A strong online following can be a powerful marketing tool, signaling legitimacy, quality, and, of course, popularity. The push to capitalize on the power of online influence has led to social media advertising and professional influencers, but also to dishonesty. Two companies, Devumi, LLC and Sunday Riley Modern Skincare LLC, recently settled FTC complaints alleging that they had engaged in deceptive tactics to boost their clients' social media influence.
In the first-ever complaint of its kind, the FTC alleged that Devumi sold fake followers, subscribers, views, and likes—which it called "fake indicators of social media influence"—to various parties who wanted to increase their influence on social media. The complaint alleged that Devumi operated multiple websites—Devumi.com, Buyview.co, Buyplans.co, and TwitterBoost.co—through which it sold over 58,000 orders for fake Twitter followers, 32,000 for fake YouTube views, 4,000 for fake YouTube subscribers, and 800 for fake LinkedIn followers. Of course, the purpose of Devumi's deception was not to deceive its customers (who were obviously complicit in the scheme), but to enable Devumi's customers to deceive their customers.
Moreover, the type of customers who were deceived—and the way in which that occurred—depended on the social media platform that was involved. The FTC alleged in the complaint, for example, that Devumi sold fake Twitter followers to actors, athletes, and other individuals who wanted to increase their appeal as influencers, and that it also sold fake Twitter followers to motivational speakers, law firm partners, and other individuals who wanted to boost their credibility to potential clients. Similarly, the complaint alleged that Devumi sold fake YouTube subscribers to the operators of YouTube channels and fake views to the posters of individual YouTube videos, allowing the purchasers of these fake indicators to deceive both potential viewers and potential music purchasers. And in addition, the complaint asserted, Devumi sold fake LinkedIn followers to marketing and public relations firms, software companies, financial services firms, and others to enable them to deceive potential clients, investors, partners, and employees.
The FTC alleged that indicators of social media influence are important metrics that businesses and individuals use in making decisions, including whom to hire, what to invest in, what to purchase, and what to listen to or watch. According to the complaint, fake metrics may cause customers to make "less preferred choices" and may undermine both "the influencer economy" and "consumer trust in the information that influencers provide."
Devumi and its owner, German Calas, Jr., agreed to settle with the FTC and enter into a stipulated order, now unanimously approved by the FTC commissioners, containing both injunctive and monetary provisions. In addition to prohibiting Devumi from participating in the sale of false indicators of social media influence, the order requires Mr. Calas to pay a $2.5 million judgment (the amount he allegedly received from Devumi or its parent company). But only $50,000 was immediately due, with an additional $200,000 due within one year and the remaining amount due only if Mr. Calas misrepresented his financial condition.
The FTC also recently settled a case with Sunday Riley Modern Skincare, LLC and its owner, Sunday Riley. The FTC's draft complaint alleged that Sunday Riley employees, including its owner, manipulated the ratings and reviews on cosmetics websites like Sephora. The company allegedly used fake accounts to post made-up positive reviews of Sunday Riley products and to dislike negative reviews from real consumers in an effort to cause the negative reviews to be removed from the site. The draft complaint included quotes from an email Ms. Riley sent to her staff members encouraging them to "create three accounts . . . registered as . . . different identities," to "create a new persona" for each account (and "choose their name, city, skin type"), to "[a]lways leave 5 stars" on Sunday Riley products, and to dislike any negative reviews. The email even said that in creating the reviews, they should "be very enthusiastic without looking like a plant," and it warned that they would "need to clear cookies and use the VPN [virtual private network] every time, or your account will be flagged." Moreover, Sunday Riley's Skincare Account Manager responsible for Sephora wrote at least two other emails encouraging managers and employees to write fictitious reviews (or at least reviews attributed to fictitious people), and reminded everyone "to follow the guidelines for VPN . . . so reviews don't get traced back to our IP address."
The FTC charged Sunday Riley with two violations of the FTC Act: making false or misleading representations that the fake reviews reflected "the independent experiences or opinions of impartial ordinary users of the products"; and deceptively failing to disclose that the reviews were actually written by Sunday Riley employees. In settling the matter, Sunday Riley agreed to a consent order that included injunctive provisions preventing it from misrepresenting the status of any endorser or reviewer and requiring the company to disclose the relationship between itself and reviewers. But the consent order required no monetary payment. While the Commissioners approved it on a vote of 3-2, the two dissenting Commissioners issued a statement objecting to the settlement because it "include[d] no redress, no disgorgement of ill-gotten gains, no notice to consumers, and no admission of wrongdoing." As a result, the dissenting Commissioners warned, the settlement would be "unlikely to deter other would-be wrongdoers" and do "little to address the epidemic of fake reviews online."
Social media influence can be critical to a company's success, but it needs to be honestly earned. As the cases of Devumi and Sunday Riley demonstrate, deceptive social media influence may invite FTC scrutiny.
The Cases are FTC v. Devumi, LLC, No. 9:19cv81419 (S.D. Fla.) and In re Sunday Riley Modern Skincare LLC, FTC No. 192-3008.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
