20over,Rs%207%20lakh%20per%20post.%E2%80%9D> accessed 15 January 2021.
 317k followers on Instagram. Another famous influencer in the field of food and beverages is
Gaurav Wasan (handle name: youtubeswadofficial) having 345k followers on Instagram.11

IV. THE PRINCIPLES GOVERNING ADVERTISEMENTS BY SOCIAL

MEDIA INFLUENCERS
Social media influencers use their voice and content to publicize and market the products or
services of companies that hire their services. But in a digital environment with stiff competition
among social media influencers themselves, are there any ethical and legal boundaries within
which they must function? Moreover, what is the authenticity and legitimacy of the
endorsements done by the influencers? Although, they are exercising their right to freedom of
speech and expression to advertise a product, but as much as it is a constitutionally endowed
fundamental right, it is also not absolute. So, where is the line to be drawn? Also, it’s important
to analyse how many of these influencers draw out disclaimers, informing their viewers that
certain content contains an advertisement or is sponsored; a practice of utmost importance in
creating ad transparency.Do they even feel bound by the ASCI Code for Advertising in India?
These questions have created quite the conundrum owing an explanation.

A. ASCI CODE FOR SELF-REGULATION OF ADVERTISING CONTENT IN INDIA-

SOFT LAW ON ADVERTISING
The ASCI Code in India was adopted in the year 1985 and has been updated from time to time,
to keep it abreast of the changes that the advertising industry has been going through, especially
in the digital era. It is a code of self-regulation that aims to protect consumers’ interests and to
ensure a sense of commitment towards honest advertising and fair competition amongst all
stakeholders in the advertising business. It defines media as any means used for the propagation
of advertisements and includes the internet as well.12 The overall goal of the ASCI has been to
maintain and instill confidence in the public, in advertisements. It aims at making sure that
advertisements conform to the Code to ensure that they are honest representations, non-offensive
to the public, against harmful products or situations and are fair in competition.13
11
Number of followers and subscribers as on 10 March, 2021, source: Instagram, Facebook, YouTube.
12
Advertising Standards Council of India, ‘The Code for Self-Regulation of Advertising Content in India’ (1985) 4
<https://ascionline.org/images/pdf/code_book.pdfhttps://ascionline.org/images/pdf/code_book.pdf> accessed 16
January 2021.
13
iIbid 2.
The ASCI recently came up with a set of draft guidelines for digital marketing by social media
influencers. The applicability of the guidelines encompasses social media influencers on
Facebook, Instagram, TikTok, YouTube and Twitter.The guidelines published on 22 February,
2021 for comments from stakeholders has, inter alia, provided for a definition of influencers and
includes any person who has “the power to affect their audience's purchasing decisions or
opinions about a product, service, brand or experience, because of the Influencer's authority,
knowledge, position, or relationship with their audience”. The definition also includes a person
who has not actually created any content but has simply provided editorial services. 14 The
guidelines have even broadened the definition of advertisement provided in the old ASCI Code,
to include any paid-up communication,“which in the normal course mayor may not be
recognized as an advertisement by the general public, but isowned or authorised by the advertiser
or brand owner” The aim behind adding these terms is perhaps to include even those posts within
its ambit that don’t prima facie appear to be an ad since many social media influencers do not
give out a clear disclaimer that the post is sponsored.A material connection or payment from the
advertiser to the influencer has to be present. Such payment could be in the form of money or
even free products, free hotel stays, free trips, etc. but such payment has to be “with the
expectation—explicit or implied—that a promotion orinclusion of the advertiser’s products in a
post occurs immediately or eventually.” 15

The 2021 draft guidelines make it mandatory to add a disclosure label “upfront” such as #ad,
#collab, #sponsored, #promo or #partnership to make a post that is an advertisement “obviously
distinguishable by the average consumer from editorial and independent user-generated content”
so that the consumer does not get confused between the two. Also, such a disclaimer label must
be added on every advertisement whether it’s a picture or a video and a blanket disclosure in a
profile/bio/about section will not be consideredadequate. Also, filters should not be applied to
social media advertisements if they exaggerate the effect of the claim that the brand is making-
eg. makes hair shinier, teeth whiter etc. which makes them false or misleading.16

