"Social Media Influencers, whether their audience is significant or small, impact the lives of everybody who watches their content. They do have a responsibility to ensure what they are publishing is not harmful or offensive.” This statement made by the Single Judge of the Bombay High Court brought into the limelight the impact and responsibilities of Social Media Influencers. Through this article we hope to provide an insight into who are social media influencers, their responsibilities and existing laws and international guidelines regulating social media influencers.

Social Media Influencers are individuals who have established credibility in a specific industry with access to a large audience and the power to persuade others to act based on their recommendations. They represent a new type of independent third-party endorser who shape audience attitudes through blogs, posts, tweets, and the use of other social media. A Social Media Influencer may be anyone from a blogger to a celebrity to an online entrepreneur. Some of the top Social Media Influencers in India are celebrities such as Alia Bhatt, Ranveer Singh, Akshay Kumar, Disha Patani, or sports personalities such Virat Kohli, MS Dhoni. Social Media Influencers may not necessarily be celebrities only. The list of Social Media Influencers also includes fashion bloggers such as Diipa Buller Khosla, Santoshi Shetty or food bloggers such as Richa Hingle, Saransh Goila or comedians such as Kanan Gill, Kenny Sebastian, etc. International Social Media Influencers who have a huge follower base include Hudda Kattan (make-up expert), Cameron Dallas (song reviews), Kylie Jenner (modelling), Cristiano Ronaldo (football star) etc.

Social Media Influencers are extremely popular among the younger population or next gen, as they now call it. They seem to play an important role in such lives, firstly, because that generation spends a large part of their time watching, viewing, liking, forwarding, and commenting on Social Media platforms. Secondly, they turn to these Social Media Influencers not only for entertainment, but also for information, advice, company and comfort. The impact of Social Media Influencers on the younger generation may have both, desirable and undesirable consequences.

Influencer marketing, the newest form of marketing, consists of companies or agencies reaching out to Social Media Influencers for their brand promotional purposes. Nowadays companies engage in such strategy by sending social media influencers products free-of-charge so that they can post reviews or share a photo, invite them to attend events where everything is taken care of by the company, or share a certain message with their audience.

However, as in the case of “Bearded Chokra”, Social Media Influencers may blog about products/services without getting paid by a brand. This can be extremely difficult to regulate. A statement by a Social Media Influencer about a certain product may be construed as defamatory/disparaging by the brand. When it comes to defamation or disparagement actions, the first test is to separate statements of fact from opinions. Opinions cannot form the legal basis of a defamation or disparagement lawsuit. Any person can have an opinion about a product/service. However, if you were to state that a particular product can harm the user, you are stating a fact. To establish defamation, in such cases, the burden would be on the company/brand to establish that the Social Media Influencer whom they were suing acted with “actual malice” i.e. the person acted recklessly, with full knowledge that their statement was false and with utter disregard for the truth.

Social Media Influencers have certain rights and obligations whether working with paid or unpaid collaborations. In case of paid collaborations, they must ensure that every sponsored post published is clearly marked so that there is no doubt in the minds of the consumer. It is also their responsibility to only recommend products that they can support, and this is typically where the issues arises. New Social Media Influencers without much experience will almost always trust an established brand. In fact, even large Social Media Influencers, including celebrities with years of experience will follow the directions of established brands without ever asking questions. A Social Media Influencer should never promote something that they don’t support or lie about a product to generate sales for the brand.

The Federal Trade Commission (FTC) has released a new publication for Social Media Influencers that lays out its rules of the road for when and how Social Media Influencers must disclose sponsorships to their followers [i].

Some of the key guidelines which the Social Media Influencers need to follow are as follows:

· If the Social Media Influencer is endorsing a product, comply with the law when making these recommendations.

· If the Social Media Influencer endorses a product through social media, the endorsement message should make it obvious when he/she has a relationship with the brand.

· Disclose the relationship if the Social Media Influencer got anything of value to mention a product.

· The disclosure should be placed with the endorsement message itself.

· The Social Media Influencer cannot make up claims about a product that would require proof the advertiser does not have – such as scientific proof that a product can treat a health condition.

The impact a Social Media Influencer has and negligence of his/her responsibility in verifying the authenticity of a brand/product before advertising it can be seen clearly in the case study conducted on the infamous Fyre Festival.

Marketed as the social event to be seen at in 2017, Fyre Festival was advertised as a highly luxurious, super exclusive music festival on an idyllic island in the Bahamas. However, with a lack of proper management and operational guidelines, the event quickly turned into a 24-hour catastrophe.

