Regulation of Influencer Marketing & Paid Promotions in Indian Law

Abstract

As social media platforms and content creators exponentially expanded, influencer marketing became a virulent force within the digital ad market. Yet, with organic and paid promotion blurred, there are serious implications for consumer rights, transparency, and accountability.

In India, the regulatory environment for influencer marketing is changing with guidelines from the Advertising Standards Council of India (ASCII), interventions from the Consumer Protection Act, 2019, and engagements of regulatory bodies such as the Central Consumer Protection Authority (CCPA).

This article examines the existing legal situation, identifies the most important regulatory tools, examines enforcement challenges, and proposes reforms to achieve a balanced environment fostering innovation and consumer confidence.

Introduction

Influencer advertising, a dynamic social media marketing, has transformed the manner in which brands reach consumers. With a huge following and high interaction rates, influencers have immense persuasive power, competing with conventional celebrities in influence. This emerging digital marketing platform, though, comes with legal and ethical issues over deceptive advertisements, non-disclosures, and manipulation of consumer decisions.

In the Indian scenario, the legal framework for influencer marketing is emerging. There was no regulation up until recent times around disclosure, authenticity of content, and liability. The aim of this article is to evaluate the existing framework and discuss the steps taken to regulate influencer marketing in India.

1. Emergence of Influencer Marketing in India

   India boasts of a huge and youth-driven online population. By different reports, India’s internet users will hit over 1 billion by the year 2025, and a large section of them consume content on applications such as Instagram, YouTube, Twitter (now known as X), and others.

   Brands are now spending major chunks of their marketing budgets on niche and loyal following catering influencers. The emergence of platforms like Mob, Josh, and ShareChat also showcases the increasing penetration of influencer culture among regional languages as well.

   Yet, commercialization of personal content tends to dilute the difference between unpaid opinions and sponsored endorsements, and hence regulation is the need of the hour.

2. Regulatory Landscape in India

   Advertising Standards Council of India (ASCII) Guidelines (2021 & 2023 updates)

   • Forced Disclosure: Influencers should identify paid partnerships clearly through hashtags such as #ad, #sponsored, #paidpartnership, etc.
   • Placement of Disclosures: Disclosures shall be displayed in a place that is easy to miss.
   • Utilization of Platform Features: Influencers can utilize disclosure features offered by platforms.
   • Brand Responsibility: Brands have to make sure that influencers follow the guidelines.

   ASCII revised these guidelines in 2023 to include:

   • Virtual Influencers: AI and avatar influencers should also follow the guidelines.
   • Multi-language Disclosures: Regional content should have disclosures in the regional language.

     1. Consumer Protection Act, 2019 & CCPA Guidelines (2022)

        The Consumer Protection Act, 2019 authorizes the Central Consumer Protection Authority (CCPA) to act against false advertisements and deceptive trade practices. In June 2022, CCPA notified Guidelines for Prevention of Misleading Advertisements and endorsements for misleading advertisements. Influencers promoting a product need proper due diligence.

        • Misleading endorsement or non-disclosure can incur a penalty of Rs. 10 lakh (first offense) and Rs. 50 lakh (subsequent offenses).
        • Influencers may be prohibited from endorsement for 1 year (first offense) or 3 years (repeat offense).

     2. Other Applicable Laws

        • Information Technology Act, 2000: Regulates online content and intermediary liability.
        • Sections pertaining to fraud or cheating might be involved in the event of intentional misinformation.

3. Preeminent Legal Issues and Challenges

   • Lack of Clarity in Legal Responsibilities: Despite ASCII and CCPA guidelines, numerous influencers are unaware of or ignore disclosure standards. The optional nature of ASCII guidelines and absence of a registration or licensing framework hinder enforcement.
   • Jurisdictional Constraints: International collaborations complicate enforcement. Influencers outside India marketing Indian products (or vice versa) pose jurisdictional hurdles.
   • Micro-influencers & Regional Language Creators: Tracking creators with fewer than 10K followers (nano-influencers) is labor-intensive, especially when operating informally.
   • Unethical Practices & Shadow Marketing: Barter deals and informal endorsements make regulation and tracing difficult.
   • Insufficient Media Literacy: Many consumers—particularly in rural areas—cannot differentiate between paid and organic content, increasing vulnerability to deceptive promotions.

4. Comparative Perspectives: Global Practices

   • United States: The Federal Trade Commission (FTC) mandates transparent disclosure of material relationships. Non-compliance invites lawsuits and penalties.
   • United Kingdom: The Advertising Standards Authority (ASA) and Competition and Markets Authority (CMA) regulate influencer content and require clear marking of sponsored material.
   • Australia: The Australian Influencer Marketing Council (AiMCO) has a Code of Practice. Violations may lead to ACCC investigations.

   India’s approach is partially aligned but lacks statutory support and strong enforcement like other countries.

5. Role of Social Media Platforms

   • Platforms like Instagram, YouTube, and X offer tools for labeling paid collaborations, but enforcement is inconsistent.
   • Algorithms prioritize content quality over transparency.
   • Platforms often deny liability, acting only under legal compulsion.
   • Collaborative regulation with platforms can improve compliance.

6. Suggested Reforms and Way Forward

   • Statutory Framework for Influencer Advertising: Transition from guidelines to legislation to ensure clarity, enforcement, and deterrence.
   • National Registry for Influencers: A registry system can monitor paid endorsements, akin to media boards.
   • Mandatory Disclosures Across Platforms: Standardization in platform, language, and format; consider watermarking for paid content.
   • Education & Capacity Building: Conduct workshops and certification for influencers, especially micro and regional ones. Launch public awareness campaigns for consumers.
   • Stronger Collaboration with Tech Platforms: Legal obligations on platforms to flag and remove non-compliant content; explore EU-style co-regulation.
   • Penal Provisions for Non-compliance: While CCPA has penalties, quicker and more robust grievance mechanisms are needed.

Conclusion

Influencer marketing is here to stay, and it holds tremendous opportunities for creators and brands alike. But the legal and ethical dangers it carries for consumer trust and fairness in the market make a strong regulatory mechanism imperative. India’s existing trend, though forward-looking, needs to mature into a codified and enforceable legal framework, aligned with international best practices. Accountability, transparency, and empowerment of consumers must be the guiding force for India’s digital advertising era.