Abstract
Social media has changed how ads work, leading to the rise of influencers. Unlike regular celebrity ads, influencer marketing often mixes personal opinions with paid promotions, making it hard to tell what is honest and what is an ad. This can cause problems like false claims, hidden sponsorships, and loss of trust, especially for young people. To fix this, Indian law now uses the Consumer Protection Act, 2019, and ASCI Guidelines of 2021, which ask influencers to clearly say when content is sponsored and hold them responsible for misleading ads.
This paper looks at how influencer marketing and consumer protection laws connect in India. It studies the rules, court cases, and compares them with laws in the U.S. and U.K. It also points out new challenges like small influencers, barter deals, and AI influencers. Finally, it gives ideas for reforms to make influencers more responsible, help people spot ads, and keep a fair balance between creativity and consumer safety.
Keywords
Social Media · Influencer Marketing · Consumer Protection · Misleading Advertisements · ASCI Guidelines · Digital Advertising
Introduction
In today’s world, the way brands talk to people has changed a lot. Old types of ads, like TV commercials, newspapers, and billboards, are now being replaced by influencer marketing. Influencers are people with many followers on social media who share opinions about products. Influencers, people with strong credibility and large followings on social media, act as a bridge between brands and consumers.
Because many people trust them, they can influence what others buy and what trends become popular. A 2023 report by Influencer Marketing Hub says this industry may grow to about 21.1 billion dollars worldwide by 2025, showing how big it has become.
However, this growth also brings some problems. Unlike regular ads, which are easy to spot and follow strict rules, influencer ads often mix real opinions with paid promotions. Sometimes they hide sponsorships or make false claims, which can mislead people and hurt their consumer rights. This makes it important to study how influencer marketing affects consumer protection.
This paper will explore the problems influencer marketing creates, check if current laws in India and other countries are strong enough, and suggest changes to balance influencer creativity with the safety and rights of consumers.
Research Methodology
The present research adopts a doctrinal approach, focusing on the study of existing legal provisions, judicial interpretations, and regulatory guidelines governing influencer marketing in India. The primary sources include statutory materials such as the Consumer Protection Act, 2019, the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, and the ASCI Guidelines for Influencer Advertising in Digital Media, 2021. Case laws and official notifications are also examined to understand the scope of liability for misleading advertisements.
Secondary sources such as academic articles, research papers, books, and online publications have been referred to for critical analysis and scholarly opinions. Reports from international regulatory bodies like the Federal Trade Commission (FTC) in the United States and the Advertising Standards Authority (ASA) in the United Kingdom are used to provide a comparative perspective.
The methodology further involves a descriptive and analytical study of recent controversies and real-life examples where influencers or brands faced legal scrutiny. This enables the research to highlight existing gaps, evaluate enforcement challenges, and propose constructive suggestions for strengthening the regulatory framework in India.
Review of Literature
Influencer marketing has caught attention because it affects consumer rights and can lead to misleading ads.
Regulatory Framework in India
The Consumer Protection Act, 2019 made endorsers more accountable. The ASCI Guidelines (2021) ask influencers to use tags like #ad or #sponsored, but many do not follow them.
Comparative Perspectives
In the U.S., the FTC, and in the U.K., the ASA, have stricter rules to make sure influencers disclose paid promotions. Experts say these rules work better than India’s system.
Gaps and Need for Study
Older studies in India mostly looked at false ads in newspapers and TV. Writers like Avtar Singh and S.M. Dugar said laws should make trade fair, but they didn’t cover hidden ads on social media.
International writers say influencers are powerful because people see them as real and relatable. This makes secret ads more harmful. In India, influencers often avoid the tough rules that apply to traditional ads.
Research in India is still small and mostly from news or practice-based writings. Few compare India with other countries or talk about new issues like micro-influencers and AI. This paper tries to fill that gap by studying the laws and suggesting reforms to make influencers more responsible.
Method
This paper uses a doctrinal research method, which means it mainly studies existing laws, rules, and cases rather than collecting new field data. The aim is to understand how current consumer protection laws in India apply to influencer marketing and where the gaps lie.
First, statutory materials such as the Consumer Protection Act, 2019 and the ASCI Guidelines for Influencer Advertising in Digital Media (2021) were examined. These provided the legal foundation for the study, especially regarding misleading advertisements and disclosure duties.
