Lying is unethical! Similarly, keeping information from loyal users is equally unethical. Hence, the government has developed new guidelines for social media influencers. Let’s explore more about it.
Giving wrong information or deliberately hiding any information during ads or promotions on social media platforms can now be costly.
According to the new guideline of the central government, every celebrity and social media influencer promoting a product or a service on any social media platform will also have to declare whether it is a paid promotion or not.
The Central Consumer Protection Authority (CCPA) may impose a fine of up to Rs 10 lakhs on companies, advertisers and influencers in relation to misleading advertisements. For repeated violations of the rules, the fine can be increased to Rs 50 lakhs, and the influencer may also attract a ban of six years on product promotions.
In the past few years, the number of FinFluencers or financial influencers has drastically increased on social media. They present themselves as financial gurus, give expert advice and then promote a product. Naive investors fall prey to them without knowing that they are being paid for giving such advice. In the end, investors have to bear losses if things go wrong.
So, will financial influencers also come under the purview of this new rule issued for social media influencers? Before getting to that, let’s understand what the new guidelines have to say.
New Social Media Guidelines
As per the new guidelines, all celebrities and social media influencers will have to declare whether they have received money for product endorsement. Not just that, they will also have to declare if they have used the product or not. Influencers will have to give declaration in the video itself.
If they promote the product on live stream, still, they will have to give correct information and declaration about the product.
Consumer Affairs Secretary Rohit Kumar Singh said that the new guidelines are issued under the purview of the Consumer Act, which is a step taken to protect consumers against unfair trade practices and misleading advertisements.
What About FinFluencers?
These rules are especially important for financial influencers, as it involves retail investors’ hard-earned money. According to Outlook, experts say that macro-financial influencers should follow these rules to have a better and clearer relationship with their subscribers.
However, the Securities Exchange Board of India (SEBI) is also working on guidelines to monitor financial influencers. A lot of influencers give advice without SEBI certification. Before giving any financial advice, financial advisors must register themselves with SEBI.
What Should Investors Do?
Avoid making investment decisions based on influencers’ recommendations on social media. Before proceeding with any investment or money-related advice, you should thoroughly research and consult your financial advisor.
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