The founders kick started the influencer campaign by working with 10 supermodels to create the vision of an uber-luxury experience of a lifetime. In totality, the supermodels boasted millions of fans and by engaging them, the team was able to spread the festival’s message in the widest scope possible.

Ultimately, Fyre Festival’s well-constructed influencer campaign proved to be highly effective for a couple of reasons:

· It drove a significant increase in mass awareness;

· It reached the relevant target audience;

· It boosted ticket sales rapidly;

In light of the fact that the Fyre Festival turned into a catastrophe, the Social Media Influencers did not come out unscathed. Piggybacking on Social Media Influencers, the Fyre team paid Kendall Jenner a reported $250,000 for a single promotional post about something she had little knowledge about. Similarly, they paid other Social Media Influencers large sums of money and kept them in the dark about what was actually happening at the festival site.

While the Social Media Influencers exceeded influencer marketing expectations, they also gave their audience a false impression by buying into an event without any proof of a tangible product/ service. Additionally, the bulk of the Social Media Influencers also violated FTC guidelines by not acknowledging the money they were paid in exchange for their endorsement.

Through this case study it is evident that products and services should be viable before Social Media Influencers promote them to impressionable audiences. Social Media Influencers should also ensure that any promotional offers relate to a legitimate business. Social Media Influencers need to perform due diligence when scoping out brands they want to collaborate with. In order to improve transparency, Social Media Influencers also need to disclose sponsorships and uphold values of authenticity.

The following existing regulations/laws regulate Social Media Influencers in India:

· Consumer Protection Act, 2019 [ ii]

The Consumer Protection Act, 2019 notified on 9 August 2019 (CP Act 2019) has introduced several measures to amplify the existing laws to safeguard consumer rights. Endorsers may be considered as Social Media Influencers therefore the CP Act of 2019 will apply to Social Media Influencers if they are paid by brands to endorse their products/services.

One very important aspect that the CP Act of 2019 addresses is the liability of the endorser of brands in case the consumer suffers an injury due to defective goods or services. It imposes a penalty of up to INR 10 lakh on a manufacturer or an endorser for false and misleading advertisements. For a subsequent offence, the fine may extend up to INR 50 lakh. The endorser of a misleading advertisement can also be prohibited from endorsing any particular product or service for a period of up to 1 year. For every subsequent offence, the period of prohibition may extend to 3 years. However, if the endorser has exercised due diligence to verify the veracity of the claims made in the advertisement, he shall not be liable to the penalties under the law.

· The Advertising Standards Council of India (ASCI)

Currently, the ASCI has set out guidelines only for a brand and a celebrity endorsing a brand and responsibilities regarding authenticity, credibility and responsibilities of the brand and celebrities while advertising a product/service.

However, the ASCI is in the process of framing disclosure rules for Social Media Influencers who promote products on the internet.

Karan Kumar, Chief Brand and Marketing Officer, Fabindia, stated that while influencers are responsible for influencing just a closed group, but even the people within that closed group at the end of the day are consumers. So, whether or not, they are part of a larger media ecosystem, everybody deserves the right to be transparently told about whatever is being endorsed in terms of product. Internationally it is the norm, India should also adopt this.

Social Media Influencers are usually paid basis their follower count and user engagement. ASCI does not have any punitive powers, however, its decisions are obligatory for both members and non-members to follow, as per a Delhi high court ruling.

· The Constitution of India - Freedom of Speech

Article 19 (1) (a) of the Constitution of India, 1949 states that all citizens shall have the right to freedom of speech and expression.

This fundamental right has been reiterated by the Division bench of the Bombay High Court, in Abhijeet Bhansali vs Marico Limited[iii].

Abhijeet Bhansali had uploaded a video on his YouTube channel, “Bearded Chokra”, in September 2018. Marico approached the Bombay High Court for an injunction to restrain Abhijeet Bhansali from publishing or broadcasting the video alleging that Abhijeet Bhansali had made claims and statements that were false and unsubstantiated. Instructing Abhijeet Bhansali to take down the video, a Single judge held that commercial speech is a fundamental right guaranteed under Article 19(1)(a) of the Indian Constitution but added that this fundamental right cannot be abused by any individual by maligning or disparaging the product of others. The Single Bench judge stated that since no freedom can be absolutely unlimited, Article 19(2) provides the grounds on which reasonable restrictions on the freedom of speech and expression can be imposed. The Single Judge of the Bombay High Court accordingly directed Abhijeet Bhansali to take down the video and remove it from YouTube and any other platform in any medium whatsoever.