Second, case law analysis was carried out. Judicial decisions on misleading advertisements, celebrity endorsements, and unfair trade practices were reviewed to see how courts have interpreted liability. Even though specific influencer cases are still rare in India, earlier judgments on endorsements and advertisements helped in drawing parallels.
Third, secondary sources such as books, journal articles, and reports from consumer organizations and regulatory bodies were consulted. These gave insights into practical challenges, global best practices, and academic discussions on balancing free speech with consumer rights.
Finally, comparative references were made to international frameworks like the U.S. Federal Trade Commission (FTC) guidelines and the UK Competition and Markets Authority (CMA) rules. This helped to highlight how India could strengthen its system by learning from other countries.
Overall, this method combines a study of law, cases, and commentary to provide a clear picture of influencer liability under consumer protection law, its enforcement difficulties, and possible reforms.
Evolution and Growth of Influencer Marketing
An “influencer” is someone who, because of their talent, lifestyle, or popularity, can affect what others buy or like. Unlike regular celebrities who promote products on TV or in magazines, influencers connect directly with their followers on social media apps like Instagram, YouTube, and TikTok. Because they seem relatable and honest, many people trust them more than traditional stars.
Influencer marketing began with simple product mentions but has now grown into bigger partnerships. Influencers create campaigns, tell stories, and mix ads into their daily posts through videos, contests, or product reviews. In India, cheap internet and smartphones have made this trend grow fast, with millions of young people following influencers daily.
However, the trust that made influencers special is fading. Many now focus on earning money, blurring the line between real opinions and paid ads. Sometimes they hide sponsorships or exaggerate claims, which can confuse consumers. This raises concerns under consumer protection laws, as people may be misled. The challenge today is to balance influencer creativity and business profits with consumer safety and trust.
Legal Framework Governing Consumer Protection in India
The emergence of influencer marketing has prompted the Indian legal system to revisit the scope of consumer protection in the digital era. While traditional advertising was regulated through statutory mechanisms such as the Cinematograph Act, 1952 and the Cable Television Networks Regulation Act, 1995, the rise of social media influencers created a regulatory vacuum where promotional content often escaped scrutiny. This gap was addressed with the enactment of the Consumer Protection Act, 2019, the ASCI Guidelines for Influencer Advertising in Digital Media, 2021, and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, together forming the primary framework for regulating influencer marketing in India.
Consumer Protection Act, 2019 – The CPA introduced “misleading advertisements” as an unfair trade practice. Under Section 21, the Central Consumer Protection Authority (CCPA) can penalize not just manufacturers and advertisers but also endorsers, including influencers. Penalties can include fines up to ₹10 lakhs and even jail time, making this a landmark step in holding endorsers accountable.
ASCI Guidelines, 2021 – The Advertising Standards Council of India requires influencers to make clear and visible disclosures (e.g., #ad, #sponsored) whenever there is a material brand connection, whether paid or in-kind. Influencers must also verify claims before endorsing, especially for health or financial products. While not legally binding, these guidelines are widely followed and referenced in regulatory actions.
IT Rules, 2021 – Issued under the IT Act, these rules require digital platforms like Instagram and YouTube to set up grievance systems and remove unlawful or misleading content. Though not influencer-specific, they indirectly regulate the ecosystem by holding platforms responsible.
Together, these frameworks create a layered system: CPA ensures legal liability, ASCI promotes ethical practice, and IT Rules make platforms accountable. However, gaps remain: CPA enforcement is slow, ASCI lacks legal force, and IT Rules face criticism for overreach. India’s framework is promising but still fragmented, highlighting the need for stronger coordination and clearer enforcement.
Judicial Approach Towards Misleading Advertisements
Indian courts have historically taken a stern view against misleading advertisements. While most precedents relate to traditional media, their principles are directly applicable to influencer marketing.
- Horlicks Ltd. v. Zydus Wellness Products Ltd. (2019) – The Delhi High Court restrained Zydus from publishing misleading comparisons in advertisements, stressing that advertisements must not mislead consumers by exaggeration or omission.
- Colgate Palmolive (India) Ltd. v. Hindustan Unilever Ltd. (2008) – The Delhi High Court held that disparaging comparative advertising misleads consumers and amounts to unfair trade practice.