14
Advertising Standards Council of India, ‘Guidelines for "Influencer advertising on digital media"- Ddraft for
Sstakeholder Cconsultation’ (2021) <https://images.assettype.com/afaqs/2021-02/0b608628-7f01-433e-98e5-
185916c4b12e/ASCI_Guidelines.pdf> accessed 9 March 2021.
15
iIbid.
16
iIbid.
The ASCI Code also has a mechanism to deal with complaints on false or misleading
advertisements. On receiving a complaint, the ASCI gives two weeks to the advertiser to
comment on the same after which the complaint as well as the response of the advertiser are
placed before the Consumer Complaints Cell [“CCC”] of ASCI for their decision. In case the
advertiser fails to respond, the CCI can pass an ex-parte decision. If the CCI finds the ad to be
violative of ASCI regulations, it can ask the advertiser to either withdraw the ad or modify
it.17The complaints procedure of ASCI is applicable also to advertisements that appear on
websites, social media platforms and e-commerce websites.18

But the ASCI is not a statutory body, and merely provides the self-regulatory guidelines for fair
and healthy competition in the advertisement business.The Code itself lays down that “it is not in
competition with law and its rules and the machinery through which they are enforced, are
designed to complement legal controls, not to usurp or replace them”. 19Therefore, it does not
legally bind social media influencers when they advertise or endorse a particular product.

B. THE CONSUMER PROTECTION ACT, 2019 AND JUDICIAL

PRONOUNCEMENTS-HARD LAW ON DIGITAL ADVERTISING
1. PROVISIONS WITH RESPECT TO ONLINE ADVERTISEMENTS UNDER THE
CONSUMER PROTECTION ACT, 2019

The CP Act of 2019 has provided for the legal definition of “advertisement” to include “any
audio or visual publicity, representation, endorsement or pronouncement made by means of
light, sound, smoke, gas, print, electronic media, internet or website”. 20Since the definition
includes any audio or visual publicity, representation or endorsement made by means of
electronic media and the internet as well, therefore, this will encompass the posts created by
social media influencers on the social media handles that are in the form of advertisements.

17
Centre for Consumer Studies, Indian Institute of Public Administration, Pushpa Girimaji, ‘Misleading
Advertisements and Consumer’ (Centre for Consumer Studies Indian Institute of Public Administration 2013) 8
<https://consumeraffairs.nic.in/sites/default/files/file-uploads/misleading-
advertisements/misleading_advertiesment_and_consumer
%20%281%29_0.pdfhttps://consumeraffairs.nic.in/sites/default/files/file-uploads/misleading-
advertisements/misleading_advertiesment_and_consumer%20%281%29_0.pdf> accessed 16 January 2021.
18
Advertising Standards Council of India (n 129) at 42.
19
iIbid 3.
20
Consumer Protection Act, 2019,, s§ 2(1).), No. 35, Acts of Parliament, 2019 (India)
 Even when the social media influencers simply endorse a product on their handle without
explicitly stating that it is an endorsement, it falls well within the definition of endorsements
under the CP Act. This is because it creates a belief in the mind of the consumer engaging in
that content that it is reflective of the personal opinion, finding or experience of the person
making such endorsement.21Moreover, to widen the ambit of advertisement under the CP Act,
the definition of advertisement can be explicitly amended on the lines of the definition provided
in the 2021 ASCI guidelines, once the guidelines are formally adopted.The guidelines provide
that if there will be any material connection or payment in cash or kind between the advertiser
and the influencer, it will be undoubtedly, an advertisement, even if the post does not get
recognized as an advertisement by the general public.A major introduction in the CP Act of
2019 is the definition of consumer rights under section 2, clause (9) which under sub-clause (vi)
includes the right to awareness of a consumer. When social media influencers give their
opinions on a product or service, whether in the capacity of a paid endorser or in the capacity of
an unpaid consumer themselves, the huge number of people who are following them and getting
influenced by them, are exercising their right to awareness as a consumer. Reason being, that the
ad or endorsement brings the information of a new product in the market, into the homes of the
consumers and may also be creating a preference in the minds of the consumer over other
similar products in the market. Also, since section 2, clause (9) sub-clause (ii) of the CP Act
endows the right upon consumers to be made aware regarding the quality, purity, standard etc.
of the product being advertised, the influencers must undertake thorough research and gain
clarity about every aspect of the product they are advertising to protect the consumer against
unfair trade practices22. The advertisements they create must not be false or misleading. 23This
increases the responsibility of social media influencers manifold, which is why the CP Act 2019
has made violation of consumer rights punishable, by both fine and imprisonment now. 24The
consumers must exercise their right to awareness also by cross-checking the claims made in the
post with others who have personally used the said product, read reviews, and make an
independent decision. Furthermore, a person must be aware of his rights in the capacity of a

21
iIbid s§ 2(18).
22
iIbid s§ 2(47).
23
iIbid s§ 2(28).
24
iIbid s§ 21.
 consumer and the legal recourse available to him if he has been misled by an ad or endorsement
which has caused him monetary loss.

