ASCI – Influencer Ad Guidelines – Need for a Legal Binding Framework
ASCI – Influencer Ad Guidelines – Need for a Legal Binding Framework
In recent times, we have witnessed the rise of Influencer Marketing as a very popular advertising medium. With its reach rooted in social media (such as YouTube, Instagram, Snapchat, etc), it has proven a very effective new marketing frontier for almost all types of brands globally. It has thus posed a challenge for law to regulate, as it does involve the traditional advertiser and consumer, but in addition, it also involves the Influencer. This has necessitated a new and innovative set of rules of governance, more so from the point of view of both advertising businesses and consumers, since social media has blurred the line between fans / followers and consumers, and those between online social interactions and advertising. This has posed challenges to the understanding of consumer rights, and advertiser rights and obligations, in the backdrop of unfair trade practices (UTP)1 and consumer protection. With the emergence of a distinct new category called Influencers, brand promotions these days are nothing like advertisements of yore that were produced by advertising houses for businesses, and the cast of such advertisements had no identity regarding the B2C relationship. This new relationship is B2I2C, and it needs rules, rules to govern unfair trade practices in this new paradigm. This post will touch only upon consumer centric laws, and regulations, and mention details of other laws applicable to this B2I2C relationship.
The recent Guidelines for Influencer Advertising in Digital Media issued by the Advertising Standards Council of India2 (hereinafter “ASCI”) is a precipitation of such a need. Their governing bases inter alia are misleading by omission, and abuse of trust of consumers, or exploitation of their lack of experience, or knowledge.
What the ASCI Guidelines state:
The ASCI Guidelines, exhaustively define an Influencer,3 and this definition is unhindered by the medium of influence. However, the Guidelines cover content only over Digital Media such as internet, on demand platforms, cellular/mobile communications, digital television, non-standard television, digital delivery home entertainment, and digital terrestrial television.4 So say for instance, a celebrity would not be covered for advertising over hoardings, or Movie Theatre advertisements, but would be covered when the same advertisement or promotion is via his Instagram account or YouTube channel. The definition of Influence also includes Virtual Influencers.5 The guidelines make it mandatory for Influencers to disclose a Material Connection between the Influencer and the advertiser. The Guidelines define a Material Connection as a connection that may affect the weight or credibility of the representation made by such Influencer and includes monetary and non-monetary benefits/incentives, free products with or without any conditions attached including those received unsolicited, discounts, gifts, contest and sweepstakes entries, trips or hotel stays, media barters, coverage, awards or any family or employment relationship, etc.
Influencer advertisements published over social media (including vicarious posts, such as those by Advertisers on their own handle or page tagging an Influencer’s handle or page) are necessitated to carry Disclosure Labels clearly identifying such publications as advertisements. Requirement of Disclosures6 are necessitated by the existence of a Material Connection, even though the evaluations is unbiased. Likewise, absence of a Material Connection does not necessitate any Disclosure, wherein an Influencer purchases a product, or service or happens to like the same and informs their audience about the same. The Nature/Representation of Disclosures need to be upfront, hard to miss, should not be buried in a group of hashtags, or links. For photographic publications disclosures need to be superimposed upon such photograph. For videographic publications, prescribed time frame for Disclosures is envisaged. Live Streams should carry such Disclosures at the beginning and end of such live stream, and for audio media, at the beginning and end of the audio, and before and after each break.
Disclosures should be simple and commonly understood, and disclosure labels are exhaustively enumerated.7 Disclosures need to be in the language of the publication. Virtual Influencer should additionally disclose its identity as such. Both advertiser and Influencer are jointly and severally liable for adherence to the Guidelines. It is the advertiser’s responsibility to ensure such adherence and the language seems to impose a primary responsibility upon an advertiser, even if not so stated in express terms. Influencers are burdened with the sole responsibility to review and satisfy themselves with the substantiation of claims of the advertiser. However, the nature of this “satisfaction” has not been defined.8
Here it is pertinent to note that ASCI is a self-regulatory voluntary body, and is of a non-governmental nature. Thus its regulations, guidelines, etc. lack teeth, that is to say they lack legal enforceability. Nevertheless, the ASCI Guidelines have probably been necessitated to ensure inter alia contractual inclusion of these Guidelines by advertisers and Influencers in their engagement contracts. Thus in the absence of specific and/or clear binding legal framework regarding Influencer Marketing in India, these Guidelines are merely advisory.
