The Rise of Social Media Influencers
In today’s world, a generation of young professionals known as social media influencers is rising at a rapid pace.
According to the INCA India Influencer Marketing Report 2022, the Indian influencer marketing industry is currently valued at INR 1275 crores. It will grow at a CAGR of 25% for the next 5 years.
India alone will be an INR 2800 crores market by 2026.
Being an influencer can be a rewarding career path for many people, but if they are not properly trained, their influence on others may cause more harm than good. Finfluencers can be a prime example of this concern.
A ‘FinFluencer,’ or financial influencer provides advice on financial matters, typically stock market trading, and personal investments.
Finfluencers started benefitting greatly from the huge rise of startups in the crypto industry.
Industry Experts are constantly pointing out that most financial content providers are not competent to provide advice as many of them are young people who are just getting started in financial investing.
Even Zerodha, the popular Indian financial services company warned investors to not take advice from “influencers”.
Zerodha’s cautious tweet about “influencers”
Reportedly some finfluencers, including popular YouTubers namely PR Sundar, Ankur Warikoo, Akshat Srivastav, and Booming Bulls had promoted Vauld.
Vauld is a Singapore-based KYC-compliant crypto exchange operating in India. It was founded by Darshan Bathija, and Sanju Sony Kurian in 2018.
But what went wrong with Vauld?
On the 4th of July, 2022 the crypto trading platform ceased customer withdrawal services.
Darshan Bathija, CEO of Vauld, stated that this was due to a variety of factors, including a volatile market. Approx 800,000 investors were struck with the bad news.
Azhar Jafri, an IIM-B Alum and Equity Investor called out the abovementioned influencers for promoting Vauld. “Most of these creators put up a sales pitch for Vauld in the name of educational content. While some said crypto is a volatile market and should be a small part of your investment portfolio, they mentioned it in passing,” mentioned Jafri.
This is not the first time a crypto controversy has occurred. News of this sort appears on the internet every other day.
But the Indian government came in full force to fix the situation.
The Government has introduced new endorsement guidelines for Celebs and Social Media Influencers.
On 20th January 2023, the Department of Consumer Affairs announced at a press conference that:
- It would now be mandatory for social media influencers to disclose promotional content following the Consumer Protection Act, 2019.
- The influences must endorse the products in clear language, and mention whether it is an “advertisement,” “sponsored,” or “paid promotion,”.
- They should refrain from endorsing any product or service they haven’t used themselves or for which they haven’t done their research.
- The disclosures should be prominently displayed in post descriptions, where hashtags or links can usually be found.
- According to the department, it must also be evident enough in the content.
- Social media influencers who won’t follow the guidelines would face a fine of up to $12,300. (1 million Indian rupees).
- For repeated offenses, the fine can go up to as much as $61,600 (5 million Indian rupees).
The government made it clear that both virtual avatars and social media influencers promoting products and services online must abide by the rules.
When it comes to promoted content in videos, the department said that:
- Disclosures for paid promos should be made in both audio and video format.
- It should not just be simply in the description and should be included in the video.
Do not blindly trust your favorite influencers
Rohit Kumar Singh, Consumer Affairs Department Secretary told the reporters, “Today’s guidelines are aimed at social influencers who have a material connection with the brand they want to promote on various social media platforms. So this is an obligation for them to behave responsibly,”
Manisha Kapoor, CEO, and secretary general of ASCI – Advertising Standards Council of India also mentioned, “Influencer violations comprise almost 30% of ads taken up by ASCI, hence this legal backing for disclosure requirements is a welcome step. The consumer affairs ministry had been in touch with ASCI to review the various global guidelines on influencers.”
Have you ever taken financial advice from social media influencers?
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