2. PENALIZATION OF FALSE OR MISLEADING ADVERTISEMENTS

The Act ordains the power on a central authority appointed under section 10 of the CP Act,
called the Central Consumer Protection Authority, to issue directions to discontinue or modify
the ad, if it adversely affects consumer rights or is false or of a misleading nature 25. The central
authority is duty-bound to prevent violation of consumer rights, prevent unfair trade practices
and ensure that there are no false or misleading advertisements. 26The District Collector has been
ordained with the power to investigate or inquire into any complaint regarding these
contraventions.27

The central authority has been endowed with the power to impose penalties of up to ten lakh
rupees against false or misleading advertisements and up to fifty lakh rupees on subsequent
contravention, not only on the concerned trader or manufacturer but also on the endorser or
advertiser or publisher of the said product.28Therefore, although the Act does not explicitly use
the term “social media influencer”, it uses a rather broader term “endorser” which can include a
social media influencer as well. It is a welcome step because many social media influencers,
including celebrities although endorse a product, are not held liable in a personal capacity if the
advertisement is false or misleading. However, the Act exempts from liability any such
endorser, if he has exercised due diligence to verify the veracity of the claims made in the
advertisement regarding the product or service being endorsed by him. 29The legislation also
imposes penalty in the nature of imprisonment of up to 2 years along with fine of ten lakh on
first violation, on a manufacturer or service provider who causes a false or misleading
advertisement to be made, which is prejudicial to the interest of consumers and imprisonment up
to 5 years on subsequent conviction along with fine of fifty lakh rupees.30

25
iIbid s§ 21(1).
26
Ibid § 18
27
Ibid § 16
28
Ibid§ 21(2)
29
Ibid§ 21(5)
30
Ibid§ 89
 3. The District Consumer Disputes Redressal Commission [“The Commission”] established
under section 28 of the CP Act has power to deal with complaints where value of goods or
services paid as consideration do not exceed one crore rupees.31 The Commission, once the
allegations in the complaint are proved, inter alia, can order for the issuance of corrective
advertisement to neutralise the effect of misleading advertisement at the cost of the opposite
party responsible for issuing such misleading advertisement.32The CP Act may also be
amended to include “non-disclosure of ad, collaboration or sponsorship status” within the
ambit of unfair trade practices under section 2(47) and should be made punishable on both
influencer and advertiser, to give teeth to the ASCI 2021 guidelines which, even after
adoption, are otherwise not legally enforceable.JUDICIAL PRONOUNCEMENTS
DEALING WITH ADVERTISEMENTS IN THE DIGITAL WORLD
Before the enactment of the said legislation, the intervention of the higher judiciary in India has
been sought in the recent past, in matters where it was alleged that there was use of defamatory
or disparaging content by social medial influencers to promote products of one brand by
defaming the products of another brand. In the landmark order of the Bombay High Court passed
on January 20, 2020, the Court ruled against a social media influencer who critiqued a prominent
brand of coconut oil online.33The defendant in this case, argued that by making the impugned
video, he was exercising his right to freedom of speech and expression enshrined in Article 19(1)
(a) of the Constitution of India and his views that ‘Parachute Coconut Oil’ is inferior in quality
as compared to virgin coconut oil were personal and in the capacity of a consumer. The video, by
virtue of not being sponsored did not fall in the category of a paid endorsement. Moreover, he
alleged to have no intentions to malign the reputation of Parachute Coconut Oil or the company
that manufactures it, and that he was merely aiming to educate his viewers.

