Influencer Fraud In Online Platforms
π 1. Introduction: What is Influencer Fraud?
Influencer fraud refers to dishonest, deceptive, or unethical practices by social media influencers or digital creators, including:
Promoting fake or harmful products/services.
Misrepresenting paid advertisements as personal opinions.
Falsifying engagement metrics (likes, followers, views).
Promoting scams or financial schemes.
Giving unverified health/financial advice.
Legal Framework in India:
Consumer Protection Act, 2019 (with 2022 Guidelines on Endorsements)
Information Technology Act, 2000
Indian Penal Code (IPC) β Sections on fraud, cheating (e.g., 415, 420 IPC)
SEBI Act (for financial/investment promotions)
Drugs and Magic Remedies Act (for misleading health claims)
βοΈ 2. Key Case Laws and Legal Incidents of Influencer Fraud in India
β 1. ASCI v. Health & Fitness Influencers (2021β2023)
Facts:
The Advertising Standards Council of India (ASCI) flagged multiple fitness influencers for endorsing unverified supplements and steroids without proper disclaimers.
Findings:
No disclosure of paid promotions.
Promoted potentially harmful products.
Outcome:
ASCI issued notices and forwarded cases to the Ministry of Consumer Affairs for action under the Consumer Protection Act, 2019.
Significance:
First major regulatory intervention against health-related influencer fraud.
β 2. Securities and Exchange Board of India (SEBI) v. Finfluencers (2023)
Facts:
SEBI acted against several so-called "finfluencers" (financial influencers) who promoted stocks and investment schemes without SEBI registration.
Example Case:
An influencer promoted a penny stock claiming guaranteed profits, causing retail investors to suffer heavy losses.
Outcome:
SEBI:
Froze their bank accounts.
Banned them from investment advisory activities.
Imposed monetary penalties.
Significance:
Clarified that unauthorized financial advice on social media is punishable under SEBI Act and IPC.
β 3. Complaint Against Actress Rashmika Mandanna (2022) β Health Influencer Allegation
Facts:
A complaint was filed alleging that the actress promoted a βmiracle weight lossβ product on Instagram, which was fake and harmful.
Allegation:
Influencer misled consumers into buying unregulated health products.
Outcome:
Consumer forums directed platforms to flag misleading promotions, and the Ministry of AYUSH initiated scrutiny.
Significance:
Shows growing consumer accountability of celebrity influencers in digital endorsements.
β 4. Skincare Influencer Scam (Delhi Police Cyber Cell, 2023)
Facts:
A social media influencer with millions of followers promoted a skincare brand that never delivered products after receiving payment.
Findings:
Used fake reviews and paid followers.
Product was never dispatched.
Hundreds of complaints filed.
Outcome:
Delhi Police Cyber Cell arrested the influencer under Sections 420 (cheating) and IT Act provisions.
Significance:
Demonstrated that engagement manipulation and fake product promotion attract criminal liability.
β 5. Instagram Influencer Arrested for Crypto Scam (Hyderabad, 2022)
Facts:
A lifestyle influencer promoted a fake cryptocurrency investment scheme, promising double returns in 10 days.
Findings:
Influencer received commissions for every referral.
Victims lost crores collectively.
Outcome:
Arrested under:
Section 420 IPC
Section 66D IT Act
SEBI guidelines for investment fraud
Significance:
One of the first cases connecting influencer promotions with crypto-related scams in India.
β 6. Complaint Against Fashion Influencer for Promoting Counterfeit Goods (Mumbai, 2021)
Facts:
Fashion influencer was accused of promoting and selling fake branded clothing and accessories via Instagram and Telegram groups.
Outcome:
Customs and cybercrime units raided premises. Legal action taken under:
Trade Marks Act
Consumer Protection Act
Sections 420 and 486 IPC (counterfeit goods)
Significance:
Extended the scope of influencer liability to IP infringement and counterfeit sales.
π§ 3. Key Legal Principles Emerging from These Cases
| Legal Principle | Explanation |
|---|---|
| Disclosure of Sponsored Content | Influencers must disclose paid partnerships and ads under Consumer Protection (E-Commerce) Rules and ASCI Guidelines. |
| Due Diligence Requirement | Influencers must verify claims of the products/services they promote. |
| Regulatory Oversight by SEBI/ASCI | Investment and health-related content is now subject to sectoral regulation. |
| Criminal Liability under IPC & IT Act | Fraudulent or misleading promotions can attract criminal charges under Sections 420 IPC, 66C, and 66D IT Act. |
| Civil and Financial Penalties | Influencers can be fined or sued for damages if their endorsements cause consumer harm. |
π 4. Types of Influencer Frauds Seen in India
| Type of Fraud | Description |
|---|---|
| Fake Engagement Fraud | Buying fake likes/followers to inflate influence. |
| Undisclosed Paid Promotions | Not disclosing sponsored posts. |
| Promotion of Ponzi Schemes | Promoting get-rich-quick schemes or illegal investment plans. |
| Health Misinformation | Promoting unverified supplements, diets, or drugs. |
| Counterfeit Product Sales | Selling fake goods under the guise of authentic brands. |
| Affiliate Link Scams | Promoting phishing or fraudulent sites for commission. |
π 5. Conclusion
Influencer fraud is a growing concern in the Indian legal landscape, especially with the explosive rise of social media commerce. Courts and regulators have started recognizing:
The power of influencers in shaping public opinion and consumer behavior,
The need for regulation and accountability,
The importance of transparency, disclosure, and due diligence.
With increased complaints and litigation, influencers can no longer escape liability by claiming ignorance or third-party fault. They are now expected to act responsibly, and failure to do so can result in civil, regulatory, and criminal consequences.
β Bonus: Recent Developments
ASCI's 2023 Guidelines now require hashtags like #Ad or #Sponsored.
Consumer Affairs Ministry can now penalize influencers up to βΉ50 lakh for misleading advertisements.
SEBI is considering a "code of conduct for finfluencers".
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