INTRODUCTION
In the present time, where social media plays a significant role in shaping one individual’s life, it is critical to acknowledge the fact that the line between genuine opinion and commercial advertisement is thin and blur. There are various incidents where someone relies on something advertised on social media. Content creator endorses a product as a part of daily routine and gives opinion about it, which is believed to be true and genuine by the views. But the part that is left out is the commercial transaction between the brand and the creators. This presents a distorted picture of the reality which leads to consumer deception.
Unlike traditional advertisements, which consumers approach with scepticism, influencer marketing is built on personal trust. It is this trust that the influencer marketing banks on and thus, is a deliberate attempt to deceit the consumers. .
Such incidents are governed by Consumer Protection Act, 2019.[1] The framework does exist on paper, but the real question is are such kinds of advertisement regulated?
THE RAPID GROWTH OF INFLUENCER MARKETING IN INDIA
India has the one of largest social media user bases with approximately 500 million internet users.[2] This vast audience has made brands invest heavily in influencer marketing, turning it into a ₹3,375 crore industry by 2026.[3] Brands are no longer using influencers just to create awareness. Instead, today they are involved at every stage of the consumer’s purchase journey, from introducing products to new audiences to driving final purchases through discount codes, affiliate links and personal recommendations.
Influencers are perceived as ordinary individuals which makes them relatable and fosters a sense of genuine connection with their audience. When an Influencer shares their opinion, their followers tend to trust it without realising that it is a commercial transactions.
The numbers reflect this shift in consumer behaviour. 63% of online users rely on influencers for product discovery, 69% consult influencer recommendations before making a purchase, and 74% of metro consumers say influencers directly drive their buying decisions.[4] Users in smaller towns with populations under 10 lakhs follow more than 11 influencers on average, a higher number than their counterparts in larger cities.[5] This is not a minor detail. It means the most digitally trusting audiences in India are also the ones receiving the least regulatory protection.
The fastest growing categories are gaming, sustainability and financial education, sectors where misleading content can cause harm far beyond a poor product purchase. Further, 51% of marketers plan to increase investment micro-influencers in 2025,[6] creators with smaller but deeply trusting audiences who currently operate largely outside the regulatory framework. Behind these numbers are real consumers making real purchasing decisions based on content they believe is genuine. The question is what happens when it is not. How is it regulated? Does as an individual have an remedy?
LEGAL AND STATUTORY FRAMEWORK
Consumer protection Act, 2019
The law attempts to address it through the Consumer protection act,2019.[7]It deals with the rights of consumers in case of unfair trade practices by the companies, brands and endorsers which includes influencers and celebrities. Section 2(28) of CPA[8] defines “misleading advertisements” as one that falsely describes, gives false guarantee or deliberately conceals important information. An undisclosed paid post comes under this ambit as the commercial nature of the content is being hidden from the consumer at the exact moment they are being influenced to buy. The major loophole being – the law defines misleading advertisement but does not specifically define what disclosure should look like for influencer content. This loophole is partially addressed by CCPA 2022[9] guidelines and by ASCI 2021[10] guidelines. Section 2(47) further defines unfair trade practices to include misrepresentation of sponsorship status and false representations. When an influencer presents a paid promotion as a genuine personal recommendation, they are misrepresenting their relationship with the brand. What this means practically is that a single undisclosed paid post can violate both provisions simultaneously. Despite this, the enforcement remains rare. If a single undisclosed post violates two provision then why are there so few prosecutions under it. The law does provide consequences Under Section 21, both the brand and the influencer can be fined up to ₹10 lakh for a first offence and up to ₹50 lakh for repeat violations. An influencer found repeatedly non-compliant can additionally be banned from endorsing any product for up to three years. However, Section 21(5) provides an escape route , if the influencer can prove they genuinely verified the product claims before promoting them, they can avoid liability. This clause sounds reasonable on paper but in practice it has become a loophole. Most influencers receive a product alongside a script which they post without verifying the claims being made. The CPA is broad enough to cover the problem, but the law is only effective if proper enforcement is followed and on that count it has largely fallen short.
CCPA and it’s Guidelines
Central Consumer Protection Authority[11] is the only body with actual statutory power to fine brands and influencers for non-compliance. Its 2022 guidelines apply to all advertisement regardless of platform or format. The guidelines prescribe three key obligations for sponsored content. First, any endorsement must reflect true and genuine opinion of the creator and cannot be scripted representation given by the brand. Secondly, which mandates full disclosure of the gifts, payment, collab products, discounts and stays. Third and significantly, is about vernacular obligation that the disclaimer must be in the same language as the claim presented in the post.
