Legal Challenges in Influencer and Celebrity Fashion Collaboration in India

Authored By: Amik Chandra Paul

National Law University, Tripura

Abstract

Influencer and celebrity fashion collaborations have increased at a breakneck pace in India owing to the country’s eight hundred million strong internet users. However, this development has brought along certain legal issues that include misleading endorsements and consumers’ rights. This paper will be looking into the changing legal scenario as outlined in the Consumer Protection Act, 2019, ASCI’s Influencer Advertising Guidelines (2021) and CCPA’s Guidelines for Prevention of Misleading Advertisements (2022).

With the help of key decisions like Nikhil Jain v. Emami Ltd., Marico Ltd. v. Abhijeet Bhansali and Francis Vadakkan v. A-One Medicals, it can be concluded that the legal system gives considerable importance to holding individuals and entities responsible for making false claims, failing to provide proper disclaimer and for their unverifiable promotion. Although these regulations ensure transparency to some extent, there are still certain areas which require improvement, especially in the context of fast fashion industry and international collaborations.

Introduction

In today’s social media driven world, marketing through the use of influencers has been gaining popularity and has become one of the crucial components of the digital economy. This is particularly evident in India which boasts a user base of 800 million internet users. These influencers in platforms like Instagram, YouTube, and Twitter are more than just content creators, they are advisors who influence public opinion as well as consumer behavior. Yet with power comes responsibility. Influencers are misleading consumers because they do not fully disclose their payments for endorsements.

However, lot of times these promotions include low quality goods which do not meet their marketing claims of the product. The products that people end up buying shrink after being washed for the first time, irritate their skin, or are totally different from what is seen in photos. It became a reason for more and more complaints, returns, and even lawsuits. The problem in India is that some influencers promote few products and services that’re not good, for people. Sometimes these products and services cause people to lose money or get harm to the consumers. India has rules that say what influencers can and cannot do. These rules are not very clear. The law in India currently provides a combination of statutory provisions and guidelines for self-regulation.[1]

Background and conceptual framework

In the current digital environment influencers have become key players between brands and consumers. As influencers have been able to command consumer behavior, they are essentially contemporary brand endorsers and their opinions will have a huge impact on people’s buying decisions. The line between real advertising and false advertising can sometimes be blurred so questions of who is liable and whether the advertisements being published are true can be raised.[2]

But the problem arises when such endorsements lack integrity. It is essential to verify their authenticity before making any statements of such nature. They should mention whether they got paid for making those endorsements. In response to these problems, legislation has been passed to fight the problem of false and misleading advertising. The influencer marketing segment has seen exponential growth in India. The size of the fashion influencer marketing globally was in the range of USD 6.5-9.2 billion in the recent few years and is projected to grow in excess of USD 100 billion by the year 2034 with healthy growth which being witnessed in the Asian regions, especially in India. It is being dominated by fashion and lifestyle which is fueled by platforms like Instagram, YouTube and Twitter. In India, there are many laws to ensure safety for consumers. There are also policies for influencers and brands to follow. As fashion trends and online shopping gain popularity, the presence of fraudulent items in the market increases.

Many influencers make claims about products without fact checking if it’s of good quality. This can affect many consumers and leave them disappointed or with bad products. This is very complicated; people should be free to express their opinions but they must also remain truthful. As of now, influencer marketing has to be more cautious, and influencers must make sure the claims they are making are accurate or they risk facing charges, just like the brands. Influencers have to be more accountable for the promotions that they make, as the influencer market is massive.[3]

Legal Analysis

Consumer Protection Act, 2019 (CPA) this is the main law which states that, a misleading advertisement is one which contains a false description, exaggerates anything beyond truth or has concealed vital information. This action is being taken by the Central Consumer Protection Authority (CCPA) against those who infringe the Act. Fines are to be imposed of an amount up to 10 Lakh for the first offense and up to 50 Lakh in the subsequent offenses. Such persons can be debarred from endorsement for 1 to 3 years. Celebrities and Influencers will be treated to have the same responsibility.[4]

The ASCI Guidelines for Influencer Advertising in Digital Media (2021) legally obliges social media influencers and brands to disclose any “material connection” clearly, with the use of predefined tags such as #Ad, #Sponsored, #Collaboration etc. The rules, enforced from 14th June 2021, mandates that all disclosures must be clear and up front with no further action needed and that video content, live streams and podcasts adhere to precise timeframes unique for each platform. The content creator should verify any scientific or performance claims made by the brand, and must not be permitted to use cosmetic filters that exaggerate the “real life utility” of the product. Since both the influencer and the brand are equally accountable, any violation of the transparency norms could result in a formal referral by ASCI to the Central Consumer Protection Authority (CCPA) and subject to stringent statutory penalties that can extend up to 50 Lakhs for repeat offenses.[5]