But the Hon’ble Court observed that neither did the defendant mention or analyse the details of
the plaintiff’s product except change in its colour in liquid and frozen forms, by himself, nor did
he get it analysed by a Food Analyser under section 40 of the Food Safety Standards Act, 2006.
He even omitted to mention the details of those products that he used, to make a comparison with
Parachute Coconut Oil. Secondly, he did not conduct any independent tests to prove that there

31
Ibid§ 34(1)
32
Ibid § 39(1)(l)
33
Marico Limited(n 7)
exist significant variations in the nutritional values of Parachute Coconut Oil and virgin coconut
oil which the defendant considered to be better. Moreover, the defendant claimed to be making
the comparison with ‘organic coconut oil’ in the impugned video whereas actually he conducted
the ‘freeze test’ with ‘virgin coconut oil’ which are both different oils. Thus, the “clear and
unambiguous impression” he gave to his viewers based on the comparison made by him, was
actually false. Furthermore, the defendant used forceful and assertive statements in the impugned
video which portrayed him as an expert to his viewers, someone who has done extensive study
and groundwork when in reality he did not conduct enough research into the category of coconut
oils, as his video description mentioned only one article to support his video.34

Therefore, the Court decided against the defendant, calling it a case ofdisparagement or slander
of goodson the ground of apparent falsehood on the part of the defendant, further stating that due
diligence wasn’t exercised by him. The Court even ruled that special damages are to be paid to
the plaintiff since a very large number of viewers ‘liked’ the video and left comments on the
impugned video indicating that they might refrain from buying Parachute Coconut Oil in the
future. Hence, its impact on the reputation of the plaintiff’s Parachute Coconut Oil and the
damage caused to the plaintiff cannot be underestimated. Regarding the responsibility of social
media influencers, while advertising a product, the Court observed that since a social media
influencer wields the power to influence minds of the common people, and is aware of the
impact of his statement which he purposefully spreads in the society, he bears a higher burden to
ensure there is a considerable degree of truthfulness in what he states.Accordingly, the court
called out the Defendant for his reckless statement that adversely impacted the Plaintiff’s
reputation.

Therefore, any advertisement and endorsement of a product will fall within the category of
disparagement or slander of goodswhen there is apparent falsehood involved on the part of the
advertiser or endorser and due diligence has not been applied and freedom of commercial speech
cannot be a sustainable defence in such a situation. Moreover, if an endorser has defamed a
product or maligned the reputation of a brand through his content, even then the protection of
freedom of speech will end for him since defamation is a reasonable restriction under Article
19(2) of the Constitution of India.
34
Ibid
 Regarding the right to freedom of commercial speech falling within Article 19(1)(a), the Court
cited the 2010Hindustan Unilevercase35in which,the Court had opined that advertisements are a
form of commercial speech, protected under Article 19(1)(a) of the Constitution although with
reasonable restrictions as provided by law and thus advertisements should be such that they do
not denigrate the product of a rival. Moreover, it is also to be seen whether a reasonable or
prudent man would take the statements made in the advertisement, seriously or not.

The Court went on to cite the 2017Hindustan Unilevercase36where it was againobservedthat

although it is an undisputed fact that commercial speech is a part of fundamental right under
Article 19(1)(a) of the Constitution, however, such right cannot be abused by any person by
maligning or belittling the product of another person through negative campaigning.

On one hand, where this judgment of the Bombay High Court has laid out the responsibilities of
social media influencers while giving opinions on sponsored and non-sponsored products,
another Bombay High Court Bench observedin the Lodha Defamation Case 37that online media
provides for plurality of voices and placed the responsibility on the social media influencees to
apply due diligence before blindly believing everything advertised online.

Therefore, while the ASCI only puts an ethical duty on social media influencers to follow its
guidelines, the above judgments and the CP Act 2019 form a legal boundary around the right to
commercial free speech to be exercised by them.

V. APPROPRIATE LABELING OF ENDORSEMENTS ON SOCIAL MEDIA:

AN EFFECTIVE TOOL TO ADD TRANSPARENCY
Social media influencers often endorse a particular product without adding a disclaimer
specifying, that their post is sponsored or carries an advertisement. This goes against the tenet of
ad transparency, which poses a duty on the endorser of a product to put it in the notice of the
consumer, explicitly mentioning that he or she has charged a fee for endorsing the product or
services, shown in the post. This is often done, because consumers in the present times, are more
likely to get influenced by a mere recommendation formulated from the personal experience of a

