Are influencer endorsements on e-commerce platforms considered advertisements under ASCI guidelines?

With the rise of influencer marketing, many e-commerce platforms now rely on social media influencers to promote their products. Influencer endorsements often appear as authentic recommendations, but are they legally considered advertisements under Indian law?

The Advertising Standards Council of India (ASCI) sets guidelines to ensure transparency and ethics in advertisements. But do these guidelines apply to influencer posts on platforms like Instagram, YouTube, and TikTok, especially when these posts promote products listed on e-commerce websites?

Legal and Regulatory Framework Regarding Influencer Endorsements

ASCI Guidelines for Endorsements

• The Advertising Standards Council of India (ASCI) provides a clear framework for advertisements to ensure they are truthful, transparent, and not misleading. The guidelines state that any endorsement or promotion of a product or service, whether through traditional media or social media platforms, is subject to the same rules as conventional advertising.
• Influencer endorsements, even if they are posted on social media or e-commerce platforms, fall under the definition of advertisement if they are meant to promote a product or influence consumer behavior.
• ASCI’s Guidelines for Influencer Advertising (2021) explicitly outline the responsibilities of influencers and e-commerce platforms when it comes to disclosure and honesty in promoting products.

Influencer Disclosures and Transparency

• Transparency is a key principle under the ASCI guidelines. Influencers are required to disclose that their posts are sponsored or paid partnerships if they are being paid or receiving products in exchange for promotion.
• The ASCI guidelines mandate that influencers must use clear and conspicuous disclosures like hashtags such as #Ad, #Sponsored, or #PaidPartnership to ensure that consumers are aware the content is a form of advertisement.
• Failure to disclose or misleading endorsements could result in penalties or the removal of the content, and platforms may be held accountable for failing to ensure such disclosures are made.

E-Commerce Platforms' Responsibility

• E-commerce platforms that host influencer promotions have an added responsibility to ensure compliance with ASCI guidelines. They must ensure that sponsored content posted by influencers does not mislead consumers about the nature or quality of products.
• The platforms should also ensure that product listings and promotions by influencers meet the requirements set forth by consumer protection laws and advertising standards, such as the Consumer Protection Act, 2019, and The Consumer Protection (E-Commerce) Rules, 2020.

Consumer Protection Act, 2019 & E-Commerce Rules

• The Consumer Protection Act, 2019 protects consumers from misleading advertising, including false or deceptive endorsements.
• Under The Consumer Protection (E-Commerce) Rules, 2020, e-commerce platforms must ensure that the information provided by third-party sellers (including influencer marketing posts) is accurate and truthful.
• Influencers who promote products must disclose any financial connection to the brand or seller, and this requirement extends to both traditional and digital endorsements.

Influencer Marketing and Fair Practices

• The ASCI guidelines promote fair advertising practices by ensuring that influencers do not make exaggerated or unsubstantiated claims about products.
• Influencers must only endorse products they have genuinely used or believe in, and claims made about a product must be substantiated by facts or evidence.

Key Responsibilities for Influencers

• Clear Disclosure of Paid Content: Influencers must use hashtags such as #Ad, #Sponsored, or #PaidPartnership when promoting products or services. This ensures the audience is aware that the post is a form of advertising.
• Avoiding Misleading Claims: Influencers must not make false claims about products. If they state that a product cures a health issue or offers specific benefits, they must have evidence to back up these claims.
• Endorsements must be truthful and must reflect the personal experience or genuine opinion of the influencer.
• Adherence to Ethical Advertising: Influencers must avoid promoting harmful or prohibited products (e.g., alcohol, tobacco, or adult products, as per legal restrictions) and must follow the guidelines set for ethical marketing.
• They should also avoid promoting unrealistic beauty standards, which could negatively affect consumer health or well-being.

Responsibilities for E-Commerce Platforms

• Ensuring Compliance with ASCI Guidelines: E-commerce platforms that host influencer promotions must ensure that these promotions comply with the ASCI guidelines. This includes ensuring that influencers are following disclosure rules, and that the content being posted is accurate and not misleading.
• Platforms should also monitor influencer activity to ensure that no misleading products or false claims are promoted through their channels.
• Managing Seller and Influencer Content: Platforms should take necessary action, such as removing content or reprimanding influencers, if any post violates advertising standards or consumer protection laws.
• They must ensure that product descriptions, reviews, and endorsements are honest, and ensure that any deceptive practices are immediately addressed.
• Protecting Consumer Rights: E-commerce platforms are responsible for protecting consumer rights by ensuring that the advertisements or endorsements of products do not violate the Consumer Protection Act or mislead customers regarding product quality, price, or efficacy.

Example Case

• Imagine an influencer, X, who regularly posts product reviews on Instagram for gadgets. A popular e-commerce platform, E-Shop, collaborates with X to promote a new smartwatch. X posts a review with a caption: This smartwatch has the best features for fitness tracking and is the most affordable on the market. However, X fails to disclose that the post is sponsored and that they received the product for free.
• Issues Identified:
• Lack of Disclosure: The post does not clearly state that it is a sponsored post.
• Exaggerated Claims: The claim that the smartwatch is the most affordable may not be true, as there are other brands offering similar features at lower prices.
• E-Commerce Platform's Responsibility: E-Shop did not ensure that X followed the ASCI guidelines and provided adequate disclosure.
• Outcome:
• Consumers file a complaint with the ASCI, and the E-Commerce Platform and Influencer X are found to have violated the ASCI guidelines for failing to disclose the paid partnership and making misleading claims.
• Both X and E-Shop are asked to remove the post and issue a public apology. Additionally, E-Shop is warned to ensure that future influencer partnerships comply with ASCI guidelines to avoid penalties.

Conclusion

• Yes, influencer endorsements on e-commerce platforms are considered advertisements under the ASCI guidelines. Both influencers and e-commerce platforms have legal responsibilities to ensure disclosure, accuracy, and transparency in advertising practices. Influencers must clearly disclose paid partnerships, avoid making false claims, and ensure their promotions are aligned with ethical advertising standards. E-commerce platforms must monitor these activities to ensure compliance and protect consumer interests.