The CCPA’s Guidelines for Prevention of Misleading Advertisements and Endorsements, 2022 were put in place to safeguard the consumers from any misleading advertisements and endorsements. These rules apply to advertisements carried in any form, through any medium. They are to be adhered to by manufacturers, service providers, advertisers and endorsers. There are specific guidelines against the practices of bait advertising (giving false advertisements of very low price) and surrogate advertising (promoting certain prohibited goods such as alcohol and tobacco in an indirect manner). The rules clearly state against false claims of free offers where there are concealed prices. Children are to be given special protection with special emphasis against any exaggerated advertisements or endorsement of restricted goods by celebrities. Similarly, celebrities or influencers when acting as endorsers have a responsibility to exercise due diligence in checking claims and disclose that there was payment for the advertisement. Disclaimer given should not attempt to hide any misleading information.[6]

Case law discussion

Nikhil Jain v. Emami Ltd (2024, Delhi Consumer Commission)

Introduction: The case of Nikhil Jain v. Emami Limited, a landmark judgment by the District Consumer Disputes Redressal Commission, Delhi, shed light upon the increasing worry of misleading ads in India. Emami’s cream named “Fair and Handsome,” which guaranteed fairness in three weeks, became part of the complaint based on its advertisement claims. It brought in the much-required focus to consumer protection and the responsibility of businesses towards the society.

Background of the case: Nikhil Jain had purchased the cream based on the misleading advertisements which promised significant results of fairness within a few weeks. Even after following the directions given on the packaging, the complainant failed to find any difference in his complexion. Hence, he filed a complaint stating that the claims were fake and it constituted an unfair trade practice according to the Consumer Protection Act.

Arguments by parties: The complainant, Nikhil Jain, insisted that the advertisements had created false hopes and misleading information. Emami in response stated that it was tested, and it depended on the individual’s health and lifestyle, including eating habits and exercise routines. However, the Commission noticed that these two conditions were neither informed nor given any attention in the advertisement or on the packaging.

Decision by the Commission: The Commission declared the advertisements made by Emami as false and deceiving. It levied a penalty of 15 lakh on the company as exemplary damages and 50,000 to the complainant for mental agony and compensation. The Commission also commanded Emami to discontinue with such misleading advertisements and warned them against making exaggerated and unverified claims about their products without appropriate disclaimers and proofs.

Significance of the case: This judgment proved very significant in establishing the concept that the trust of consumers must never be jeopardized through false and deceptive claims. This set a guideline and precedent for severe scrutiny of the cosmetic and wellness products advertisements and became in line with the Guidelines for Prevention of Misleading Advertisements and Endorsements, 2022.

Conclusion: The case of Nikhil Jain v. Emami Ltd clearly defined the initiative of judiciary in safeguarding consumers from fraudulent trade practices. It emphasizes the need for transparency and fair dealing in advertising while at the same time warning the businesses that the system shall be rigid against the deceiving ones.[7]

Marico Ltd. v. Abhijeet Bhansali (Bombay High Court, 2019)[8]

The Marico Ltd. V. Abhijeet Bhansali case decided by the Bombay High Court is a milestone for the regulation of digital content and accountability of influencers. Marico Ltd., the manufacturer of famous Parachute Coconut Oil, brought a suit against a YouTuber, Abhijeet Bhansali for posting a video in which he critiqued the company’s product. Bhansali in the video mentioned that the product is not pure or beneficial as portrayed and suggested alternative solutions. Marico argued that the video made false and misleading statements amounting to commercial disparagement and defamation.

The main question before the Court was whether a YouTube video making criticism can be protected under freedom of speech or it is not protected as a false and misleading information harming the company. Bhansali argued it was an exercise of free speech and awareness to consumers. But Court mentioned that, freedom of speech as guaranteed under Article 19(1)(a) is for the fair comment but it cannot mean a substantiated scientific fact stated in the nature of being unverified. According to the Court, his video stated false facts without support and was likely to mislead customers.

The Bombay High Court ruled in favor of Marico Ltd and directed Bhansali to take down his YouTube video. It reiterated that in relation to claims made about a product, digital content creators and influencers would be governed by the same set of rules as traditional media would be in relation to such claims. The ruling upheld the concept that criticisms should be made in a fair manner with factual support, exaggerated or misleading statements could constitute unfair trade practices and disparagement.

The decision is an important step because it addresses the emerging power of digital media and accountability for the content created online. This decision aligns with the CCPA guidelines for Prevention of Misleading Advertisements and Endorsements, 2022 which expects endorsers to take care in verifying the facts and make appropriate claims when making their endorsements or criticisms. The judgement establishes a standard that sets bounds for the freedom of speech to be used effectively to make the customers aware without defaming the company.

Conclusion, in the case of Marico Ltd. V. Abhijeet Bhansali, it can be observed that judiciary acknowledged the power that lies with the digital media and also the fact that such a power also comes with a great deal of responsibility for content creators including influencers that ensures accurate and fair information.[9]

Francis Vadakkan v. A‑One Medicals & Ors. (Kerala District Consumer Commission, 2021)

The main issue is whether a manufacturer, seller and celebrity endorser of a hair cream are responsible for misleading advertisement about the hair cream promising ‘threefold hair growth in six weeks’ and for which no result could be obtained.

Consumer protection act 2019 prohibits misleading advertisement and deficiency of service. Endorser is responsible for promoting product without due diligence; the disclaimers can be in the smallest font and in the back cover but no relief for him.

