Accountability of social media platforms for misleading advertisements

Posted On - 10 August, 2022 • By - Souvik Ganguly


Marketing on social media platforms has emerged as one of the fastest and efficient modes of promoting any activity whether linked to business, social activity or governance. With an increase in online advertisements regarding all subject matters, concerns over transparency, accountability, and unethical marketing practices around such online advertisements have also increased remarkably. Though illegal in its most obvious form, false or misleading advertisements on social media platforms can occur in the most subtle manner which may be difficult to establish as outright deception. Accordingly, protection of consumers from misleading advertisements, and strategies to counteract it are important issues that must be addressed.

Misleading Advertisements and Social Media Platforms

We have earlier authored short articles on liability of business enterprises emanating from misleading advertisements on social media platforms that elaborate on the concepts of social media platforms and misleading advertisements under Indian laws. Please click here and here to read our earlier coverage.

Laws regulating the activities of Social Media Platforms

There is no comprehensive and omnibus law regulating the activities of social media platforms in India. However, a few statutes and the regulations detailing such statutes address varying issues pertaining to online advertisements by social media platforms in India. Apart from statutory regulations, social media platforms may also put in place self-regulations to monitor activities on their platform.

1.  Information Technology Act, 2000

Platforms hosted by social media platforms are governed by the Information Technology Act, 2000 (IT Act). Section 79 of the IT Act prescribes the concept of ‘safe harbor’ that protects these social media platforms from being held liable for any illegal act of third parties and provides immunity from liability arising from such acts. Notably, the IT Act extends the protection under section 79 to only those social media platforms which merely act as a facilitator and are not involved in the creation or modification of the content hosted on its platform. Further, to claim protection under section 79, social media platforms must also comply with the provisions of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (Intermediary Rules) (summarized below). In case of non-compliance with the Intermediary Rules, social media platforms may lose their immunity under section 79 and be held accountable under the IT Act as well as the Indian Penal Code, 1860, for publishing false or misleading advertisements.

Accordingly, while hosting advertisements on its platform, social media platforms must ensure that they have not in any manner assisted in the production of such advertisements. Further, business enterprises responsible for such advertisements must be under explicit obligations to ensure that the advertisements comply with all applicable laws, including any specific criteria as prescribed by the Intermediary Rules.

2.  Intermediary Rules

The Intermediary Rules place definitive obligations upon social media platforms, such as the requirement to inform users about the rules, regulations, privacy policy, user agreements governing the use of the platforms, observing due diligence while discharging their duties and mandating the appointment of grievance redressal officer for redressal of complaints, etc. Non-compliance with the Intermediary Rules, the social media platforms will cease to enjoy the safe harbor protection under the IT Act and will be exposed to significant liability as highlighted under the aforesaid paragraph.

Additionally, the Ministry of Electronics and Information Technology has recently proposed to amend the Intermediary Rules vide its notification dated 06 June 2022 (Amendment Notification). The Amendment Notification proposes to place onerous diligence requirements on social media platforms including its responsibility to ensure that users of the platform are complying with the Intermediary Rules. The Amendment Notification also proposes to establish a government committee for adjudicating appeals against orders issued by grievance redressal officers of the social media platform, while prescribing strict timelines for acknowledgement of such user complaints. The Amendment Notification also proposes rigorous timelines for redressal of complaints. Social media platforms will be required to act upon and redress user complaints for takedown of information within 72 hours from receipt of complaints, while other complaints may be resolved within the pre-existing timeline of 15 days.

While the above amendments are currently in draft form and have been released for public comments, it is recommended that detailing the requirements to satisfy compliance with the Intermediary Regulations is not kept vague to: (a) prevent unintended use of the Intermediary Regulations to harm the messenger, i.e., the genuine social media platform; and (b) establish regulatory tolerance for the genuine social media platforms who are merely acting as the ‘postman’.

3.  Data Protection

Social media platforms hosting advertisements on their platforms are also required to comply with the data protection norms as prescribed under the IT Act, and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, with respect to any personal information or sensitive personal data or information collected by such intermediaries for the provision of more targeted advertising services.

4.  Consumer Protection Act, 2019 and Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022

The Consumer Protection Act, 2019 (Consumer Protection Act) and the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022, issued by Central Consumer Protection Authority (CCPA Guidelines) prescribe certain key requirements in relation to regulation of advertisements, including online advertisements in India.

While the CCPA Guidelines are applicable to all forms of advertisement regardless of form and medium, the guidelines do not provide any particular requirements for social media platforms that merely host such advertisements on its platform. However, as a matter of good governance, social media platforms may consider putting in place mechanisms to ensure that the advertisements hosted by them are in compliance with the CCPA Guidelines.

Our thoughts

India has in recent times, witnessed the far-reaching impact as well as the future potential of advertisements on social media platforms. Even though the current Indian legal framework for such advertisements may be a co-regulatory model i.e., a mix of both statutory as well as self-regulatory frameworks, significant compliance requirements have been prescribed under statutory framework, and non-compliance with the same may result in imposition of penalties on social media platforms hosting such advertisements.

This is further exacerbated by the intrinsically dynamic and continually evolving nature of these social media platforms and the regulations put in place to deal with any content hosted by these platforms. It is therefore recommended that laws governing social media advertisements should create an enabling environment by ensuring that the social media platforms are taken to task in the event there is a failure to act in a reasonable manner to prevent misleading advertisements. In the absence of such failure, regulatory intervention should only be for the cause of growth of social media platforms, to enable further reach of these platforms to the deep corners of India for better awareness of product/ services, relevant to each segment of our population and inclusive governance.

Author: Souvik Ganguly

The information contained in this document is not legal advice or legal opinion. The contents recorded in the said document are for informational purposes only and should not be used for commercial purposes. Acuity Law LLP disclaims all liability to any person for any loss or damage caused by errors or omissions, whether arising from negligence, accident, or any other cause.