- India takes action to protect consumers from misleading financial claims by Ponzi apps and influencers on social media.
According to Finance Minister Nirmala Sitharaman, the government is not considering any proposal to regulate financial influencers on social media, but is working with the Reserve Bank of India and the Ministry of Electronics and Information Technology (Meity) to combat ‘Ponzi apps’ that make exaggerated financial claims. “There are also apps that are coming out and reaching out to people saying we can do this, we can do that, your money will fetch you this much—many of which are Ponzi apps on which we are working with Meity and the Reserve Bank, and clamping down on them like never before, so that we don’t get those Ponzi apps taking away hard-earned money,” the minister said during an interactive session with academics, students, and public intellectuals at the Ministry of Human Resource Development at Tumakuru in Karnataka on Sunday.
“At this time, I don’t have any proposals for regulating them (financial influencers).” “However, a word of caution is necessary,” she said, adding that consumers must be vigilant and conduct their own research before spending money in recommendations made by so-called “finfluencers. She stated that while some financial influencers provide objective advice, the majority could be influenced by other variables, and hence, customer verification was vital. “We must exercise caution. It’s our money, after all. You earned it, you save it, and you protect it,” she explained. To improve transparency and protect consumers, the government introduced new rules for social media influencers in January, requiring specific disclosures regarding brand relationships. Influencers who do not comply with the rules may face fines of up to ₹50 lakh, or be prohibited from endorsing products for a period of up to six years.
When there is a “material connection” between an advertiser and a celebrity or influencer, disclosures must be published. The guidelines come at a time when the influencer industry is expected to be worth $2,800 crore by 2025, as businesses increasingly rely on them to push items to their audiences in a relatable and personal way. The rules apply to everyone who has “access to an audience and the power to influence audience purchasing decisions.” An endorsement message’s disclosure should be clear and visible. In the case of an endorsement in a photograph, disclosure should be placed over the image so that people can see it. It should be included in the video rather than just in the description. In the case of a live stream, disclosure should be displayed continuously in the form of a ticker during the entire length of the stream, as per government guidelines.
