ASCI Intends To Take Rigorous New Approach In Scrutinising Influencer Ads

Social media influencers have become powerful marketing tools in recent years, but their unchecked promotional practices have raised significant concerns. The Advertising Standards Council of India (ASCI) is now taking a decisive stance against widespread violations, particularly in the cryptocurrency and betting industries.

Increase in Advertising Misconduct

The digital marketing ecosystem has witnessed an alarming trend of influencers disregarding regulatory guidelines. In 2022 alone, ASCI reported over 400 cryptocurrency advertisements that violated established norms. Manisha Kapoor, the Secretary General and CEO of ASCI, has highlighted the critical need for increased surveillance, announcing a focused two-quarter initiative to monitor influencer activities.

The problem is particularly acute among micro-influencers who, struggling to monetize their content, often fall prey to notorious companies in betting and cryptocurrency sectors. As revealed by a prominent social media financial influencer, these content creators are frequently lured by quick monetary gains, risking substantial legal repercussions. The most vulnerable segment tends to promote fly-by-night crypto companies without proper disclosures or understanding of the potential consequences.

Legal Consequences and Mandatory Disclosures

The Central Government has implemented stringent measures to combat misleading advertising practices. Starting January 2023, social media influencers are now mandated to disclose all “material” interests, including gifts, hotel accommodations, equity stakes, discounts, and awards when endorsing products or services. The penalties for non-compliance are severe and multi-layered.

Under the Consumer Protection Act 2019, the Central Consumer Protection Authority (CCPA) can impose substantial financial penalties. First-time offenders may face fines up to INR 10 lakh, with subsequent violations attracting penalties of up to INR 50 lakh. Moreover, the regulatory body can prohibit endorsers from making advertisements for up to one year, extending to three years for repeated violations.

Specific guidelines have been established for cryptocurrency and virtual digital asset advertisements. All promotions released after April 1, 2022, must include a prominent disclaimer: “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.” This disclaimer must be clearly visible across print, video, and audio promotional content.

ASCI’s ultimate goal, as articulated by Kapoor, is to create a safe digital environment by ensuring influencers understand their responsibilities and adhere to government and regulatory requirements. The ongoing surveillance and strict enforcement mechanisms signal a new era of accountability in digital advertising, protecting consumers from potentially misleading and harmful promotional content.

Key Guidelines from ASCI: What Influencers Need to Know

1. Disclosure Requirements

The ASCI has established comprehensive guidelines to ensure clear and prominent disclosure of sponsored content:

• Material Connection Disclosure: Any connection between an advertiser and an influencer that might affect the credibility of the representation must be clearly stated.
• Prominent Labeling: Advertisements must be clearly marked using terms like:
  • Advertisement
  • Ad
  • Sponsored
  • Collaboration
  • Paid Partnership

2. Sector-Specific Regulations

Special attention is being paid to influencers in sensitive domains:

• BFSI (Banking, Financial Services, and Insurance) influencers must:
  • Be registered with SEBI
  • Display their registration number
  • Have appropriate qualifications (CA, CS, IRDAI license)
• Health and Nutrition Influencers must:
  • Possess relevant medical qualifications
  • Prominently display their credentials
  • Provide certifications from recognized bodies

3. Virtual Influencer Transparency

Another requirement mandates that virtual influencers must disclose they are computer-generated entities, ensuring consumers are aware they are not interacting with a real person.

Enforcement and Penalties

The consequences of non-compliance are severe:

• Potential fines up to INR 10 lakh for first-time offenders
• Subsequent violations can attract penalties of INR 50 lakh
• Endorsement bans ranging from 1 to 3 years

Cryptocurrency and Offshore Betting Are A Major Concern

In 2022, over 400 cryptocurrency advertisements were found to violate ASCI guidelines. The regulatory body has specifically targeted:

• Lack of risk disclaimers
• Misleading promotional content
• Unregulated digital asset advertisements

Despite the guidelines put in place last year, many influencers have been blatantly ignoring these and failing to implement them. The regulatory body recently released their half-yearly report and saw a significant spike in misleading advertisements across various sectors from offshore betting to cryptocurrency ads. One of the most basic but common violations is the failure to include the mandatory disclaimer for crypto ads. Hence, it’s no surprise that ASCI intends to crack down on all violations and complaints stringently for the next two quarters.

So, Advice for Influencers?

1. Always disclose material connections
2. Be transparent about sponsorships
3. Verify the credentials of brands you’re promoting
4. Understand the legal implications of non-compliance
5. Prioritize consumer protection over quick earnings

Stay tuned for further updates on Regulations and Guidelines given by ASCI.