We shall visit these issues after a brief discussion of similar regulations in the USA and UK.
pari materia Regulations:
The Federal Trade Commission in the USA (“FTC”) does not define the term Influencer in its Disclosures 101 for Social Media Influencers brochure9, but rather relies upon a more socially acceptable and/or dynamic understanding of the term, to be interpreted in situ. A Material Connection is defined as being one of personal, family, or employment relationship or any type of financial relationship. The definition is similar to the ASCI Guidelines. Mentioning of a Material Connection is essential even when the said Influencer is not asked by the brand to mention a particular product so mentioned, and even when an Influencer thinks that the said evaluations are unbiased. An endorsement is stated to include tags, pins, likes, and similar other types of expressions conveying that an Influencer likes a brand or a product. The absence of a Material Connection precludes a disclosure. Foreign Influencers are covered by US Laws if the said post affects US consumers in a foreseeable manner, and not to the exclusion of applicability of foreign laws.10 Unambiguity, proximity, language, truth, and honesty, etc requirements are also similar to those of the ASCI Guidelines. In FTC v. Teami, LLC, & Ors.11, FTC brought an action against the Defendants, a marketer of teas and skincare products charging them for promotion of products using deceptive health claims and endorsements by well-known social media influencers who did not adequately disclose that they were being paid to promote its products. Defendants also claimed without reliable scientific evidence that their Teami 30 Day Detox Pack would help consumers lose weight, and that its other teas fight cancer, clear clogged arteries, decrease migraines, treat and prevent flus, and treat colds. The Defendants settled the charges with FTC.
The Competition & Markets Authority of the UK (“CMA”) has issued a Guidance regarding Social Media Endorsements.12 Herein, Influencers have been defined as popular bloggers, vloggers, celebrities, and social media personalities. Disclosures are the usual as per FTC. However, past relationships with brands, products, or services, going back to a reasonable period of 1 year are also to be disclosed. Promotions need to be transparent, easy to understand, unambiguous, timely and prominent, and apparent without the need for people to click for more information, no matter what type of device they are using to view the post. Thus disclosures have to be made upfront. Terming posts as an ‘Advertisement Feature’ or ‘Advertisement Promotion’, and hashtags including #Ad, #Advert, and using the ‘Paid Partnership’ tool on Instagram in addition to these hashtags convey the appropriate messages simply and effectively. Any other method is deemed illegal. Lastly, Influencers have been burdened with the responsibility of assessing the affect of each social media platform individually and the effect of the features of each platform upon their followers and thus act honestly and truthfully. Influencers have been warned of possible actions under the consumer protection law, enforcement action from the CMA, local authority Trading Standards services, or the Department for the Economy in Northern Ireland, besides being in violation of industry rules on advertising, for non-adherance to the said Guidance.
Social media platforms too have their individual endorsement related disclosure guidelines to be adhered to by Influencers.13 These can get very detailed, descriptive, and technical. For instance, Instagram has a detailed Branded Content Policy.14
Legal Framework in India:
To give a brief background, under the Indian Law there is no unfair trade practice envisaged under the Competition Act, 2002, unlike the same entrusted to the FTC or the CMA. Only the earlier Consumer Protection Act, 1986 and the current Consumer Protection Act, 2019 (the “Act”) have provision for unfair trade practice. Here I shall only deal with the current Act. S.10(1) of the Act provides that the Central Government shall establish a Central Consumer Protection Authority (CCPA) to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers as a class.
However unlike the ASCI Guidelines, there are no specific definitions for Influencer (virtual or otherwise, Material Connection and Digital Media (it may or may not have been defined depending upon one’s view of e-commerce under S.2(16)15 of the Act).
In any event, there is a clear need for expansion of definitions under the Act to expressly include Influencer Marketing (in terms of digital media marketing, or social media endorsements by Influencers) under S.2(18)16 and/or 2(28)17 of the Act. Accordingly, Digital Media needs to be clearly defined either separately or as part of S.2(16). Influencers too need to be defined, or brought under the definition of Endorser as used in Section 2118 of the Act, but the term Endorser surprisingly has still not been defined.
