THE LEGAL GREY FIELD OF INFLUENTIAL MARKETING IN INDIA: WHO IS ACCOUNTABLE?

AUTHOR : NITHYA PRAKASH

A single post can sell a dream — or may mislead millions. But when things go wrong, who keeps the blame: brand, stage, or face with one million followers?

INTRODUCTION

India is looking at the golden age of influencer marketing, with an explosion of Instagram reels, YouTube vlogs, and paid brand collaborations. From fashion tips to crypto investment, consumer choices in various sectors are now shaped by influencers. But growing power comes with growing responsibility — and this is where the legal grey zone begins.

What happens when an influencer causes the skincare product loss recommended by them? Or when a crypto scheme propagated by a celebrity collapses? Can the influencer be held responsible? Are current laws enough to protect Indian consumers from misleading online endorsements?

This article explores the evolving world of influencer accountability in India — and what the law says (or doesn’t).

EMERGENCE OF INFLUENCER ECONOMY IN INDIA

India's influencer economy has grown rapidly, with more than 100 million users active on creator platforms. Many of these influencers earn attractive incomes through brand endorsements, affiliate marketing, and product reviews. This trend is not limited to urban hubs — Tier-2 and Tier-3 cities, and even rural areas, are now witnessing large-scale impacts.

Influencers are rapidly replacing traditional advertising formats, thanks to their relatability, authenticity, and engaged audiences. Unlike traditional advertisements, which are clearly labeled and regulated, influencer content often mixes personal storytelling with commercial interests.

A recommendation can look like a casual tip from a friend, making it more inspiring but also harder to regulate. This seamless blend of commerce and personal opinion has created a need for clarity to distinguish genuine advice from misleading promotion.

THE CURRENT LEGAL LANDSCAPE

1. ASCI Guidelines (2021 and 2023 updates)

These guidelines require influencers to clearly disclose paid collaborations using specific hashtags such as #AD or #Sponsored, especially within the first few seconds of a video or at the start of a caption. Misleading or unclear disclosures — such as vague tagging or language in comments — are prohibited.

For example, if an influencer promotes a skincare product claiming immediate fairness or anti-aging results, they are expected to ensure that such claims are scientifically valid.

However, ASCI is a self-regulatory body without statutory authority. It can issue recommendations or request corrections but cannot impose fines or initiate legal proceedings.

2. Consumer Protection (E-Commerce) Rules, 2020

These rules primarily affect influencers promoting products on digital marketplaces. Under Section 21 of the Consumer Protection Act, 2019, endorsers can be held liable for misleading advertisements.

If an influencer deliberately or negligently makes false claims, they can face financial penalties — up to ₹10 lakh for the first offense and up to ₹50 lakh for repeat violations.

Influencers are expected to perform due diligence before making public claims. Promoting products or services with exaggerated or misleading statements such as "guaranteed returns" or "instant weight loss" can expose them to consumer litigation or regulatory investigation. This framework signals a shift from voluntary ethics to enforceable accountability in digital marketing.

CAN INFLUENCERS BE SUED FOR WRONGDOING?

Yes — influencers can be held accountable under Indian law. The Consumer Protection Act explicitly includes endorsers within the scope of liability for false or misleading advertisements. This ensures that celebrities, digital creators, and brand ambassadors are not immune when their promotions mislead the public.

Legal responsibility arises not only from intentionally false claims but also from careless promotion without verification. Influencers promoting dubious health products, financial services, or tech gadgets may face legal action if their content causes consumer or financial losses.

CASE STUDIES

Case 1: Ranveer Singh and misleading health advertisementIn 2022, Ranveer Singh was criticized for promoting a health supplement claiming to "build muscles in 10 days." Health experts challenged the scientific validity, prompting public complaints. The ad was removed, and Singh’s team issued clarifications. This incident highlights that even high-profile celebrities can face regulatory scrutiny.

Case 2: Crypto Promotion and ImpactDuring the Crypto Boom between 2021 and 2022, many influencers and celebrities promoted crypto exchanges without highlighting risks. When platforms like Vault and FTX collapsed, Indian investors suffered major financial losses. Although no influencer has been successfully prosecuted, this prompted SEBI and the Finance Ministry to issue guidelines discouraging irregular crypto promotions.

Case 3: Instagram fake product sellingIn 2023, several Indian influencers promoted fake luxury items, weight-loss teas, and unverified beauty creams. Despite consumer outrage and media coverage, legal action was limited. These cases demonstrate how regulatory gaps allow misleading promotions to persist, harming consumers.

BUNDLING LEGAL GREY ZONE IN INFLUENCER MARKETING

India's influencer marketing sector remains largely unregulated due to the absence of compulsory licensing. Anyone can become an influencer without legal obligations to disclose paid promotions. The blurred line between personal content and advertisements often results in missing disclosures, while regulatory enforcement is weak, and consumer protection mechanisms remain unclear.

Social media platforms also lack continuous enforcement of advertising disclosure rules.

To address these gaps, India must:

• Introduce a dedicated influencer regulation bill, mandating digital endorsement licenses.

• Give ASCI statutory authority to impose penalties.

• Require platforms like Instagram and YouTube to monitor and remove misleading content.

• Launch legal literacy programs to promote responsible advertising.

• Establish a digital consumer protection cell for fast, accessible recourse.

Strengthening these areas will ensure accountability, transparency, and consumer protection in India’s growing digital economy.

CONCLUSION

Influencers are no longer just entertainers or content creators — they are powerful digital opinion-makers shaping public perception and purchase decisions. When this influence is misused, consumer losses can be real and irreversible.

If influencers can profit from their reach, they should also bear responsibility for the impact of their endorsements. India must move beyond voluntary codes and establish clear, enforceable legal rules to regulate influencer marketing.

The goal is not to stifle creativity but to protect trust. In a digital-first economy, trust is the most valuable currency — and misleading influence, in every sense, is theft of that trust.

"In the digital age, there is power in influence — and without accountability, that power is a threat to consumer confidence."