35
Hindustan Unilever Ltd. v Cavincare Pvt. Ltd., (2010) SCC OnLine Del 2652
36
Hindustan Unilever Limited v Gujarat Co-operative Milk Marketing Federation Ltd & Ors., (2017) SCC Online
2572 (Bom)
37
Lodha Developers Ltd v Krishnaraj Rao & Ors.,2019 SCC OnLine Bom 4157
social media influencer, than, by an up-front advertisement.It is partaken by a myriad of
influencers, ranging from fashion to travel.The disclosure of receiving payments from the brand
to endorse their product might interfere with the experience of the consumer in the social media
setting and increases the chances of the consumer, rejecting the endorser along with the message
he is trying to put across. By embedding endorsement messages in social media and other non-
traditional advertising, advertisers seek to avoid such rejection.38
The United Kingdom Advertising Standards Authority commissioned a study in 2019, to find out
the type of disclaimer to an advertisement that resonated with the maximum number of social
media users, specifically on Twitter and Instagram. The results of the study showed that only
32% of the 1,999 participants in the age bracket of 18-64 years were able to identify influence
ads as ‘definitely an ad’. Moreover, the positioning of the ad labels such as “sponsored”, “Ad”,
etc. also made a huge difference, because when the label ‘#ad’ was positioned in the beginning
of the post, 35% of the participants classified the Instagram post as “definitely an ad”, but when
it was positioned at the end of the post, only 29% participants could identify it as “definitely an
ad”.39The study concluded that it was more likely that people identified brand ads as “definitely
adverts” in comparison to influencer ads, even when a label was added to the post that it was an
advertisement and not merely a normal or organic post.40 Hence, the disclosure solutions that
advertisers come up with are often not as clear or conspicuous as they should be.

It is important that social media influencers must label their sponsored posts as thus, because it
affects the weight or credibility given by the social media influencees to such posts. Even if there
exists a connection between the endorser and the manufacturer of the product being endorsed
which the consumers would not expect, but would affect how they evaluate the particular
endorsement, it should be disclosed. A disclosure of such a nature not only adds transparency
and authenticity to the ad, but also makes the social media influencer more accountable. ASCI
has taken care that all these important requirements are added to its 2021 guidelines pertaining to
digital marketing by social media influencers. Moreover, it’s a win-win situation for influencers

38
Leah W. Feinman, ‘Celebrity Endorsments in Non-Traditional Advertising: How the FTC Regulations Fail to
Keep Up with the Kardashians’(2011)22 FORDHAM INTELL. PROP. MEDIA & ENT. L. J. 97, 129-130
39
Advertising Standards Authority, ‘Research on the Labelling of Influencer Advertising’ (2019) 5
<https://www.asa.org.uk/uploads/assets/uploaded/8cde72e8-796b-430f-9d2d228038286b4e.pdf.>accessed 18
January2021
40
Ibid 26
 as well since putting an ad disclaimer on their posts will not only enhance their image in the eyes
of their audience because only authentic and established influencers get brand projects, but it will
also portray them as law abiding and responsible citizens.

VI. A COMPARATIVE ANALYSIS WITH USA AND UK REGARDING

REGULATION OF ADVERTISEMENTS BY SOCIAL MEDIA
INFLUENCERS

IN USA

The United States’ Federal Trade Commission’s Endorsement Guides 41[“FTC Guide”]requires
that when the ad represents that the endorser uses the endorsed product, the endorser must have
been a bona fide user of it at the time the endorsement was given. 42The advertiser and the
endorser can be held liable for making any false or unsubstantiated claims about the product
being endorsed.43For example, advertiser of a skincare product requests a famous blogger to try
the product and write a review on it on her blog but makes no statements regarding the product’s
ability to cure skin diseases. But the blogger goes on to make claims that the product cures skin
issues such as eczema and recommends it to her readers who suffer from this condition. In this
case, both the advertiser and the endorser (in this case, the blogger) may be held liable for the
misleading and unsubstantiated representations made in the course of the endorsement.

It also makes it necessary for the endorser to fully disclose if there exists a material connection
between the endorser and the advertiser of the product.44This has also been laid down in the
Disclosure 101 which is a new brochure for social media influencers putting a mandate on the
influencer to put a message in his post if there exist a “material connection” between him and the
brand he is endorsing which could be a family relationship, employment relationship or financial

