Liability of Celebrity and Influencer Endorsements in India: Regulatory, Contractual and Ethical Dimensions

Introduction

Endorsements by celebrities and influencers have long been a cornerstone of brand communication in India. From product launches to digital campaigns, brands increasingly rely on public personalities to shape consumer perceptions and drive trust.

However, with growing consumer awareness, digital amplification, and regulatory oversight, the landscape of endorsement liability has undergone a fundamental transformation.

The contemporary framework governing endorsements in India now rests on three pillars:

1. Statutory regulation under the Consumer Protection Act, 2019 (“CPA 2019”) and the Central Consumer Protection Authority (CCPA) Guidelines (2022);
2. Self-regulatory standards under the Advertising Standards Council of India (ASCI) Code and Influencer Guidelines (2023 update); and
3. Contractual and ethical governance through endorsement and influencer agreements.

The Regulatory Context: From Caveat Emptor to Accountability

Historically, Indian advertising law placed primary responsibility for misleading advertisements on manufacturers and advertisers, not endorsers. Celebrities were viewed as “faces” rather than participants in commercial speech.

This changed following public outcry over product controversies, most notably, the Maggi noodles case (2015), where celebrity endorsers faced scrutiny for allegedly promoting unsafe food products.

The introduction of the Consumer Protection Act, 2019 marked a decisive shift. For the first time, the statute recognised endorsements as a form of advertising representation, extending accountability to endorsers and influencers who participate in shaping consumer choice.

Statutory Framework under the Consumer Protection Act, 2019

1. Key Provisions

The CPA 2019 defines a “misleading advertisement” (Section 2(28)) as one that gives a false description, makes false claims, misrepresents quality or quantity, or deliberately conceals important information likely to mislead consumers. Section 21 empowers the Central Consumer Protection Authority (CCPA) to:

• Direct discontinuation or modification of misleading advertisements;
• Impose fines up to ₹10 lakh for a first offence, and ₹50 lakh for subsequent offences; and
• Prohibit endorsers from appearing in advertisements for up to one year (first offence) and three years (subsequent offences).

2. Applicability to Endorsers

The CCPA’s jurisdiction explicitly extends to “endorsements”, defined as any representation or statement made by an individual or group promoting a product or service. This includes both traditional celebrities and digital influencers.

The emphasis is not on intent but on effect; an endorser may be held liable even if unaware of the product’s defects, unless they can demonstrate due diligence.

The CCPA Guidelines on Endorsements, 2022

The CCPA Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements (effective 9 June 2022) operationalise the CPA framework.

1. Key Obligations

• Due Diligence: Endorsers must verify that claims made in advertisements are truthful and substantiated by evidence.
• Disclosure of Material Connection: Endorsers and influencers must clearly disclose any financial or other benefit received from the brand.
• Avoidance of Prohibited Products: Endorsements of banned or restricted products (e.g., tobacco, alcohol, health cures without approval) are prohibited.
• Liability: Both the brand and the endorser are jointly responsible for misleading claims.

2. Enforcement Powers

The CCPA has authority to issue notices, order ad modifications, impose penalties, and ban endorsers. Non-compliance can attract fines and reputational risk especially as CCPA actions are public and widely reported.

3. “Due Diligence” – The Emerging Standard

• Review of relevant evidence or product data;
• Reliance on credible certifications or approvals; and
• Documentation of verification steps taken before endorsement.

In essence, endorsers must show they acted as a reasonable person of ordinary prudence before making representations to the public.

Self-Regulation: ASCI and the Influencer Code

The Advertising Standards Council of India (ASCI) complements statutory regulation through its Code for Self-Regulation in Advertising and Influencer Advertising Guidelines (2023 update).

1. The ASCI Code

The Code mandates that all advertisements:

• Be truthful and not misleading;
• Not exploit consumer trust; and
• Ensure claims are capable of substantiation.
• ASCI’s complaints mechanism provides a quicker, reputationally driven form of enforcement that brands often prefer to resolve without litigation.

2. Influencer Guidelines

• Mandatory disclosure tags (#Ad, #Sponsored, #Collaboration) on all paid or barter-based promotions;
• Platform-specific visibility standards (e.g., spoken disclosure in videos); and
• Avoidance of false testimonials or unverified product claims.
• Violations can lead to ad takedowns and referral to the CCPA for further action.

Scope of Liability: What Constitutes a Misleading Endorsement

Liability may arise not only from overtly false claims but also from implication, omission, or exaggeration, such as:

• Claiming medical or nutritional benefits without scientific proof;
• Depicting personal use without actually using the product;
• Concealing paid partnerships under “organic content”;
• Omitting disclaimers or risk disclosures;
• Using doctored visuals or “before-after” comparisons without basis.

Endorsers who repeat brand-provided statements without verification risk being treated as joint tortfeasors under consumer law.

Illustrative Cases and Enforcement Trends

1. The Maggi Case

The Nestlé Maggi noodles controversy (2015–2018) involved celebrity endorsers being questioned by regulators for allegedly misleading consumers about product safety. Though no liability was imposed, it catalysed the introduction of explicit endorser accountability provisions in the CPA 2019.

