Are marketplaces required to maintain compliance with ASCI influencer guidelines?

With the rise of social media influencers, influencer marketing has become a significant tool for promoting products online. However, to protect consumers and maintain ethical advertising practices, marketplaces in India are required to comply with the Advertising Standards Council of India (ASCI) guidelines for influencer promotions. These guidelines are designed to ensure that disclosures are clear and that consumers can distinguish between sponsored content and genuine recommendations. Failure to comply with these standards can lead to legal consequences for the marketplace.

ASCI Guidelines for Influencer Marketing

Influencer Disclosure

ASCI requires that social media influencers clearly disclose when their posts or promotions are sponsored or part of a paid partnership. This includes:

• Using labels such as #Ad, #Sponsored, or #PaidPartnership in their posts, stories, or videos, making it clear to followers that the content is not an organic, unpaid recommendation.
• Clear visibility of the disclosure in the post ideally in the first few lines or at the beginning of a video, ensuring that the consumer immediately knows that the content is promotional.
• Avoiding the use of ambiguous language that might mislead followers into thinking the promotion is a personal opinion, rather than an advertisement.

Impact on Marketplaces:

Marketplaces are responsible for ensuring that sellers or influencers using their platform for promotions follow these guidelines. This means that the platform should monitor influencer campaigns to ensure proper disclosure and compliance with advertising ethics.

Ethical Advertising and Transparency

The ASCI guidelines emphasize that influencers must not make false claims about products. They must ensure:

• Honesty and transparency in their promotion, avoiding misleading statements about product effectiveness, benefits, or pricing.
• Substantiated claims: Influencers should only promote products they believe in or those that are backed by appropriate proof, such as certifications, reviews, or scientific data.

Role of Marketplaces:

Marketplaces must ensure that any promotional content from influencers on their platform does not violate these principles. This includes:

• Ensuring that product descriptions, influencer endorsements, and ads on the platform are factually correct and do not deceive consumers.

Target Audience Consideration

ASCI guidelines also specify that influencer marketing should be conducted responsibly, especially when the target audience includes minors or vulnerable groups. Influencers should not promote products that are harmful or unsuitable for certain demographics, such as those under 18 years of age.

Marketplaces' Responsibility:

Online marketplaces should ensure that the products being promoted by influencers on their platform adhere to these standards, ensuring that unethical products or those not suitable for the target audience are not marketed.

Content Ownership and Intellectual Property

Influencers must ensure they have the rights to use any content, logos, or trademarks that appear in their promotional posts. Using someone else's intellectual property without permission can violate copyright or trademark laws.

Marketplaces' Responsibility:

Marketplaces need to monitor influencer content for potential IP violations and ensure that influencers are using content they are authorized to promote, avoiding any unauthorized use of third-party materials.

Consequences of Non-Compliance

Legal Action and Penalties

If marketplaces do not ensure that influencers on their platform comply with the ASCI guidelines, they may face:

• Penalties or warnings from the ASCI for promoting non-compliant content.
• Lawsuits from consumers or competitors if misleading or deceptive influencer content leads to consumer harm, such as purchasing subpar or ineffective products.
• Regulatory scrutiny by consumer protection agencies, which can impose fines or mandates to correct the platform's influencer practices.

Loss of Trust and Consumer Backlash

Failure to comply with influencer marketing guidelines can erode consumer trust:

• Consumers may lose trust in the marketplace if they feel that influencer promotions are misleading or lack transparency.
• Negative reviews or public backlash may affect the marketplace's brand image and lead to declining sales.

Reputational Damage

If a marketplace regularly hosts influencer content that does not comply with ASCI guidelines, it may be seen as an unethical platform that tolerates misleading advertising. This can:

• Harm the marketplace’s reputation among both consumers and regulatory authorities.
• Affect partnerships with brands and advertisers who prioritize ethical marketing.

Increased Scrutiny from Regulators

Non-compliance with advertising standards can result in increased scrutiny from regulatory authorities, including:

• Investigation into marketing practices.
• Mandatory implementation of corrective measures.
• In some cases, platforms may be required to compensate consumers who were misled by influencer promotions.

Example

Scenario:

An online marketplace, ShopSphere, hosts a campaign where several social media influencers promote a weight loss supplement. However, some influencers fail to disclose that they are being paid for the promotion and make exaggerated claims about the product's benefits, such as guaranteed weight loss without diet or exercise.

Steps ShopSphere Might Face Legal Scrutiny:

• ASCI Investigation: The ASCI receives complaints that influencers failed to disclose their paid partnership and made misleading claims about the weight loss supplement. They investigate whether ShopSphere has complied with the guidelines for influencer promotions.
• Consequences: If ShopSphere is found to be non-compliant, they could face fines and a demand to remove the misleading content. Influencers may also face sanctions for failing to follow disclosure rules.
• Reputation Damage: As a result of the misleading promotions, ShopSphere faces negative media coverage, with consumers accusing the platform of supporting deceptive advertising. Trust in the platform declines, leading to decreased user engagement and sales.
• Corrective Measures: ShopSphere may be required to issue a public apology and compensate affected consumers. The platform might also need to implement stricter guidelines for influencer marketing and review its advertiser policies.

Conclusion:

Yes, marketplaces are legally required to ensure compliance with ASCI influencer guidelines. These guidelines aim to promote transparency, honesty, and ethical advertising in influencer promotions. Marketplaces must ensure that influencers on their platform disclose paid partnerships and avoid misleading claims. Failure to comply with these guidelines can result in legal consequences, reputational damage, and consumer backlash. By following ASCI's rules, marketplaces can protect themselves from regulatory scrutiny and maintain consumer trust.