41
Federal Trade Commission, ‘Guides Concerning the Use of Endorsements and Testimonials in Advertising’
<https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-publishes-final-guides-governing-
endorsements-testimonials/091005revisedendorsementguides.pdf.> accessed 19 January 2021
42
Ibid § 255.1(c)
43
Ibid § 255.1(d)
44
Ibid§ 255.5
relationship (that is, the brand is paying the endorser or giving him free or discounted
products).45 The disclosure should be placed in such a manner that it is hard to miss and does not
get mixed in a group of hashtags and links.46Terms like “advertisement,” “ad,” and “sponsored”
should be used by them instead of vague or confusing terms like “sp,” “spon,” or “collab,” or
stand-alone terms like “thanks” or “ambassador”.47Moreover, social media influencers must not
talk about their experience with a product if they haven’t tried it themselves, or say good things
about a product they felt was terrible, just because they have been paid to do so. 48Furthermore,
they should not make up claims about a product that would require proof the advertiser doesn’t
have, such as scientific proof that a product can treat a health condition.49

The FTC Code has apparently been a major source of inspiration for the Indian policymakers, to
make the Indian legal framework for regulating endorsements in online advertising, and bring it
at par with global standards. For example, whenever there is a material connection or payment
made by the advertiser to the influencer, the 2021 draft guidelines also make it compulsory for
social media influencers to make a disclaimer upfront which make the advertisement obviously
distinguishable by the consumer by usage of hashtags such as #ad, #collab, etc. The influencer
must not make exaggerated claims about the efficacy or results of the product and apply due
diligence about any technical or performance claims made by them.

ASCI has also added the responsibility of the disclosure upon the influencer orpublishing
account on which the advertisement is published, aswell as upon the advertiser for whose brand
the advertisement is..

IN UNITED KINGDOM
With respect to the legal and regulatory framework in place in India, the CP Act of 2019 has
brought a sea of change in the protection of consumer rights on e-commerce platforms. But
unlike the Consumer Protection Act of the UK, which lays down the requirement, of having
social media influencers to be transparent about any kind of payment made to them or having
received any other form of compensation for promoting, reviewing or even just talking about a
45
‘Disclosure 101 for Social Media Influencers’ (2019) 2 <https://www.ftc.gov/system/files/documents/plain-
language/1001a-influencer-guide-508_1.pdf> accessed 19 January 2021
46
Ibid 4
47
Ibid 5
48
Ibid 6
49
Ibid
 product on social media, the CP Act of India puts no such legal obligation on social media
influencers. In addition, the Committee of Advertising Practice Code in UK says that "ads must
be obviously identifiable as such", meaning that consumers should be able to "recognize that
something is an ad, without having to click or otherwise interact with" a piece of content. 50Now
in India, the ASCI has alsocome out with a set of draft guidelines to specifically regulate
advertisements on social media by social media influencers. The guidelines make appropriate
labeling of advertisements on social media, compulsory, so that the consumer does not get
confused about the nature of the content he is witnessing, as to whether it is just an organic post
or an endorsement.

VII. EMPIRICAL STUDY ON HOW ADVERTISING BY SOCIAL MEDIA

INFLUENCERS AFFECT CONSUMER CHOICES

RESEARCH OBJECTIVE
The author undertook this empirical study to collect primary data on the affect of advertising and
its clear disclaimer by social media influencers, on consumer behaviour.

RESEARCH QUESTION

Does a disclaimer on a post by a social media influencer that it is an advertisement affect

consumer choices?

HYPOTHESIS

A clear indication on a post on social media by a social media influencer, that it is an

advertisement, affects consumer choices.

METHODOLOGY ADOPTED

For the purpose of this research paper, the author conducted a small survey to gather primary
data on how advertising by social media influencers affect consumer choices. The survey was
conducted online via the SurveyMonkey app pan India.The sampling method employed was

50
‘“Influencer” ads transparency on social media’ (Privacy International, 2019)
<https://privacyinternational.org/node/3297> accessed 20 January 2021
random sampling technique, independent of variables such as age, location and sex of the
respondents although a large number of respondents were college students and young
professionals but not limited to the same. The questionnaire that was circulated consisted of nine
close-ended questions. The limitation of the research is that the number of respondents is not
large enough to represent the entire population of social media users and to come to a
representative and definitive conclusion and therefore, the results are merely indicative.

ANALYSIS OF THE STUDY

Out of the 100 respondents that took the survey, on being asked if a social media influencer's
post is actually an ad and not just a simple organic post without an explicit disclaimer, will it
affect how they would view that post, 56% of the respondents answered that they would simply
consider it to be the influencer’s personal view. This could be problematic since the consumers
might not even know that it’s an ad for which the social media influencer is likely getting paid.

