A Look at AdTech Regulations in India: Regulations on Deepfakes, Paid Endorsements, and Dark Patterns

India’s advertising regulatory landscape is decentralized; there is no central statutory agency or uniform legislation governing the industry as a whole. The Indian advertising market is overseen by a non-statutory body, i.e., the Advertising Standards Council of India (“ASCI”), which relies on self-regulation by advertisers. Consumer protection in India is regulated under the aegis of the Consumer Protection Act, 2019 (“CPA”), and is enforced by the Central Consumer Protection Authority (“CCPA”).

The CPA regulates and treats consumer rights violations, such as unfair trade practices and misleading advertisements, as being prejudicial to public interest, and provides the CCPA with the power to make regulations and levy heavy penalties for contravention of the CPA and its regulations. In recent times, the CCPA has taken strides in protecting consumers from deception and being misled in light of rapidly evolving digital media and the nature of advertisements. This article will set out a brief overview of the latest developments in dealing with advertisements, often obscured to the common man by deepfakes, paid endorsements and dark patterns, within the Indian regulatory space.

Deepfakes are essentially synthetic media capable of digitally generating and manipulating a person’s likeness by leveraging tools such as machine learning and artificial intelligence. Earlier this year, a morphed video of the chief executives of two Indian stock exchanges, the Bombay Stock Exchange and National Stock Exchange, had surfaced giving stock recommendations to the general public, prompting the stock exchanges to caution investors not to rely on these videos.

In India, although there is no specific law yet that governs deepfakes, legal remedies against them can be found in current penal laws. Under the Indian Information Technology Act, 2000, Sections 66C (punishment for identity theft), 66D (punishment for cheating by personation), and 67 (punishment for publishing and transmitting of obscene material) may apply. Sections 318 (cheating), 319 (cheating by personation), 336 (forgery), and 356 (defamation) under the newly revamped Bharatiya Nyaya Sanhita, 2023 (which replaced the Indian Penal Code, 1860) may also be of use.

Additionally, the Union government, on November 7, 2023, issued an advisory to all social media intermediaries, instructing them to detect and promptly remove misinformation and deepfakes within 36 hours of receiving reports of the same as per the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Intermediary Rules”). In another advisory dated December 26, 2023, intermediaries were urged to clearly communicate content prohibited from being hosted on their platforms, including impersonation, to users via user policies and agreements.

Dark patterns are deceptive design techniques that are employed to compel or influence user behaviour and choices online. They can be found in the form of subscription mailing lists that are hard to opt out of, finding automatically included items in one’s carts during online shopping, or even concealed costs to an item that are only revealed during or after a purchase. The CCPA stepped up against these deceptive practices by issuing the Guidelines for Prevention and Regulation of Dark Patterns on November 30, 2023 (“Dark Pattern Guidelines”) under the overarching CPA.

Presently, the Dark Pattern Guidelines have identified 13 dark patterns inter alia including “drip pricing”, “confirm shaming”, and “forced action” that often induce a sense of shame, guilt or urgency amongst consumers to make a purchase or take a certain action. These guidelines apply to and prohibit a broad spectrum of entities, such as sellers, advertisers, and platforms systematically providing goods and services in India from engaging in the 13 specified dark patterns. While this is a welcome step towards the protection of consumer rights, the Dark Pattern Guidelines are silent on any punishment criteria or the framework for enforcement action by the CCPA for a contravention of the guidelines.

Noting the damaging effect on consumers due to false or misleading advertisements and endorsements, the CCPA on June 9, 2022 issued the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements (“Advertisement and Endorsement Guidelines”) under the aegis of the CPA. These guidelines supplement the largely general regulation of misleading advertisements under the CPA, by setting out detailed parameters of advertisements that are permissible or prohibited, regardless of their form, format, or medium.

These guidelines apply to all manufacturers, service providers, traders, advertising agencies or endorsers to whom the good or service being advertised relates. Duties are also placed upon manufacturers, service providers, advertisers and advertising agencies, to (inter alia) provide substantiable descriptions and claims in advertisements, source and date of independent research referenced in advertisements, and generally refrain from abusing the trust of consumers. Endorsers are required to carry out their own due diligence in terms of reflecting genuine and reasonably current opinions while making their representations. The latter should be based on adequate information and should not be deceptive. Further, in cases where the endorser has a ‘material connection’ with the advertiser, trader, etc. of the endorsed product, which may affect the credibility of the endorsement, and the connection is not reasonably expected by the audience, such connection must be fully disclosed.

Additionally, the Department of Consumer Affairs also issued additional guidelines for celebrities, influencers, and virtual influencers who endorse health and wellness products or services (“Health Influencing Guidelines”) on August 10, 2023, expanding the scope of the Advertisement and Endorsement Guidelines. The Health Influencing Guidelines require individuals sharing information, promoting products or services or making any health-related claims to display a disclosure or disclaimer during endorsements, promotions or at any instance of making health-related assertions. Much like in the Advertisement and Endorsement Guidelines, these guidelines also encourage celebrities, influencers, and virtual influencers to exercise their own due diligence prior to making their endorsements.

India is at a crucial juncture when it comes to protecting consumer rights, particularly in the online realm. The recent advertising and consumer law regulations in India against deepfakes, paid endorsements, and dark patterns reflect a proactive approach by the Indian government towards safeguarding consumers’ interests and promoting transparency in advertising practices. However, there are still gaps and challenges that need to be addressed, particularly in the areas of privacy protection and comprehensive regulation of evolving technologies like deepfakes. Inter-ministerial collaboration and closer alignment with existing laws are essential for ensuring the effectiveness of these regulations and maintaining a fine balance between consumer protection and technological innovation.

About the author: Kalindhi Bhatia is a Partner and Arushi Mukherji is an Associate at BTG Advaya.

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