There is also a need for an additional Consumer Right under S 2(9)19 of the Act, possibly a Right to be made aware of Influencer association with product being reviewed, endorsed, etc. over Digital Media. Additionally, the Central Government needs to frame specific rules thereto under S.101(2)(zg) & (zj), and S.94 of the Act. Thus, the CCPA (under S.10 of the Act) as a Statutory Entity needs to assume the role and responsibility of the FTC/CMA to regulate unfair trade practices in relation to Influencer Marketing and Conduct. Of course, one can always argue that the aforestated sections do implicitly envisage actions against and involving Influencers. But the same would have to be tested by exhaustion of appeals till the Supreme Court for determination of such an interpretation. Amendments on the other hand would be a much more swifter and clearer method to adopt this new evolving frontier of UTP within the Act. What is surprising is that the recent Draft of the Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 2020, proposed to be issued by the CCPA under S.18 of the Act, also does not cover or provision for Influencer Marketing.20
Now if a situation similar to Teami LLC were to be dealt with under Indian Law, in the absence of ASCI Guidelines, and with the current Act in place without the aforestated / suggested amendments, cognizance of deception on part of influencers, vicariously or otherwise, would be beyond comprehension and thus go undetected. Thus, UTP would not be applicable to Influencers under Indian Law. Similarly, after the decision in the case of Marico Limited v Abhijit Bhansali21 a consumer can not proceed as per UTP law against the Defendant, an Influencer that wrongfully compared and reviewed Marico’s Parachute Edible Coconut Oil to organic cold pressed coconut oil, and misled his followers on YouTube and V-Blogger if not consumers at large by making certain disparaging and unfair comparisons.22
Conclusion:
The ASCI Guidelines are a step in the right direction, and anticipate social media marketing and Influencers as a serious new frontier for UTP. They have attempted at being exhaustive and provide for applicability to audio publications such as podcasts, radio/over the air broadcasts, etc. as well. They also provision for Virtual Influencers. They clearly define obligations of advertisers and Influencers, and thus necessitate contractual inclusion of the Guidelines or at least compliance by way of peer pressure and internalization of the Guidelines by applicable industry over time. However, in the absence to UTP law viz Influencers, ASCI Guidelines will be only the smoke of a fire that failed to start, due to the lack of their legal enforceability, especially by consumers. Statutory oversight and legal sanction is eventually necessary for effective regulation.
1These encompass fraud, misrepresentation, and oppressive or unconscionable acts or practices by business, often against consumers.
2Established in 1985, it is a self-regulatory voluntary organization of the advertising industry in India. It is a non-Government body, committed to the cause of self-regulation in advertising, ensuring the protection of the interest of consumers. It seeks to ensure that advertisements conform to its Code for Self-Regulation, which requires advertisements to be legal, decent, honest and truthful, and not hazardous or harmful while observing fairness in competition. It looks into complaints across all media such as Print, TV, Radio, hoardings, SMS, Emailers, Internet/web-site, product packaging, brochures, promotional material and point of sale material etc. By its very nature thus it does not have the sanction of law and legal teeth of enforcement, but has over time gained internalized legal weight, and thus compliance.
3An Influencer is someone who has access to an audience and the power to affect their audiences’ purchasing decisions or opinions about a product, service, brand or experience, because of the influencer’s authority, knowledge, position, or relationship with their audience.
4The specific terms have not been individually defined, and their in situ understanding is possibly intended/encouraged.
5Virtual influencers, are fictional computer generated ‘people’ or avatars who have the realistic characteristics, features and personalities of humans, and behave in a similar manner as influencers.
6Guideline 1.1.
7Guideline 1.3(a).
8Would it be sufficient for an Influencer to have knowledge of presence of empirical data or scientific research, or would such Influencer be required to verify the same. For instance, whether an Influencer should merely have knowledge of advertiser’s research or data regarding Ponds cream’s action in winter is effective for the driest of skins or is he required to verify the same by using it on self or persons with the driest of skins.
9See https://www.ftc.gov/system/files/documents/plain-language/1001a-influencer-guide-508_1.pdf
10An Influencer is further obligated to comply with FTC’s Endorsement Guides in Advertising (See 16 CFR Part 255, that deals with application of Section 5 of the FTC Act (15 U.S.C. 45) to the use of endorsements and testimonials in advertising), and comply with laws against deceptive advertisements.
