FTC says selling followers and likes is illegal, as well as posting fake reviews
Social Media Today reports that the FTC this week fined a Florida businessman to the tune of $2.5 million for selling "fake indicators of social media influence." It also warned Sunday Riley over writing fake product reviews on Sephora's website. The FTC claims she also instructed her employees to do the same.
To the broader digital marketplace, the FTC is sending out a signal. The $2.5 million fine handed out to German Callas Jr was over activities with his company Devumi and could prove to be a benchmark case for those involved in selling fake likes. The New York Times first broke the details of its investigation into Devumi last year and found the company was engaged in selling phony likes and followers to celebrities and influencers. The NY Times report said:
The NY Times report lead to Devumi shutting down, but it's thought the company had already generated about $15 million from selling digital fakes. Devumi agreed on a $50,000 settlement back in January with the New York Attorney General's office. The FTC has said that the new $2.5 million fine will be suspended once Mr. Calas has paid $250,000, but it warns that the full sum will be imposed if the businessman is later found to have "misrepresented his financial condition."
While there is now a legal precedent for pursuing fake like sellers, it remains difficult when offenders have no US presence. However, Facebook has recently extended its own initiative against the practice to sellers based in China. It seems that things are closing in on those who buy and sell fake popularity online.
In the case of Sunday Riley, a settlement was agreed with the FTC over allegations the company faked reviews to increase sales. That activity is said to date back to a 2016 email, in which Riley told her staff to create accounts to invent locations and skin types for fake reviewers. The employees then went on to post good reviews of Sunday Riley products and bad reviews of rival offerings.
The settlement doesn't dictate that Sunday Riley will have to issue any refunds, but the company has promised not to do it again. While that's a bit of a let-off in terms of a sanction, the company's brand image will likely take a hit.
I'd be interested to know what Warrior Forum members make of this. I guess that even though these practices are online, they're fraudulent - plain and simple. Regulation isn't always a good thing but is this a positive step for online marketing and a fair marketplace.
To the broader digital marketplace, the FTC is sending out a signal. The $2.5 million fine handed out to German Callas Jr was over activities with his company Devumi and could prove to be a benchmark case for those involved in selling fake likes. The New York Times first broke the details of its investigation into Devumi last year and found the company was engaged in selling phony likes and followers to celebrities and influencers. The NY Times report said:
| "Devumi sells Twitter followers and retweets to celebrities, businesses and anyone who wants to appear more popular or exert influence online. Drawing on an estimated stock of at least 3.5 million automated accounts, each sold many times over, the company has provided customers with more than 200 million Twitter followers, a New York Times investigation found." |
The NY Times report lead to Devumi shutting down, but it's thought the company had already generated about $15 million from selling digital fakes. Devumi agreed on a $50,000 settlement back in January with the New York Attorney General's office. The FTC has said that the new $2.5 million fine will be suspended once Mr. Calas has paid $250,000, but it warns that the full sum will be imposed if the businessman is later found to have "misrepresented his financial condition."
While there is now a legal precedent for pursuing fake like sellers, it remains difficult when offenders have no US presence. However, Facebook has recently extended its own initiative against the practice to sellers based in China. It seems that things are closing in on those who buy and sell fake popularity online.
In the case of Sunday Riley, a settlement was agreed with the FTC over allegations the company faked reviews to increase sales. That activity is said to date back to a 2016 email, in which Riley told her staff to create accounts to invent locations and skin types for fake reviewers. The employees then went on to post good reviews of Sunday Riley products and bad reviews of rival offerings.
The settlement doesn't dictate that Sunday Riley will have to issue any refunds, but the company has promised not to do it again. While that's a bit of a let-off in terms of a sanction, the company's brand image will likely take a hit.
I'd be interested to know what Warrior Forum members make of this. I guess that even though these practices are online, they're fraudulent - plain and simple. Regulation isn't always a good thing but is this a positive step for online marketing and a fair marketplace.
