Due Diligence in Brand Endorsements by Celebrities and Influencers: Legal, Regulatory and Practical Guide

Introduction

In an era where influence equals currency, celebrity and influencer endorsements are among the most powerful marketing tools in India. From television campaigns to Instagram reels, endorsements shape consumer trust and drive billions in brand value each year.

However, the same visibility that amplifies influence also magnifies accountability. Under India’s modern consumer protection and advertising regime, endorsers — whether actors, sportspersons, or social media creators — are legally responsible for the truth, accuracy, and transparency of the messages they promote.

The concept of due diligence has therefore become central to endorsement compliance. The Consumer Protection Act, 2019 (“CPA 2019”) and the Central Consumer Protection Authority (CCPA) Guidelines on Misleading Advertisements and Endorsements, 2022 explicitly require endorsers to “exercise due diligence to verify the veracity of claims.”

This article explains the legal foundation, practical scope, and operational steps of due diligence in endorsements — outlining what brands, celebrities, and influencers must verify before lending their name, likeness, or platform to any product or service.

The Legal Foundation of Due Diligence

The obligation to conduct due diligence arises primarily from Section 21 of the Consumer Protection Act, 2019, which empowers the CCPA to:

• Order discontinuation or modification of misleading advertisements;
• Impose fines up to ₹10 lakh (first offence) and ₹50 lakh (subsequent offences); and
• Prohibit endorsers from advertising for up to three years.

The CCPA Guidelines for Prevention of Misleading Advertisements and Endorsements (2022) operationalise this statutory duty by requiring that all endorsers:

1. Verify the truth and substantiation of product claims;
2. Disclose any material connection with the advertiser; and
3. Avoid endorsing prohibited or harmful products.

In practice, due diligence has evolved into a legal and ethical safeguard – a documented process that demonstrates reasonable care before endorsing.

What Does “Due Diligence” Mean in Endorsements?

In legal terms, “due diligence” refers to the reasonable verification expected from a person of ordinary prudence in a given context. Applied to endorsements, it means that a celebrity or influencer must:

• Ask questions about the product’s claims, ingredients, certifications, and regulatory approvals;
• Review documentation provided by the advertiser or agency;
• Seek clarification where claims appear exaggerated or unsupported; and
• Retain records of such verification for potential regulatory review.

The law does not expect endorsers to conduct scientific testing themselves, only that they verify evidence reasonably and avoid blind reliance on brand assurances.

Why Due Diligence Matters

• Legal Liability: Under the CPA 2019, endorsers may face financial penalties and bans if found negligent.
• Reputational Risk: Public backlash can severely impact credibility and marketability, even if no formal penalty follows.
• Contractual Protection: Documented diligence helps defend against breach or misrepresentation claims.
• Regulatory Cooperation: During CCPA or ASCI investigations, evidence of diligence often mitigates penalties and supports exoneration.

Key Areas of Due Diligence

The scope of due diligence varies by product type and endorsement medium but typically covers the following areas:

1. Product Legitimacy and Regulatory Compliance

Celebrities and influencers should verify that the product or service is legally permitted and appropriately licensed.

Checklist:

• Obtain copies of all relevant approvals or certifications e.g., FSSAI (food), CDSCO (cosmetics, drugs), BIS (electronics, appliances), or RBI/SEBI (financial services).
• Verify that the product label complies with the Legal Metrology (Packaged Commodities) Rules, 2011.
• Confirm that there are no bans, recalls, or pending regulatory actions against the product or brand.
• Why It Matters: Endorsing an unlicensed or prohibited product can expose the celebrity to liability for promoting an illegal good regardless of intent.

2. Claim Verification and Substantiation

Under the CCPA Guidelines, all claims must be truthful, substantiated, and verifiable. The celebrity must ensure the brand possesses credible evidence for every performance, quality, or benefit claim.

Checklist:

• Request laboratory reports, clinical studies, or test data supporting claims.
• Ask for expert certifications (nutritionists, dermatologists, engineers) where claims involve technical specifications.
• Review disclaimers to ensure they are legible and proportionate to the claim’s prominence.
• Example: If a face cream claims “visible fairness in seven days,” the endorser must review test data or consumer trial reports substantiating that claim.

3. Product Safety and Risk Disclosures

Checklist:

• Verify product safety certificates and quality control documents.
• Seek written confirmation that the product complies with Indian safety standards.
• Ensure all risk disclosures (allergen warnings, side effects) are present and prominent.
• Why It Matters: Celebrities promoting products with undisclosed health or safety risks (e.g., dietary supplements, cosmetics) have previously faced consumer backlash and potential liability.

4. Brand Reputation and Litigation History

Endorsers should conduct a background check on the advertiser’s reputation.

Checklist:

• Ask whether the brand or its affiliates have faced CCPA, FSSAI, or ASCI actions.
• Search for pending consumer litigation or regulatory penalties.
• Evaluate whether the brand has a history of misleading ads or recalls.
• Why It Matters: Association with a brand under investigation can cause “reputational contagion.” A celebrity’s endorsement is only as strong as the brand’s credibility.

5. Script and Creative Content Review

The celebrity must review all creative materials, namely ad scripts, storyboards, social media captions, and voiceovers before approval.

