Influencer Marketing: Legal Pitfalls and Precautions for Brands and Influencers

Influencer marketing is no longer a nascent trend—it's now a cornerstone of modern brand strategy. From tech startups to fashion houses, companies across industries are leveraging social media personalities to reach consumers. But this high-impact marketing tool also brings with it a set of legal challenges, often overlooked by both brands and influencers. In the absence of a well-drafted agreement and clear legal understanding, collaborations can turn into costly disputes.

Key Legal Issues in Influencer Marketing

1. Disclosure and Transparency Obligations

India’s advertising landscape is now closely regulated by the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 issued under the Consumer Protection Act, 2019. These guidelines place a strict onus on influencers to:

• Clearly disclose paid collaborations (e.g. using tags like #ad or #sponsored)

• Avoid misleading representations

• Conduct due diligence on the product/service they promote

  
  

Non-compliance can lead to penalties of up to ₹10 lakhs for first offences and ₹50 lakhs for repeated violations, along with bans on endorsements.

2. Intellectual Property Rights

The use of copyrighted music, logos, or third-party content without permission can lead to infringement claims. Influencers must ensure that any content they post—be it music overlays, brand names, or visuals—does not violate IP rights.

Similarly, brands should ensure that influencers assign or license back the rights in content created under the collaboration, especially if it is to be repurposed for wider advertising.

3. Misrepresentation and False Claims

Influencers are increasingly being held liable for promoting products with exaggerated or false claims. The Delhi High Court and Advertising Standards Council of India (ASCI) have reiterated that influencers are considered “service providers” under the Consumer Protection Act and can be held accountable for misleading advertisements.

Brands also share joint liability. A lack of diligence or failure to pre-approve influencer content can expose them to consumer and regulatory claims.

What Influencers Need to Be Mindful Of

• Disclosures: Always tag promotional content in accordance with ASCI’s influencer guidelines.

• Claims: Avoid unverified or exaggerated statements about a product or service.

• IP Usage: Don’t use copyrighted music, photos, or brand content without explicit permission.

• Contractual Clarity: Ensure terms related to content rights, payments, exclusivity, and takedown obligations are clearly defined.

What Brands and Advertisers Should Be Cautious About

• Due Diligence: Vet influencers for past controversies, authenticity of engagement, and audience demographics.

• Content Approval: Include clauses mandating pre-approval of all posts and content.

• Reputational Risk: Be aware that influencer misconduct can result in reputational damage and even liability.

• Regulatory Compliance: Ensure the influencer is aware of applicable guidelines and disclosure obligations.

The Need for a Robust Influencer/ Collaboration Agreement

A carefully drafted influencer agreement can mitigate most of the risks mentioned above.

Key clauses should include:

1. Scope of Work

• Deliverables (number and format of posts)

• Platforms (Instagram, YouTube, etc.)

• Campaign timelines

2. Compensation and Payment Terms

• Fixed fee, performance-based bonuses, or product-based compensation

• Payment milestones and invoicing

3. Content Rights and Usage

• Ownership of content (often a license or assignment to the brand)

• Duration and territory of usage

• Rights to modify, reproduce or repurpose

4. Compliance and Disclosures

• Obligation to follow ASCI guidelines and platform policies

• Pre-approval requirement for all content

5. Confidentiality and Non-Disparagement

• Restriction on sharing sensitive brand information

• Prohibition on publicly disparaging the brand during or after the term

6. Indemnification and Liability

• Influencer to indemnify the brand for any third-party claims arising from breach of law, IP violations, or non-compliance with disclosure norms

• Brand to indemnify the influencer in case of defects or legal issues related to the product being endorsed

7. Termination and Takedown Rights

• Right to terminate for breach or reputational harm

• Obligation on influencer to delete/take down content post-termination

Conclusion

Influencer marketing thrives on authenticity—but in the eyes of the law, even authenticity needs to be regulated. Both influencers and brands must navigate this space with legal foresight and contractual safeguards. A failure to do so not only risks regulatory action and reputational damage but may also lead to expensive litigation.

At Apar Law, we assist brands and influencers in drafting enforceable, custom-tailored influencer agreements and ensuring compliance with India's evolving advertising and consumer protection frameworks. Whether you’re a startup seeking to amplify reach or a seasoned creator negotiating brand deals, a sound legal foundation is non-negotiable.