Abhijeet Bhansali filed an appeal against the order of the Single Judge. Granting a stay on the impugned order of the Single Judge, the Division Bench of the Bombay High Court held that where an objective analysis of words and expressions used is capable of being debated upon, the issue pertaining to defamation would have to charter a route in the context of freedom of speech vs reputation. Where a person asserts a matter of fact, he cannot be restrained from expressing himself. Law does not so permit. Because if he fails to make good the fact asserted, damages are awarded. The Division Bench further held that the existing law on defamation says no one can make a false statement of a fact. An opinion cannot be held as a fact irrespective of how bad it (opinion) is. Freedom of speech is always put on a higher pedestal than reputation even though both are fundamental rights. While admitting the appeal, the Division Bench lifted the injunction granted by the Single Judge and asked the parties to resolve the matter amicably. Abhijeet Bhansali was permitted to retain the video with certain edits.

In order to prevent social media users from falling prey to misrepresentations or false advertisements from Social Media Influencers, other countries too have adopted similar regulation guidelines as set out by FTC.

In the United Kingdom, the Committee of Advertising Practice (CAP) (along with the Competition and Markets Authority CMA) published the first edition of the influencer guidance on 28 September 2018, in order to bring together all the advisory information Social Media Influencers needed to ensure they were sticking to the ad rules and the relevant provisions from consumer protection legislation[iv]. The Consumer Protection from Unfair Trading Regulations 2008[v] also apply to Social Media Influencers. These regulations protect consumers from unfair or misleading practices and ban misleading omissions and aggressive advertising. Social Media Influencers are required to label content that has been paid for, or content that they have received as a gift or loan, and the CMA in its guidance on the subject emphasizes that the hashtag “#ad” or “#advertisement” should be clearly and prominently displayed at the beginning of the post.

Similarly, the Australian Association of National Advertisers (AANA) has updated its guidelines and the AANA Code of Ethics to require that “advertising or marketing communication must be clearly distinguishable as such to the relevant audience”[vi]. The AANA’s Code of Ethics applies to advertising and marketing communications where the marketer has a reasonable degree of control over the material and the material draws the attention of the public in a manner calculated to promote a product or service.

What does the future entail for regulation of social media influencers?

The Social Media Influencer ecosystem is all set to change soon. The guidelines to be released by ASCI will bring more transparency and help protect consumer interests. This would mean a similar set of regulations, if not the same, will be in place to put sponsored influencer and digital creator posts on Instagram on the same peg as regular advertising on digital platforms. A step towards regulation of such Social Media Influencers would be to follow the footsteps of many nations and adopt guidelines similar to the guidelines set out by the FTC.

While the decision in Abhijeet Bhansali vs Marico Limited does not bar review videos and video blogs, the decision comes as an important breakthrough in this age, placing certain restrictions on the fundamental rights of freedom of speech. However, there needs to be further clarification on the basis for deciding if a statement made by a Social Media Influencer is am opinion or a fact.

Social Media Influencers travail tremendously to gain a significant number of followers. But once a marketer is funding a Social Media Influencer, he/she is no longer the innocuous friend/expert that his/her followers deem him/her to be. Social Media Influencers hold considerable power over their followers, and a well-paying corporation, in turn, holds considerable power over the Social Media Influencer. Law cannot be blind to that relationship and take a Social Media Influencer to be your friendly next-door expert like they want their followers to take them. Currently, the law sees it as an attempt to masquerade advertising in an honest review. But as influencer marketing grows day-by-day, how the law deals with it needs to be seen.

Authored by: - Mr. Shantanu Shah, Associate; Mrs. Vaishakhi Mehta, Senior Associate and Ms. Chandrima Mitra, Partner

[i] https://www.ftc.gov/system/files/documents/plain-language/1001a-influencer-guide-508_1.pdf

[ii] http://egazette.nic.in/WriteReadData/2019/210422.pdf

[iii] https://www.livelaw.in/pdf_upload/pdf_upload-370256.pdf

[iv] https://www.asa.org.uk/uploads/assets/9cc1fb3f-1288-405d-af3468ff18277299/INFLUENCERGuidanceupdatev6HR.pdf

[v] https://perma.cc/4VSD-PZM7

[vi] http://aana.com.au/content/uploads/2017/01/AANA_Distinguishable-Advertising-Best-Practice-Guideline__Final.pdf