Checklist:

• Verify that language and visuals are not exaggerated, misleading, or incomplete.
• Ensure no unauthorized superlatives (e.g., “best,” “only,” “fastest”) are used without substantiation.
• Confirm disclaimers are clearly visible or audible.
• Why It Matters: Regulators have held endorsers accountable for implied claims and post-production edits. Retaining approval rights prevents unforeseen exposure.

6. Disclosure and Transparency

Both the CCPA Guidelines (2022) and ASCI Influencer Code (2023) mandate clear disclosure of any material connection between endorser and brand.

Checklist:

• Ensure visible or audible tags like #Ad, #Sponsored, or “Paid Partnership” are used.
• Verify that disclosure appears in the same language and format as the content.
• For video or live content, ensure disclosure is spoken and displayed on-screen for sufficient duration.
• Why It Matters: Undisclosed paid endorsements are considered misleading by omission, exposing both the brand and endorser to liability.

7. Target Audience and Vulnerable Groups

Endorsers must ensure that the advertisement does not exploit or mislead vulnerable audiences, particularly children, senior citizens, or patients.

Checklist:

• Review the product’s intended demographic.
• Prohibit depictions encouraging unsafe behavior or unrealistic results.
• Ensure disclaimers are age-appropriate and understandable.

8. Digital and AI-Generated Content

With the rise of virtual influencers and AI-generated avatars, endorsers should verify:

• Consent for use of their likeness, voice, and data;
• Limits on synthetic reproduction or “deepfake” use; and
• Compliance with the Digital Personal Data Protection Act, 2023.
• Why It Matters: Unauthorized digital replication of an endorser’s likeness can result in privacy breaches and reputational misuse.

The Documentation Standard: Proving Due Diligence

The CCPA’s enforcement experience shows that documentation is the most persuasive evidence of due diligence. Endorsers should maintain a compliance file containing:

1. Product approval documents and claim substantiation reports;
2. Brand representations and warranties from the endorsement contract;
3. Emails and notes evidencing queries raised and clarifications received;
4. Approved final ad scripts, disclaimers, and disclosure screenshots; and
5. A signed “Due Diligence Declaration” recording the review undertaken.

This file should be retained for at least five years or as long as the advertisement remains in circulation. During CCPA inquiries, the ability to produce this documentation often differentiates compliance from negligence.

The Contractual Dimension: Embedding Due Diligence into Agreements

Endorsement contracts must codify diligence obligations and risk allocation. Key clauses include:

Contracts should also require the brand to provide all substantiation documents upfront and warrant that they are genuine.

ASCI’s Self-Regulatory Role

While the CCPA enforces statutory compliance, the Advertising Standards Council of India (ASCI) plays a critical self-regulatory role. Its Code for Self-Regulation in Advertising and Influencer Advertising Guidelines (2023 update) emphasize:

• Truthful and non-misleading communication;
• Responsible portrayal of products, especially health or financial items; and
• Proper disclosure of paid collaborations.

ASCI decisions, though not legally binding, are frequently cited by regulators and courts as evidence of best practice. Endorsers who comply with ASCI standards effectively demonstrate diligence beyond the minimum legal requirement.

The “Prudent Endorser” Test: Regulator’s View

The CCPA evaluates compliance using a “prudent endorser” standard asking whether a reasonable celebrity or influencer, in similar circumstances, would have:

• Sought substantiation for claims;
• Read and understood the content; and
• Ensured disclosure and compliance before release.

This objective test balances practicality with accountability. Endorsers are not expected to act as scientists only as responsible professionals aware of their influence.

Sector-Specific Sensitivities

Certain industries require heightened diligence due to regulatory scrutiny or consumer impact.

Endorsers should engage subject-matter experts or legal counsel when endorsing in such sensitive sectors.

Role of Talent Managers and Agencies

Talent managers and agencies increasingly act as the first line of diligence. Their role should include:

• Conducting preliminary brand background checks;
• Maintaining compliance templates for contracts and disclosures;
• Coordinating legal review of claim substantiation; and
• Educating clients on emerging regulatory risks (e.g., AI, data protection).

The agency’s duty of care is not merely commercial but compliance-oriented, as negligence can indirectly expose their clients to liability.

The Reputational Dimension

Beyond law, due diligence protects personal credibility, a non-renewable asset in the endorsement economy. When consumers perceive a celebrity as careless or complicit in misleading advertising, trust erodes faster than any legal process can repair it. Documented diligence allows endorsers to demonstrate integrity, even under public scrutiny.

The message is simple: Reputation travels faster than regulation. Preventive diligence is cheaper than corrective damage control.

Technology and the Future of Diligence

As advertising shifts to digital ecosystems, new diligence tools are emerging:

• Blockchain-based product verification for traceability of claims;
• AI-driven ad review tools that detect misleading content;
• Smart contracts embedding compliance checkpoints for automated audit trails.
• In coming years, regulatory filings may require proof of claim substantiation at ad submission, making digital diligence not just optional but operationally mandatory.

Conclusion: Diligence as Discipline

Due diligence in endorsements is no longer an optional exercise or moral formality, it is a legal necessity and professional discipline. For brands, it ensures credibility; for celebrities, it preserves reputation; for regulators, it ensures fairness in persuasion. The prudent endorser of today must combine influence with inquiry asking the right questions, reviewing the right documents, and retaining the right records.

As the law evolves, one principle remains constant – Fame carries responsibility, and due diligence converts that responsibility into protection.

Practical Due Diligence Checklist for Endorsers

Contributed by – Mehek Chablani