67% of the respondents said that social media influencers should compulsorily mention on their
posts if it is an ad. When asked if a social media influencer's post clearly mentioned that it is an
advertisement, will it affect their choice as a consumer about that product, 94% of the
respondents said that it will affect their choice as a consumer about that product since they will
know that the influencer has been paid to say good things about the product endorsed. Most
social media influencers do not make any such disclaimers on their posts since it might adversely
affect the result they desire to achieve from their posts, that is, giving a personal touch to the post
by trying to establish a connection with their viewers by giving recommendation owing to their
personal experience which might increase the chances of the viewers buying the product being
endorsed.Many a times the decision to not make any ad-related disclaimers is a decision made
by the advertiser, again, to give the post a personal touch. This, perhaps, is the reason that the
2021 ASCI guidelines have put a joint responsibility on the advertiser and the influencer both, to
make ad-related disclosure in their posts.48% of the respondents were of the view that social
media influencers must clearly mention in unambiguous terms that it is an ad at the beginning of
the post rather than at the end of it. Moreover, as a lot of social media influencers simply put the
ad status of the post as a hash tag, on being asked whether they really pay attention to hash tags
on a post, 55% of the respondents said that they actually ignore hash tags on posts. Therefore,
instead of putting the ad status of the post as a hash tag, the social media influencer can put a
 disclaimer of it at the beginning of the post in clear and unambiguous terms. The empirical study
also shows that although 36% of the respondents said that they might be more interested in
buying a product endorsed by famous social media influencers, 64% of the respondents stated
that they will apply their own mind to decide whether or not they should buy that product.

RESULTS OF THE STUDY

The study proves the hypothesis that a clear indication on a post by a social media influencer,
that it is an advertisement affects consumer choices. There is a direct bearing of an ad disclaimer
on consumer behaviour since there is a difference in how they perceive the post once they know
that it is an ad and not just a regular organic post. They might not look at the post endorsing a
product as just the personal view of the social media influencer if they know that it is an ad or a
sponsored endorsement. Rather, they might apply due diligence in making a choice whether or
not to buy that product in the future by doing their own research on it.

VIII. CONCLUSION AND SUGGESTIONS

Social media has become an important tool of self-expression, self-presentation, inter-personal
communication, mass communication, publicity and marketing. There remains not an iota of
doubt that the legal and ethical framework for regulation of advertisements in India has come a
long way. But there has been a paradigm shift in digital advertising, which includes
endorsements on social media platforms by social media influencers. Therefore, they must
always have regard to the influence they bestow, on the thousands of people who follow them.
Thus, they must not act recklessly, while choosing brands and creating content for their
endorsement, since they are directly and indirectly affecting consumer choices.Influencers as
well as advertisersmust act responsibly and adhere to the good practices of fair and healthy
advertising. Influencers mustappropriatelylabel their posts, making it easier for their followers to
recognize that a particular post is sponsored or endorsed, make careful use of commercial
speech, without maligning the reputation of another product, conduct extensive research into the
quality of the products and verify the veracity of the claims they are making, by applying due
diligence and avoid creating advertisements and endorsements that are false or could be
misleading.
The consumers, must also apply due diligence to understand the true nature of the content they
are engaging in. Social media influencees mustmake their own responsible judgments.As much
as the social media influencers have the obligation to apply due diligence when they create, post
or publish content endorsing a particular product, the social media influencees must also do their
own research and cross-check from multiple sources before they end up buying a product
endorsed by their favourite influencers.

The government, through the consumer affairs ministry and other specialized agencies, can take
measures to spread awareness among consumers about their legal rights and the remedies
available to them if they ever fall prey to a false advertisement. The fact that ASCI has takena
page from the United States’ Federal Trade Commission’s Endorsement Guides or Disclosure
101, having come up with the 2021 draft guidelines, is a welcome step in this direction and once
formally adopted, may go a long way in regulating digital marketing by social media influencers.

Lastly, as India still does not have a legislation solely aimed at regulating the advertising
industry as a whole, a uniform law to govern advertising sector in India is essential. Meanwhile,
the CP Act of 2019 can be slightly amended to modify the definition of ‘advertisements’ and
‘unfair trade practices’ to work in harmony with the ASCI 2021 guidelines and can be relied
upon to regulate advertisements, by social media influencers and otherwise, in the online
domain, and curb and penalize unfair trade practices perpetrated by means of false or misleading
advertisements.