ASCI Guidelines 2021
The Advertising standards council of India[12], introduced specific guidelines for influencer advertising in 2021. Under these guidelines, a material connection is not restricted to money. If an influencer received anything from the brand in form of free products, discounts, gifts, trips, hotel stays, awards, and even personal relationships such as being a family member or employee of the brand, it must be disclosed upfront and prominently. The Guidelines also specify acceptable labels such as Ad, sponsored, collaboration, paid partnership. Both advertiser and influencer have shared responsibility for disclosure. In 2023, ASCI went further requiring financial influencers to be SEBI registered and health influencers to hold relevant qualifications before making any claims in their content.
However, ASCI carries no statutory enforcement power This is where the problem lies, the body with detailed disclosure standards has no power to enforce them, and the body with actual enforcement power has not kept pace with the realities of how influencer advertising actually operates. The result is a system where everyone knows the rules but almost nobody is held accountable for breaking them.
LEGAL LACUNA
The impact of this enforcement gap is visible in ASCI’s own reports, a consistent pattern emerges where influencers correct their content only after being flagged, rather than disclosing proactively. Platforms like Instagram and YouTube enjoy platform immunity under section 79 of the IT act,[13] profiting from paid promotion while bearing no legal responsibility for the content they host. Emerging categories compound the problem, many financial influencers give financial advice with no financial backing which leads to actual huge loss faced by consumers and micro-influencers remain largely outside regulatory attention.
SUGGESTIVE REMEDY
The existing framework needs structural reform. First, ASCI must be given statutory backing, it has the expertise and the specific disclosure standards but without legal power it cannot compel compliance. Second, platform safe harbour under IT Act must be reformed. Platforms that algorithmically promote paid content, provide brand collaboration tools, and actively profit from hosting paid promotions are not passive intermediaries, they are commercial participants. Platforms must be required to build disclosure verification mechanism which flags the post for non-compliance. Third, financial influencers must be brought under mandatory SEBI registration, with penalties proportionate to the harm caused. The penalty must reflect the scale of harm, not just non-compliance. Similarly, health influencers making unverified medical or nutritional claims must be required to hold relevant qualifications. When the law fails to keep up with the industry it regulates then it is the consumer that has to pay the price.
CONCLUSION
India’s current framework for regulating influencer marketing spanning CPA, CCPA Guidelines, and ASCI rules exists but remains fragmented and ineffective. These three layers each tackle parts of the problem, yet none fully addresses it. The result is an industry worth thousands of crores operating in a space where the rules exist with no proper enforcement and accountability. Until that changes, the consumer remains the weakest link in a chain that was built to protect them.
Author(s) Name: Aastha Patel (O.P. Jindal Global University)
References:
[1] Consumer Protection Act 2019
[2] Kemp S, ‘Digital 2025: India — DataReportal – Global Digital Insights’ (DataReportal – Global Digital Insights, February 25, 2025)<https://datareportal.com/reports/digital-2025-india>
[3] “India Influencer Marketing Report 2025” (The Goat Agency 2025) <https://www.wppmedia.com/news/influencing-with-integrity> accessed March 15, 2026.
[4] “India Influencer Marketing Report 2025” (The Goat Agency 2025) <https://www.wppmedia.com/news/influencing-with-integrity> accessed March 15, 2026
[5] ibid.
[6] ibid.
[7] Consumer Protection Act 2019
[8] ibid.
[9] Central Consumer Protection Authority, “THE GAZETTE OF INDIA : EXTRAORDINARY” (THE GAZETTE OF INDIA, June 9, 2022) <https://consumeraffairs.nic.in/sites/default/files/file-uploads/latestnews/CCPA%20Notification.pdf>
[10] Advertising Standards Council of India, “GUIDELINES FOR INFLUENCER ADVERTISING IN DIGITAL MEDIA” <https://www.ascionline.in/wp-content/uploads/2023/08/GUIDELINES-FOR-INFLUENCER-ADVERTISING-IN-DIGITAL-MEDIA.pdf>
[11] Central Consumer Protection Authority, “THE GAZETTE OF INDIA : EXTRAORDINARY” (THE GAZETTE OF INDIA, June 9, 2022) <https://consumeraffairs.nic.in/sites/default/files/file-uploads/latestnews/CCPA%20Notification.pdf>
[12] Advertising Standards Council of India, “GUIDELINES FOR INFLUENCER ADVERTISING IN DIGITAL MEDIA”<https://www.ascionline.in/wp-content/uploads/2023/08/GUIDELINES-FOR-INFLUENCER-ADVERTISING-IN-DIGITAL-MEDIA.pdf>
[13] Information Technology Act 2000, s 79.
