Aug 12, 2025
Looks Like Content, Acts Like Ads: The Legal Risk in E-Commerce’s Influencer Economy
In today’s age of digital media and click-and-buy shopping, the consumers’ market has seen a dramatic transformation from brick-and-mortar retail to online shopping platforms including through e-commerce websites. Acknowledging this shift, the brands have increasingly started to adopt and embrace modern forms of marketing to reach their target customers. Marketing today is no longer confined to the traditional broadcasting and print advertisements. Instead, social media influencers have emerged as a vital link between brands and the digitally engaged consumer. In this scrolling era, consumers are often influenced by the products and services shown by the influencers they trust and follow in their everyday lives.
Influencer advertising has seen an exponential growth, particularly in sectors such as fashion and lifestyle, mobile phones and personal care products. The pertinent question, though which arises as to whether the existing legal and regulatory framework governing advertisements in India along with the statutory rights and protections available to customers under consumer protection laws of India are dynamic enough to effectively safeguard the consumer’s interest against potential misuse of influencer- driven promotions? This article delves into the current legal framework in India for regulating influencer advertisements and examines the associated risks of misleading consumers through the unchecked influence of social media personalities.
Attempts at Regulating Influencer Advertisements in India
Akin to all modern digital developments, law has been playing catch up- India being no exception. India has adopted a phased and layered regulatory approach to influencer advertising, evolving from self- regulation to enforceable advertisement standards and disclosures.
(a) The Advertising Standards Council of India (“ASCI”), a self-regulatory body, introduced the Guidelines for Influencer Advertising in Digital Media on May 27, 2021 (“ASCI Guidelines”), which came into effect from June 14, 2021. These ASCI Guidelines contemplate a broad definition of “influencer” and also identify the concept of a “virtual influencer”. The ASCI Guidelines provided that all advertisements published by social media influencers or their representatives should carry a disclosure label clearly identifying such content to be an advertisement. This responsibility to ensure placement of disclosures was imposed as a self-regulatory measure on the influencers as well as the advertisers to ensure influencers’ compliance.
The requirement of labelling an advertisement by an influencer using a disclosure was, however, carved out, only for content where there was a material connection between an advertiser and an influencer. Material connection would encompass monetary exchange, media barters, trips, holidays, meals, product exchange and gifts. The ASCI Guidelines emphasized on the disclosures to be : (a) upfront and prominent and not be buried into hashtags, bios or profiles of the influencers; (b) superimposed on stories and video posts that are unaccompanied by a caption or text, so that each and every viewer can easily spot the message; and (c) in English or in the same language as the promoted content.
The ASCI Guidelines also clarified that if there is no material connection between the advertiser and the influencer and the influencer is merely sharing an opinion about a product or service they independently purchased and liked, such content will not be considered as an advertisement and hence, no disclosure requirements will get triggered for such posts. The objective was to ensure transparency for the customers and to prevent viewers from being misled into believing that the influencers are genuine users of the products / services featured in the content, when in reality, the content is intended to promote the product / service based on a material connection that the influencer would have gained from the advertiser in return of marketing and promotion services.
(b) The Indian Influencer Governing Council, another self-regulatory body of influencers through its Code of Standards issued in April, 2025 encouraged the influencers to use #Admiration for content that genuinely reflects their support for brands, products, or services, based purely on personal preference and appreciation (and no material connection per se).
(c) In January 2023, Department of Consumer Affairs (“DoCA”) introduced further guidance to enhance accountability by releasing the “Endorsement Know-hows”, detailing disclosure obligations for celebrities, influencers, and virtual influencers on social media platforms.
(d) Complementing self-regulation, the Central Consumer Protection Authority (“CCPA”) on June 09, 2022, notified the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 (“CCPA Guidelines”), under its powers granted by the Consumer Protection Act, 2019.
The CCPA Guidelines are binding and apply to all advertisements across all formats and mediums. The definition of the term “endorsers” under these CCPA Guidelines broadly cover celebrity as well as social media influencers, thereby mandating certain compliances applicable for an endorsement to be followed by an influencer as well. Upon contravention, the CCPA may impose a penalty of up to INR 10 lakh on manufacturers, advertisers, and endorsers for issuance of misleading advertisements and for subsequent contraventions, up to INR 50 lakh. Further CCPA can also prohibit the endorser of a misleading advertisement from making any endorsement for up to 1 year and for subsequent contravention, up to 3 years. One of the key compliances under the CCPA Guidelines mandate full disclosure of the connection where there exists a connection between the endorser and the trader, manufacturer or advertiser of the endorsed product that might materially affect the value or credibility of the endorsement and where the connection is not reasonably expected by the audience.
