Social media has revolutionized advertising, offering brands and influencers a powerful platform to reach millions of users worldwide. However, this shift has brought challenges concerning transparency, consumer protection, and ethical conduct. To address these issues, various legal guidelines have been implemented to regulate social media advertising, ensuring fairness and honesty in promotional content.
1. Information Technology Act, 2000 and IT Rules, 2021
The Information Technology (IT) Act, 2000, and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 govern the operation of digital platforms, including social media. These rules mandate platforms to remove harmful content and protect user data, but they also impact advertising by ensuring that:
- Ads comply with platform policies and are not misleading or harmful.
- Platforms act as intermediaries and are responsible for removing illegal or harmful ads, such as those promoting prohibited products like alcohol or tobacco.
While the IT Act primarily focuses on platform regulation, it establishes a legal framework for digital content that applies to advertisements as well.
2. Consumer Protection Act, 2019 and Advertising Standards
The Consumer Protection Act, 2019 protects consumers from false, misleading, or deceptive advertisements on social media. This law applies to brands and influencers promoting products and services online. Under this Act:
- Any misleading claim can lead to fines or legal action.
- Influencers or brands found promoting inaccurate or false claims can be held liable for damages suffered by consumers.
For example, in 2021, the Consumer Protection Authority fined an online retailer for making false claims about a beauty product on social media, setting a precedent for stricter advertising rules.
3. Advertising Standards Council of India (ASCI) Guidelines
The Advertising Standards Council of India (ASCI) introduced specific guidelines for influencer marketing in 2021, in response to the growing number of influencers promoting products on platforms like Instagram and YouTube. Key provisions of the ASCI guidelines include:
- Influencers must disclose paid partnerships clearly by using hashtags such as #Ad, #Sponsored, or #PaidPartnership.
- The disclosure should be easily visible and not hidden among multiple hashtags or in a long caption.
- Brands are responsible for ensuring that influencers comply with these guidelines.
An example of non-compliance is the case of an Indian influencer who promoted a fitness supplement without disclosing it as a paid advertisement, violating ASCI guidelines and leading to the removal of the post.
4. Competition Act, 2002
The Competition Act, 2002 prohibits unfair trade practices, including false advertising and misrepresentation of products. Brands that engage in anti-competitive practices on social media, such as price fixing or creating misleading promotions to gain a market edge, can face legal penalties. For instance, in a 2020 case, several companies were penalized for price manipulation through social media campaigns during a flash sale, violating competition laws.
5. Data Protection and Privacy
With the Digital Personal Data Protection Act, 2023 on the horizon, data privacy regulations are becoming stricter. Brands must be cautious when collecting consumer data for targeted advertising. Consent from users is mandatory, and advertisements based on personal data should not violate privacy rights. Ads that misuse consumer data can lead to significant penalties.
Gaps and Challenges
Despite these guidelines, challenges remain in ensuring compliance:
- Influencer marketing often lacks transparency, with many influencers failing to disclose paid partnerships properly.
- Targeted advertising raises ethical concerns about the use of personal data without clear consent, especially with children and vulnerable audiences.
- Enforcement of these guidelines, particularly for foreign influencers targeting Indian consumers, is difficult due to jurisdictional issues.
Marico Ltd. vs Adani Wilmar Ltd. (2013)
- Facts: This case involved a dispute between two major brands, Marico Ltd. and Adani Wilmar Ltd., over misleading social media advertisements. Marico filed a complaint against Adani Wilmar for publishing a social media post that allegedly provided false comparisons between their cooking oil product and Marico’s product, claiming that Marico's product was inferior.
- Issue: The key issue was whether the social media post violated the provisions of the Consumer Protection Act by being misleading and defamatory in nature.
- Outcome: The Delhi High Court granted an injunction against Adani Wilmar, directing them to refrain from making misleading advertisements and comparisons. The Court emphasized that social media ads must not mislead consumers with false information.
This article was written by Sai Jawahar V Mallady as a part of Certificate Course on Advertising Laws and Compliance.