11Case No. 8:20-cv-518. Complaint documents available at https://www.ftc.gov/enforcement/cases-proceedings/182-3174/teami-llc
12See https://www.gov.uk/government/publications/social-mediaendorsements-guide-for-influencers/social-media-endorsements-being-transparent-with-yourfollowers
13Instagram:
https://help.instagram.com/116947042301556;
YouTube:
https://support.google.com/youtube/answer/154235?hl=en
14It categorises the same into Prohibited Content, Restricted Content, content requiring Business Partner Authorisation, and Format Restrictions. Prohibited content is usually content the practice of which is either illegal or against public policy. Restricted content is sensitive content that can only be promoted with restrictions, such as restricting who can see the post based on age or geographical location.1 Those requiring Business Partner Authorisation include products and services that require a written pre-authorisation from Facebook, or Instagram before engaging in branded content such as dating services, real money gambling, pharmacies, cryptocurrency products and services, drug and alcohol treatment centres, and government, elections, and politics. Format Restrictions include the following:
Branded content may only be posted where the branded content tool is available, such as Facebook Stories or Instagram posts.
Don't include pre-, mid-, or post-roll ads in videos or audio content.
Don't include banner ads in videos or images.
Don't include title cards within a video's first three seconds. Interstitial cards outside of a video's first three seconds, such as mid cards or end cards, must not persist for longer than three consecutive seconds and must not be included within Facebook Stories or Instagram Stories.
See at https://help.instagram.com/1695974997209192
15“e-commerce” means buying or selling of goods or services including digital products over digital or electronic network.
16“endorsement”, in relation to an advertisement, means—
(i) any message, verbal statement, demonstration; or
(ii) depiction of the name, signature, likeness or other identifiable personal characteristics of an individual; or
(iii) depiction of the name or seal of any institution or organisation,
which makes the consumer to believe that it reflects the opinion, finding or experience of the person making such endorsement.
17“misleading advertisement” in relation to any product or service, means an advertisement, which—
(i) falsely describes such product or service; or
(ii) gives a false guarantee to, or is likely to mislead the consumers as to the nature, substance, quantity or quality of such product or service; or
(iii) conveys an express or implied representation which, if made by the manufacturer or seller or service provider thereof, would constitute an unfair trade practice; or
(iv) deliberately conceals important information
18Section 21(1) Where the Central Authority is satisfied after investigation that any advertisement is false or misleading and is prejudicial to the interest of any consumer or is in contravention of consumer rights, it may, by order, issue directions to the concerned trader or manufacturer or endorser or advertiser or publisher, as the case may be, to discontinue such advertisement or to modify the same in such manner and within such time as may be specified in that order.
19“consumer rights” includes,—
(i) the right to be protected against the marketing of goods, products or services which are hazardous to life and property;
(ii) the right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be, so as to protect the consumer against unfair trade practices;
(iii) the right to be assured, wherever possible, access to a variety of goods, products or services at competitive prices;
(iv) the right to be heard and to be assured that consumer's interests will receive due consideration at appropriate fora;
(v) the right to seek redressal against unfair trade practice or restrictive trade practices or unscrupulous exploitation of consumers; and
(vi) the right to consumer awareness.
20https://consumeraffairs.nic.in/sites/default/files/file-uploads/latestnews/Draft%20guidelines%20for%20stakeholders%20consultation.pdf
21https://bombayhighcourt.nic.in/generatenewauth.php?bhcpar=cGF0aD0uL3dyaXRlcmVhZGRhdGEvZGF0YS9qdWRnZW1lbnRzLzIwMjAvJmZuYW1lPU9TTk1DRDM5MzE5LnBkZiZzbWZsYWc9TiZyanVkZGF0ZT0mdXBsb2FkZHQ9MTUvMDEvMjAyMCZzcGFzc3BocmFzZT0xMjA2MjExMjIwMTI=
22The Influencer’s post made the following statements:
A) Packaging of Parachute Coconut Oil is inferior and that the cap of the bottle is flimsy;
b) The fragrance of Parachute Coconut Oil is very strong and it smells similar to a rotten coconut;
c) The packaging of the product does not mention the grade of the coconut used, where they have been extracted from and which coconut it has been extracted from;
d) From the tests conducted by the Influencer, Parachute Coconut Oil is inferior to organic cold pressed oils;
e) The flavour of Parachute Coconut Oil suggests that the oil is made from poor quality coconuts or is heated to a high temperature;
f) Parachute Coconut Oil has impurities and that the same are seen once the oil is frozen;
g) There is a vast difference between the nutritional value of a virgin coconut oil and that of Parachute Coconut Oil; and
h) the antibacterial properties or antifungal properties and nutrients in Parachute Coconut Oil are less due to the processing it undergoes.
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