- Hindustan Coca Cola Beverages (P) Ltd. v. CCPA (2022) – The National Consumer Disputes Redressal Commission emphasized that consumers must not be deceived by advertisements exaggerating benefits.
By analogy, influencer promotions that exaggerate, misrepresent, or omit essential facts fall squarely within the ambit of misleading advertisements.
Global Perspectives on Influencer Marketing Regulation
In the United States, the Federal Trade Commission (FTC) has taken the lead in regulating influencer marketing. Its Endorsement Guides, updated in 2023, require influencers to clearly disclose brand ties, and in FTC v. Lord & Taylor (2016), the retailer was penalized for failing to do so.
In the United Kingdom, the Competition and Markets Authority (CMA) and the Advertising Standards Authority (ASA) insist on clear labels such as “Ad” or “Gifted,” with ASA v. PrettyLittleThing (2019) showing that misleading posts can attract sanctions.
Similarly, the European Union’s Unfair Commercial Practices Directive bans misleading commercial practices, and the European Commission’s 2022 guidelines stress disclosure and fairness in influencer promotions. Overall, global regulation trends toward stronger accountability, with India’s ASCI Guidelines (2021) making progress but still facing weaker enforcement compared to the FTC and CMA.
Consumer Rights and Influencer Liability
Influencer marketing has a big effect on consumer rights, especially the right to be informed, protected, and to get remedies. Under the Consumer Protection Act, 2019, consumers have the right to correct information about products and services. When influencers hide paid partnerships or exaggerate claims, they break these rights.
The E-Commerce Rules, 2020 and ASCI Guidelines, 2021 make it clear that influencers must disclose paid promotions. If they don’t, they mislead consumers and support unfair trade practices. For example, safety is at risk when influencers promote unsafe health products or financial schemes. Hidden sponsorships also affect the right to choose, while the right to redressal ensures remedies for those misled.
Courts have also stressed fairness. In Colgate Palmolive v. Anchor Health, the court said ads must be truthful and not misleading. This applies to influencer content as well. Influencer liability is therefore more than just a deal with brands—it is a legal and ethical duty to protect consumers.
Case Studies of Misleading Influencer Promotions
A clearer picture of influencer liability emerges when examining real-world controversies:
- Kim Kardashian and Morning Sickness Drug (U.S.) – In 2015, Kardashian promoted the drug Diclegis without mentioning its FDA warnings. The post was deemed misleading, and she had to issue a corrective statement. Though foreign, this case illustrates how celebrity endorsements can endanger public health.
- Indian “Crypto Influencers” and Financial Schemes – In 2021–22, several Indian influencers promoted unregulated cryptocurrency exchanges and investment schemes on YouTube and Instagram. Many investors suffered losses, leading SEBI to issue cautionary advisories . This incident reveals gaps in India’s regulatory framework.
- Patanjali Case – Though not an influencer case per se, the Delhi High Court in Patanjali Ayurved Ltd. v. Indian Medical Association held that false claims in advertisements about curing diseases violated consumer rights. If influencers had propagated these claims, liability would have extended to them as well.
- Beauty Influencers and Skincare Products – In 2022, ASCI flagged multiple Indian beauty influencers for not disclosing paid promotions of fairness creams. This reflected the need for transparency to ensure consumers make informed decisions about products that impact self-image and health.
These case studies underline that influencer marketing is not merely promotional but has the potential to cause consumer harm. Lessons from global jurisdictions indicate that proactive regulation, combined with accountability mechanisms, is crucial.
Challenges in Enforcement
Even though India has ASCI Guidelines, CPA 2019 rules, and e-commerce laws, making influencers follow these rules is still hard. Here are some of the problems:
- Jurisdiction Problems – Influencers work worldwide. For example, an Indian consumer could be misled by an influencer living outside India. This raises the question of whether Indian law can apply in such cases.
- Proving the Evidence – It is not easy to track fake or misleading posts, prove that an influencer is linked to a brand, and show that consumers were harmed. This often needs special digital tools that normal consumers don’t have.
- Lack of Awareness – Many people don’t complain about false ads because they don’t know their rights or feel the claim is too small to bother with.
