The Centre on Friday made it mandatory for celebrities and social media influencers to disclose any material benefit that they receive in exchange for promoting a product or a brand through their social media platforms, PTI reported.

The Central Consumer Protection Authority can impose a penalty of up to Rs 50 lakh on them if they fail to do so.

A new set of guidelines named “Endorsement Know Hows for celebrities, influencers and virtual media influencers (Avatar or computer generated character) on social media platforms” was issued by the Department of Consumers Affairs.

Under the guidelines, influencers will need to disclose material interests such as gifts, hotel accommodation, equity, discounts or awards while promoting any product. In cases of violations, legal action to be taken can include banning the influencers from endorsing any products.

At a press conference, Consumer Affairs Secretary Rohit Kumar Singh said that influencers need to behave responsibly.

“The guidelines are aimed at social media influencers which have material connection with the brand they want to promote on various social media platforms,” Singh said. “This is an obligation for them to behave responsibly as far as the disclosure is concerned to the consumers.”

He stated that the rules are issued to ensure that individuals do not mislead their audiences when endorsing products or services and that they are in compliance with the Consumer Protection Act.

“There are many ways in which unfair trading practices take place, one of the important unfair trading practice is the menace of misleading advertisements, by trying to sell something which is not exactly as it is being portrayed in the ad,” Singh said.

Singh said the size of the social media influencer market in India in 2022 was of the order of Rs 1,275 crore and by 2025, it is likely to rise to Rs 2,800 crore with a compound annual growth rate of about 19-20%. “The social media influencer of substance, those having good number of followers, are in excess of 1 lakh in the country,” he added.

Central Consumer Protection Authority Chief Commissioner Nidhi Khare said that misleading advertisements in any form or medium is prohibited by law.

“Individuals/groups who have 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/celebrity’s authority, knowledge, position, or relationship with their audience will have to disclose the material connection,” according to the rules.