How influencers can stay out of legal trouble

A flurry of legal and enforcement actions against leading brand influencers has raised questions on what is kosher for social media promotion and what isn’t. The spotlight on influencers has turned harsher, along with the rise of the category as a professional choice for web-savvy youth with a pulse on their audience. While building and growing a social media audience is key for influencers, what’s often left out is the nitty-gritty of rules, laws and taxation. We explore some of the key issues that new and established influencers must contend with in their social media journey.

Wake-up call: Influencers under fire

Just this month, the Directorate of Enforcement (ED) issued notices to leading influencers including Saurav Joshi, Abhishek Malhan, Purav Jha and Elvish Yadav, accusing them of endorsing Hibox, an app linked to a ₹500 crore investment scam. These influencers were promoting something they likely didn’t fully understand, highlighting the importance of doing one’s homework before signing any deal.

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On 26 September, the Delhi High Court ordered Prashant Desai to remove videos in which he criticized the sugar content of the popular health drink Complan. The court’s message was clear: If you’re dishing out advice, make sure you’ve got the facts to back it up. A slip-up like this can cost you big time, both in reputation and in cash.

The cases come as a reminder that with great influence comes great responsibility.

Due diligence is a must

Social media influencers must start with the Advertising Standards Council of India’s (ASCI) rulebook. Its guidelines are all about one thing: due diligence. If you’re going to promote a product, make sure your claims are backed by facts, especially in industries like health and finance. An endorsement based on errors could attract charges under the Consumer Protection Act, 2019.

“The guidelines issued by Central Consumer Protection Authority require that endorsements in an advertisement must reflect genuine and reasonably current opinion of the individual or organization endorsing any product or service in the advertisement, and that any representation should be based on adequate information or experience with the relevant products or services. Therefore, influencers or celebrities promoting any product or service in collaboration with an advertiser should do their own due diligence on the products or services as well as the advertiser,” said Tanu Banerjee, a partner at Khaitan & Co.

“If influencers are unable to substantiate such due diligence at their end, the authorities could hold them liable as well, where the statements made in an advertisement are found misleading or deceptive,” she added.

Talent agencies to the rescue

Many influencers rely on talent management agencies who fetch deals and handle the legal fine print.

“Like any public figure, influencers must be responsible for the messages they deliver. Verifying the brand and product, and reviewing scripts before content creation is critical, either by the influencer or their agency,” said Priyanka Padode Sheth, head of business and operations at IPLIX Media.

So, if you’ve got an agency in your corner, make sure it is doing the heavy lifting in vetting brands and contracts.

Be transparent: your audience will love you for it

ASCI mandates influencers to clearly label all paid promotions, sponsored posts and ads. That means no sneaky ads disguised as regular content. Tags like #ad, #sponsored and #paidpromotion aren’t just hashtags; they’re necessary and help maintain trust with your audience. Though some influencers still avoid these disclosures, more are recognizing the value of transparency.

“The audience values authenticity, and we’ve seen a nearly 30% annual growth in influencers voluntarily disclosing brand collaborations,” said Shudeep Majumdar, co-founder of influencer marketing agency Zefmo.

Your followers want to know when you’re being paid for a post, and being upfront about it can actually make them trust you more.

Contracts and paperwork: not glamorous, but essential

A quick brand deal via DM and instant payments may look tempting, but without proper paperwork, you’re opening yourself up to late payments, creative disputes and legal battles.

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“Many brands offer quick payments via social media DMs, bypassing the hassle of paperwork. But without contracts, influencers have little legal recourse if something goes wrong,” an influencer said on the condition of anonymity.

Get everything in writing—contracts, invoices, deliverables. It can save you many headaches down the road.

Know your finances: File taxes, register for GST

If you’re earning over ₹20 lakh annually, you need to register for goods and services tax (GST) and file your taxes. Don’t wait until tax-filing season to figure out the tax matters; get professional help early if you need it.

“Financial literacy is essential for everyone, including influencers. If you’re unsure, seek professional help from a chartered accountant,” said Suraj Pal Singh, a fashion, travel and lifestyle influencer with 1.1 million followers on Instagram.

Say no to risky collaborations

Be picky about the brands you partner with. Companies operating in sectors prohibited for advertising like betting, tobacco and alcohol might offer a fat paycheck. But is it really worth risking your credibility or, worse, legal action?

“These brands sometimes offer double or triple the usual amount, but promoting them can harm our followers. We need to put their well-being first and avoid such collaborations,” Singh added.

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ASCI chief Manisha Kapoor said, “Influencers need to be particularly careful about associating with categories that have certain restrictions on advertising via various laws, such as state excise laws in the case of alcohol, or laws pertaining to gambling. Most states have banned these promotions and influencers could be in violation of such laws. Ignorance of the law is not an excuse.”

Just because a deal is on the table doesn’t mean you should take it. Long-term success in the influencer world is all about protecting your personal brand and your followers’ trust.

The bottom line: Protect yourself and your brand

Being an influencer is more than just posting pretty pictures and landing brand deals. By sticking to ASCI guidelines, doing your due diligence, being transparent, and keeping your finances in check, you’ll not only avoid legal trouble but also build a reputation that stands the test of time.