- ASCI’s Limited Power – ASCI can warn influencers, but its decisions are not binding by law. Without stronger legal backing and real penalties, these warnings don’t have much effect.
- Exaggeration vs. False Claims – Courts in India find it tricky to decide what is just harmless exaggeration (like “the best soap in the world”) and what is a lie. Influencers sometimes take advantage of this grey area.
- Huge Number of Posts – With millions of influencer posts every day, it is impossible for regulators to watch and check them all.
These challenges show that simply writing laws about influencer responsibility is not enough. Stronger and smarter ways to enforce the rules are needed.
Balancing Freedom of Expression and Consumer Protection
A major issue in regulating influencer marketing is the balance between freedom of speech under Article 19(1)(a) of the Constitution and consumer protection laws. Influencers often claim that their endorsements are personal opinions. However, when money or brand partnerships are involved, such speech becomes “commercial speech.”
In Tata Press Ltd. v. M.T.N.L., the Supreme Court ruled that commercial speech is protected under Article 19(1)(a) but can face reasonable restrictions under Article 19(2), especially for consumer protection and public health. This means influencer endorsements are protected but may be regulated if they mislead consumers.
The Doctrine of Proportionality, applied in Modern Dental College and Research Centre v. State of Madhya Pradesh, says that limits on free speech must be reasonable, necessary, and proportionate. Using this rule, requiring influencers to disclose sponsorships or punishing false claims would count as fair restrictions.
The key is to separate genuine reviews (protected free speech) from deceptive promotions (commercial misrepresentation). Regulation should not block creativity or personal expression but should ensure influencers, who act like advertisers, follow rules of truth and transparency.
Suggestions
To make influencers more responsible in India, some important changes are needed. First, the Consumer Protection Act, 2019, should clearly include digital influencers as advertisers. This means influencers and brands would share the blame if they make false or misleading claims.
Influencers with very large followings should have to register with a special body, especially if they promote financial products. Just like financial advisors are regulated, these influencers could be checked by SEBI or another authority so they don’t mislead people about money matters.
There should be fines and punishments for repeat offenders. If influencers break the rules, ASCI or consumer courts could make them pay money or stop them from promoting products for some time.
Platforms like Instagram and YouTube should use clear and standard tags to show when a post is an advertisement. This would stop influencers from hiding paid promotions and help viewers easily spot them.
The government should run awareness campaigns to teach people about the risks of fake or misleading influencer promotions. Just like the Jago Grahak Jago campaign, this could help consumers make smarter choices.
Finally, because influencers often reach global audiences, India should work with international groups like ICPEN. This way, rules can be followed across countries to stop cross-border cheating.
Together, these reforms would make influencers more responsible, protect consumers, and still allow influencers to do business fairly.
Influencers should clearly show when a post is sponsored, using simple tags like #Ad so that even young people can understand. Brands and ad agencies must also share responsibility, since they benefit most from these promotions. Rules from consumer authorities should be simple and clear, ensuring safe products and banning harmful ads for minors.
To protect consumers, schools and campaigns should teach people how to spot fake or hidden ads. At the same time, enforcement should be fair—stopping harmful promotions without silencing creativity. Warnings, fines, or short bans are better than very harsh punishments.
Platforms like Instagram and YouTube should add tools to flag hidden ads and let users report misleading posts. Ethical influencers should be rewarded with badges or recognition, creating a positive culture where honesty is encouraged and trust is maintained.
Conclusion
Social media influencers have changed how brands reach people, making ads look more real and friendly. But when they hide sponsorships or promote unsafe products, it can mislead people. This creates new problems for the Consumer Protection Act, 2019.
The rules must balance consumer safety with freedom of speech. Influencers should be free to share their opinions and build their brands, but they also need to be honest. Fair and reasonable rules are important.
Good regulation should focus on three things: accountability, transparency, and fairness. Accountability means influencers and brands must take responsibility, transparency builds trust by showing when content is paid for, and fairness protects freedom while stopping hidden ads.
The law should guide influencers to act responsibly, not stop their creativity. As online shopping grows, strong but fair rules will decide if influencer culture helps people or takes advantage of them.
-BHAVANYA E K
-DHANALAKSHMI SRINIVASAN UNIVERSITY, TIRUCHIRAPALLI, TAMIL NADU