The complainant Francis Vadakkan had bought the hair cream from Dhathri Ayurveda, sold by the seller A-One Medicals and endorsed by actor Anoop Menon. Francis noticed no change in his hair for about 7 weeks using this cream. The Commission observed that the advertisement by the seller raises false hopes, while the endorser himself confessed that he had not even used the hair cream. While the manufacturer attributed the cause to the disclaimers, these were very small and in fine print. The Commission held the seller responsible for promoting the product without taking any steps for verification of product credibility.

In Conclusion, the District Consumer Disputes Redressal Forum held all three parties responsible, ordering Dhathri Ayurveda to pay 10,000 compensation, A-One Medicals to pay 3,000 in legal costs, and Anoop Menon to pay 10,000 for endorsing a product without verification of its credibility. The order is of a special mention because it penalizes a celebrity directly; according to the CCPA Guidelines, 2022 advertiser, seller and endorser have to be responsible for all misleading advertisements.[10]

Critical analysis and findings

While the existing regulations in India regarding influencer and fashion advertisement are quite impressive, there is a certain gap in its implementation. To begin with, the existing laws prescribe a fine line regarding punishment for any act of false endorsement and also the need for clarity in terms of advertisement so that poor or dishonest fashion advertisement does not thrive in the minds of customers. Moreover, the observation in the Patanjali case also reflects that the more famous someone is, the greater responsibility he or she holds to face consequences due to their influence and should not avoid responsibility by virtue of being famous.[11]

The sector still suffers from many issues despite being made conscious about these: the foremost of these issues is regulation, many complains are filed to ASCI but thousands of misleading posts go unanswered; although CCPA has begun taking measures they cannot cover the enormity of the number of social media posts. Disclosure is still a drawback where most of the celebrities don’t disclose their sponsors, use generic tags in their endorsement thus tricking the viewers into believing that the advertisements are personal reviews; careless in due diligence and endorsement campaign for fast fashion brand where celebrities promote products without proper research and analysis about it; they do not even take the necessary quality checks and thus sell Chinese manufactured copies and duplicate products under the guise of designer brands for a high price. There are issues with regards to contractual and intellectual property laws as celebrity collaborations may fail to implement stringent contractual agreements with regards to ownership of IP, use of content and exclusivity which give rise to disputes; the challenges get more complex in trans-border collaborations with global brand endorsements by international celebrities, dealing with several international laws creating problems with jurisdiction and lack of immediate enforcement of rules. The victims of all this are the consumers and their families (more so the youngsters as they are impressionable) as they not only end up spending hard earned money but lose their trust and it affects the reputation of the fashion industry in a negative way.

The results indicate that although there are existing legal provisions, their awareness among the influencer community is minimal, and they are frequently compelled by brands to indulge in exaggerations. Self-regulation is inadequate because voluntary codes can neither solve nor control the volume of the problem. It is vital for greater monitoring on platforms and quicker redressal to make sure that those at fault are held accountable. On comparing with other regulatory measures in places like the United States with its FTC guidelines, while India may not be lagging far behind, there remains a need for stricter enforcement suited to the fashion sector, including quality allegations and replica claims.[12]

Conclusion

There are many advantages offered by influencer marketing, but along with it come many responsibilities too. The legal structure provided through the Consumer Protection Act and ASCI guidelines is certainly a progressive one in ensuring accountability in digital advertisements. But there is much more that needs to be done.[13]

Influencer and celebrity endorsement marketing is no longer an experiment but a multi-billion rupees ecosystem that forms the bedrock of brand marketing. But they are also a highly regulated practice with personal liability for endorsements. There are two rules that influencers and celebrities have to follow: the CPA and ASCI Guidelines. These rules say that they have to be honest and make sure they are doing the thing. If they do not know about these rules that is not an excuse. If they do something they can hurt their reputation and also have to pay money.

For influencers, brands and the people who work with them the best way to do things is to be open and honest, with people who might buy their products. They have to make sure what they are saying is true. For the people who give money to these companies and the lawyers who work with them they need to make sure they are following all the rules when it comes to endorsements[14].

Reference(S):

[1] Understanding Legal Accountability in Influencer Marketing and Consumer Protection in India

[2] Fashion Influencer Marketing Market Share Report, 2034

[3] Looks Like Content, Acts Like Ads: The Legal Risk in E-Commerce’s Influencer Economy – azb

[4] eng201935.pdf

[5] ASCI Releases Influencer Advertising Guidelines For Digital Media Effective 14 June 21 Onward – Khaitan & Co

[6] CCPA’s guidelines on ‘Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’ | CAG

[7]M/S Emami Ltd. vs Nikhil Jain on 1 May, 2017

[8]Marico Limited vs Abhijeet Bhansali on 15 January, 2020

[9] Marico Limited vs Abhijeet Bhansali on 15 January, 2020

[10] Anoop Menon vs Francis Vadakkan on 27 September, 2022

[11] Celebrities & Influencers are liable for Misleading Advertisements: Supreme Court | IPRMENTLAW