(e) The need for an ethical and transparent digital promotion was reinforced by the notification of the Guidelines for Prevention and Regulation of Dark Patterns, 2023 by the CCPA on November 30, 2023 (“Dark Pattern Guidelines”). These Dark Pattern Guidelines prohibit all persons including any platforms from engaging in dark pattern practices particularly the ones identified under the Dark Pattern Guidelines. Disguised advertisement by masking advertisements by influencers as other content types such as lifestyle vlogs, social media posts, live streams etc., intended to mislead the customers into believing that the influencers are real life customers of such showcased products / services, could be considered as a form of dark pattern practice and hence, is prohibited under the Dark Pattern Guidelines.
Blurring the line between paid promotion and content
The increasing rate of consumption of influencer content in India has resulted in blurring the lines between a paid promotion and an organic content, leading to consumer confusion. Influencers often integrate brand endorsements seamlessly into their content, presenting them as personal opinions or lifestyle choices. This subtle integration results into misleading the consumers and feeding them a sponsored content in the disguise of a lifestyle content, even though in actual the influencers could have never used the product / service or verified the claims presented in the content.
Despite the statutory and regulatory requirements in India pertaining to mandatory disclosures by influencers on content where there exists a material connection between the influencer and the advertiser, ensuring compliance on ground remains a challenge. In a recent study done by ASCI of the brand promotional content of the influencers recognized in the list of “Forbes’ India’s Top 100 Digital Stars 2024”, it was found that 69% of top influencers failed to include the mandatory disclosures in their respective brand partnership content. Following ASCI’s intervention, most of the influencers agreed to put necessary disclosure labels in their content while the ones who continued non-compliance to both self- regulatory and statutory guidelines, were escalated to the Ministry of Information & Broadcasting. The list of those who failed to comply with the ASCI Guidelines and potentially with the CCPA Guidelines included both brands and influencers.
Content with multiple endorsements
With the boom in e-commerce space, the digital content space in India has also experienced a trend of lifestyle content being posted by influencers in which the influencers showcase a selection of products – typically clothing, accessories, gadgets or home essentials – purchased from a specific e-commerce marketplace, presenting them as either shopping choices, personal recommendations, or product feedback.
Such content, typically referred as a “haul” video, often serve as subtle forms of paid promotion benefiting both the e-commerce marketplace and the specific brands / sellers of the products being showcased / unpacked in these videos. While these hauls may appear as an organic content, many of these hauls are sponsored, with influencers receiving free products, affiliate commissions, or direct payments. This form of advertising not only boosts visibility for specific brands listed on the marketplace but also simultaneously drives traffic and sales to the marketplace itself. Such integrations further blur the line between editorial and commercial content. In such cases, it is more essential to identify the entity on which the onus for compliance and disclosure shall eventually vest, especially when there are multiple advertisers benefitting from the content and the material connection of the influencer could possibly be established with more than one advertiser.
Accountability for virtual influencers
As per the ASCI Guidelines, the responsibility for disclosure labels and ensuring compliance by the influencer lies primarily with the advertiser, i.e., the brand or entity that benefits from the promotion. In the case of AI-generated virtual influencers, this accountability becomes even more direct. Since the virtual influencer is not a legal person and cannot be held liable, it is the brand that uses the content of such virtual influencer for promoting its goods / services, as well as any associated advertising or marketing agencies, who could possibly be held accountable for failure to disclose paid promotions.
It remains to be seen how Indian jurisprudence will evolve in attributing liability to brands / advertising agencies using virtual influencers in cases of non-compliance with disclosure norms and other compliances under the CCPA Guidelines including the requirement to carry out due diligence by an endorser.
Way forward
Considering that usually the influencers are engaged by the brands to promote their products and services, it is ultimately the brand’s reputation at stake when any influencers non-compliance comes into light. Hence, in our view, it is important for brands to ensure:
(a) That before engaging with an influencer for brand promotions, the followers’ count should not be the only consideration, rather brands should also consider the influencer’s dedication towards complying with the law and any involvement in previous non-compliances;
(b) conducting due diligence prior to engaging influencers;
(c) Safeguarding itself from the risks of liability arising due to non-compliance by influencers by including adequate indemnity in the contracts with the influencers;
(d) Disseminating information about the product / service being endorsed along with documentary evidence for substantiating claims being made in the endorsement;
(e) Verifying the content at the pre-publication stage to ensure inclusion of adequate disclosure labels.
(f) Periodic training for the influencers and making them aware of their roles and responsibilities; and
(g) Informing and educating influencers regarding advertising laws applicable on influencers, and the significance of complying with such laws, including the potential legal consequences of non- compliance.