2. Pan Masala and Surrogate Advertising

The Ministry of Information and Broadcasting and the CCPA have repeatedly acted against surrogate advertising – ads for “mouth fresheners” or “music CDs” resembling tobacco brands. In 2023, several leading actors and cricketers were issued notices under Section 21 for such promotions.

3. Crypto and Fintech Endorsements

With unregulated digital assets and trading apps proliferating, the CCPA and SEBI issued advisories in 2023–24 cautioning celebrities and influencers to avoid endorsing financial products without requisite licences or disclaimers.

The principle: high public reliance creates high responsibility.

Digital Influencers: The Expanding Universe of Accountability

The CCPA and ASCI explicitly include social media influencers within the definition of “endorser.” This covers individuals, groups, and even AI-generated avatars that promote goods or services.

Influencers are liable for:

• Failing to disclose paid relationships;
• Making unverifiable claims;
• Posting reviews without experience or evidence; and
• Using endorsements in regulated sectors (healthcare, finance) without expertise or approvals.
• Even micro-influencers with limited followership are not exempt – the standard is based on influence, not audience size.

Emerging Legal Frontiers: AI, Virtual Endorsers, and Data Protection

1. AI-Generated Endorsements

Brands are increasingly experimenting with AI-generated influencers. However, such content raises issues under:

• The Copyright Act, 1957, for unauthorized use of likeness or works;
• The DPDP Act, 2023, for processing biometric data without consent; and
• The CPA 2019, for misleading or synthetic advertising.
• The liability remains with the brand and the agency controlling the content.

2. Deepfakes and Misuse of Likeness

Using a celebrity’s image or voice without consent constitutes infringement of personality rights and may attract claims under the Torts of Passing Off and Privacy Law. The CCPA can also treat such acts as deceptive representation.

Contractual Risk Allocation: Best Practices in Endorsement Agreements

The endorsement agreement is a key risk-management tool for both brands and endorsers. A robust contract should include:

Well-drafted contracts also address morality clauses, governing situations where the endorser’s personal conduct or public image adversely impacts brand reputation.

Data Protection and Privacy Considerations

The Digital Personal Data Protection Act, 2023 introduces obligations that intersect with endorsement activities:

• Endorsers collecting or sharing user testimonials must obtain consent from individuals.
• Brands using customer data in ads must comply with purpose limitation and retention principles.
• Unauthorized use of personal likeness through deepfakes or synthetic content may amount to data misuse.
• Non-compliance can attract significant monetary penalties (up to ₹250 crore per instance).

Reputational and Criminal Exposure

Beyond regulatory fines, endorsers may face:

• Civil liability for damages under tort law;
• Criminal liability under Sections 417–420 of the Indian Penal Code for cheating or fraudulent representation; and
• Public backlash, which often carries greater long-term impact than formal penalties.

In practice, reputational consequences now act as a parallel form of enforcement, amplified by social media scrutiny.

The Global Context

India’s endorsement regime aligns with global standards:

• The FTC (U.S.) Guides require disclosure of material connections.
• The UK Advertising Standards Authority (ASA) treats influencers as traders when promoting goods for payment.
• The EU Digital Services Act (2024) mandates transparency in online advertising.
• However, India’s framework stands out for integrating statutory enforcement (via CCPA) with self-regulation (via ASCI), creating a hybrid system of accountability.

Compliance Checklist for Brands and Endorsers

Strategic Considerations for Counsel and Marketing Teams

To operationalize compliance, organizations should:

1. Embed legal review at the creative stage of ad development;
2. Train marketing and influencer teams on CCPA and ASCI obligations;
3. Adopt internal endorsement policies, with escalation procedures for risky categories (e.g., health, finance);
4. Monitor live campaigns for disclosure compliance and consumer feedback; and
5. Conduct periodic audits of influencer collaborations and content archives.

Legal teams must act not as gatekeepers but as strategic enablers – helping brands communicate credibly within lawful boundaries.

Ethical and Social Dimensions

Regulation can mandate disclosure, but not ethics. Celebrities and influencers hold disproportionate power in shaping public opinion, particularly among younger audiences. Their endorsements carry not just legal but moral weight. Promotion of products that are environmentally harmful, socially regressive, or health-risking may attract public backlash even if technically lawful.

As public discourse matures, ethical compliance beyond legal minimums is emerging as a competitive advantage. Responsible endorsements reinforce consumer trust and align with ESG-conscious brand values.

Conclusion: Influence with Integrity

The transformation of India’s endorsement ecosystem represents a broader evolution in market governance from glamour-driven persuasion to evidence-based credibility. For endorsers, the message is unequivocal: influence is now a regulated asset. For brands, endorsement is no longer a marketing decision alone, it is a compliance function intertwined with reputation management.

As digital ecosystems expand and consumers demand authenticity, trust becomes the ultimate differentiator. The next phase of Indian advertising will belong to brands and personalities who combine creativity with accountability, and fame with responsibility. Legal diligence, ethical advertising, and transparent communication are no longer just best practices,they are business imperatives in the age of informed influence.

Authored by – Tanya Gupta