10 things you must know about the new influencer endorsement guidelines issued by the CCPA

With great (social media) influence comes great responsibility.

This is the essence of the new CCPA guidelines. Here:

This is not a new development. ASCI had earlier come up with similar guidelines for influencers/celeb endorsers. However, the same were observed more in their breach than in compliance.

This was because ASCI guidelines are only advisory/persuasive in nature and there are no legal consequences for their breach.  

The new CCPA guidelines attempt to change that and ensure that there are real consequences on influencers violating the guidelines. 

If you are an influencer or a counsel advising one, here’s what you should know:

  1. Influencers can now be held liable for false and misleading advertisements.
  2. Influencers are now under an obligation to satisfy themselves of the veracity of the claims that they make. 
  3. They need to ensure that the recommendations they make are based on adequate information’. (What would qualify as ‘adequate information’ is something that the law doesn’t really clarify! Mind you, this would become very important when it comes to technical products which the influencer may not be in a position to test. In other words, what is the level of due diligence expected of an influencer before endorsing is a bit of a grey area currently!).
  4. Influencers may also endorse a product/service basis their own experience with it.
  5. In a nutshell, the intent is that their opinion should be credible and based on their genuine and currently held opinion. This has two parts : First, their endorsement should be genuine. This is a no brainer. A celebrity or an influencer cannot simply say things on camera just because the script says it. They would have to satisfy themselves as to correctness of those claims. Further, they need to adequately inform themselves of the current state of the product/service. (Meaning – If you used something a decade back, you may have to revisit the product/service to be able to opine/comment with credibility now).
  6. It is only if they satisfy the above that they would be able to avoid liability for false and misleading advertisements and take the ‘due diligence’ defence. 
  7. Additionally, influencers are now under an obligation to disclose any ‘material connection’ that they may have with the company providing the good/service. 
  8. For instance, they would have to clearly disclose that their post is a genuine review or a paid or sponsored advertisement. They would also have to disclose if they have a financial interest (equity, for instance) in the company manufacturing the product/service. All of this with a view to ensure the weight and credibility of an endorser’s opinion. (Material connection may not necessarily be a monetary relationship/consideration but also may include other benefits such as free product, etc etc.).
  9. The law has some serious bite. The violation of the above may lead to a penalty of up to 10 Lakh for the first violation and up to 50 Lakhs for subsequent violations. Additionally, Influencers may also be prohibited from endorsing products, and face a ban for up to 1 year for the first violation and up to 3 years for subsequent violations. 
  10. And, it doesn’t end here. If an order directing payment of penalty or discontinuance of endorsements is not complied-with, there may be a jail sentence as well. 

“it is a no brainer that Influencers/Celebrities should be held accountable for the products they endorse and what they say. With great influence comes great responsibility. Having said this, exercise of ‘due-diligence’ by the influencer (into the correctness of claims relating to the product) should be a defence against liability. It indeed is – under the present law. In this : there are certain questions unanswered. For instance, the expectation of the law from the influencer in relation to the scope and extent of this ‘due diligence’ should be made clearer so as to make it easier for the influencers to be compliant and follow the letter and the spirit of the law. Similarly, more clarity is needed on the issue of disclosures as to “material connections between the influencer and the brand”

Bharat Chugh

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  1. SR AGARWAL

    Respected Sir, Grateful to you for timely article with rules download option on influencer and endorsement.In these days of Social media, the article is very useful as now we can take up with regulatory authorities if some endorsement is not proper.One of the interesting things that research shows is that Influencers/Celeb.are overconfident in a lot of ways and think that they’re smarter than the average person; they think that they:re more moral than the average person. But more recent research shows that they actually tend to be underconfident in a lot of other ways.
    Sir,pl.keep on writing and sharing articles on new laws.
    Kind Regards/SR

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