- 13 Jun 2025
Finfluencers in India: Liability Explained
Finfluencers or financial influencers operating on platforms like YouTube, Instagram, Telegram, and WhatsApp have become a dominant force in shaping retail investment behaviour. These social media personalities use entertaining content to attract millions of followers, often selling trading strategies, stock tips, or paid courses. While some contribute positively to financial literacy, many operate without legal registration, often crossing the thin line between financial education and illegal investment advice. The consequences are serious as investors suffer losses, and unregulated finfluencers escape liability due to vague disclaimers. This ungoverned rise has now drawn the attention of regulators like SEBI (Securities Exchange Board of India), CCPA (Central Consumer Protection Authority), and MeitY (Ministry of Electronics & Telecommunications).
Unlicensed Advice Disguised as Education: SEBI Draws the Line
SEBI has clarified, especially through its circulars dated October 2024 and January 29, 2025, that education and advice are legally distinct. If someone discusses only historical data (older than 3 months), avoids naming specific stocks or price points, and refrains from suggesting future action, it qualifies as education. However, real-time charts, live tickers, or “buy/sell now” calls, especially when combined with marketing of paid courses or Telegram group access that constitutes investment advice. Such acts, without SEBI registration, amount to unlawful activity under the SEBI (Investment Advisers) Regulations, 2013 and violate Section 12A of the SEBI Act, 1992.
Applicable SEBI Laws and Prohibitions
Section 12A of the SEBI Act, 1992 explicitly bars deceptive or manipulative conduct in the securities market. The SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (PFUTP Regulations) prohibit any misleading, manipulative, or deceptive activity related to securities. Regulation 3 bars fraudulent activities; Regulation 4(1)(s) includes mis-selling and promising assured returns. Under the Investment Advisers Regulations, Rule 13(b) prohibits giving misleading investment advice without disclosure, while Rule 15(9) mandates transparency and ethical conduct. These provisions impose civil penalties, disgorgement, and market bans on violators, and in some cases, even criminal action under Sections 24 and 27 of the SEBI Act may apply.
Finfluencer Case Studies: Illegal Gains and Market Bans
SEBI’s crackdown has already begun. In 2025, action was taken against Asmita Patel for running a stock trading school promising guaranteed return. SEBI alleged ₹54 crore in illegal earnings and ordered disgorgement of over ₹100 crore. Similarly, Ameet Savant’s firm "Crefin India" posed as "Ventura PMS" without authorization, raising ₹8.10 crore. SEBI ordered refunds and banned the promoters from the securities market. Even SEBI-registered IAs like Yogesh Kukadia misused licenses to operate through unregistered firms thereby violating both PFUTP and IA Regulations. These cases reflect how finfluencers bypass compliance using marketing gimmicks, mock endorsements, and deceptive disclosures.
Consumer Protection Act, 2019 and the CCPA’s Jurisdiction over Influencers
Finfluencers aren’t just answerable to SEBI. Under the Consumer Protection Act, 2019, the Central Consumer Protection Authority (CCPA) can take action under Section 21 against any advertiser, manufacturer, publisher, or social media influencer, who promotes a product or service using false, misleading, or unverifiable claims. Penalties include up to ₹50 lakh in fines and ban future endorsements. Repeat offences may even lead to imprisonment of up to 5 years. The CCPA Guidelines of June 2022 specifically mandate that endorsements must be based on genuine experience and disclose all material connections (e.g., sponsorships, affiliate commissions). Violations open the door to civil and criminal liability.
Platform Responsibility under IT Law: Can YouTube and Instagram Be Liable?
The Information Technology Act, 2000, especially Section 79, provides “safe harbour” to platforms like YouTube or Instagram, protects them from liability for third-party content. However, this protection is conditional. If platforms fail to act despite knowledge of illegal content (e.g., stock tips from unregistered finfluencers), they can lose this immunity. Under Section 79(3)(b) and relevant court directives or MeitY notices, platforms must act swiftly upon notification of unlawful content. SEBI’s Draft Guidelines of 2024 also propose AI-based content tagging, verified status labels, and compliance logs for finfluencer content, placing proactive duties on platforms, not just passive hosting roles.
Multiple Regulators, Fragmented Oversight: The Coordination Crisis
Finfluencer activity spans across financial sectors such as stock markets, mutual funds, insurance, online loans, bringing multiple regulators into play. SEBI oversees securities and mutual funds. Insurance products fall under IRDAI. Online loan apps and payment products are under central agencies such as RBI and Meity. The CCPA governs advertising, and the ASCI oversees advertising ethics. This creates regulatory overlap and confusion, especially when one finfluencer operates across all domains. Currently, there is no central portal for complaints, no unified investigation protocol, and no coordinated enforcement mechanism thereby giving rise to legal evasion.
Towards a Unified Framework for Digital Financial Advice
India urgently requires a Unified Digital Financial Promotions Framework. This must include:
- Mandatory registration of financial content creators who earn through sponsorships or affiliate links.
- Platform-level compliance dashboards with AI tools for flagging non-compliant financial content.
- A single complaint redressal portal managed jointly by SEBI, CCPA, IRDAI, and MeitY.
- Clear labelling standards for content: “sponsored”, “educational”, “promotional”, or “registered advice”.
Unless these mechanisms are built, finfluencers will continue to exploit grey zones between education, entertainment, and advice for endangering retail investors with sophisticated frauds masked as lifestyle content.
Conclusion: Legal Advice Must Come from the Lawful
Finfluencers may democratize financial awareness, but they cannot replace licensed, regulated advisors. India’s financial markets demand a higher level of compliance, especially when millions of rupees can be moved with one viral video. Laws already exist such as SEBI Act, PFUTP Regulations, CPA 2019 and Guidelines therein, and the IT Act, penalize misleading influence. The challenge is enforcement and coordination. Meanwhile, platforms must act, users must remain cautious, and content creators must respect the legal boundary between financial literacy and investment manipulation. In finance, credibility without compliance is a risk no nation can afford.
Disclaimer
The contents in this article are just for informational purposes only. Efforts have been made to ensure the accuracy and reliability of information, the author(s) and publisher do not guarantee its completeness or precision. Any matter written in this article does not express the opinion of the author or the publisher. Additionally, it does not reflect the views of the organisation. Readers should self-analyse the information and perceive accordingly. The author(s), The publisher and the organisation are not responsible for any losses or damage occurring due to the interpretation of the article.
