The organizers of Fyre Festival have been hit with two more class action lawsuits in connection with the failed music fest. On the heels of festival-goer Daniel Jung’s lawsuit, which was filed last week in California federal court, Chelsea Chinery, Shannon McAuliffe and Desiree Flores filed a breach of contract, negligent misrepresentation and fraud suit in Los Angeles County Superior Court against Ja Rule and Billy McFarlane. And another suit filed by Matthew Herlihy and Anthony Lauriello. 

Not wildly different from the suit that Jung filed, the suits filed by Chelsea Chinery, Shannon McAuliffe and Desiree Flores, and Matthew Herlihy and Anthony Lauriello both make negligence and fraud claims. Chinery, McAuliffe and Flores’s lawsuit is noteworthy, particularly because it speaks directly to the social media posts used to promote the festival, including those posted by Kendall Jenner, Bella Hadid, Hailey Baldwin, and Emily Ratajkowski, among other heavily-followed models and influencers.

While the lawsuit does not name the influencers as defendants, it certainly does place blame. As the plaitniffs’ attorney John Girardi told the Hollywood Reporter, the “social media ‘influencers’ made no attempt to disclose to consumers that they were being compensated for promoting the Fyre Festival.”

As we told you in the months leading up to the festival, the models’ social media promotion of the event, including disclosure-less Instagram posts that read, “So excited to announce the first ever #fyrefestival @fyrefestival,” likely runs afoul of the Federal Trade Commission (“FTC”)’s disclosure guidelines.

According to the FTC, if an individual is compensated in any way to promote/endorse a brand or product (compensation includes anything from a paycheck to free gifts, trips, lodging, etc.) or promote/endorse a brand with which he/she has a relationship, that needs to be disclosed “clearly and conspicuously” in connection with each instance.

The FTC – an independent government agency tasked with promoting consumer protection, and eliminating and preventing anticompetitive business practices – has explicitly stated that its guidelines apply no matter the medium. So, if such promotional/endorsement efforts occur on social media, they need to be disclosed; common disclosure language comes in the form of hashtags, such as “#ad” or “#sponsored.” 

Since none of the models’ Instagram posts – all of which result from a free trip provided for the models at issue courtesy of Fyre Fest, as well as handsome paychecks – include disclosures indicating this, they are likely in violation of the FTC’s guidelines. 

Jung’s suit also makes mention of the role of influencers in drawing festival-goers to the weekend-long festival, which has been described as “closer to ‘The Hunger Games’ or ‘Lord of the Flies’ than Coachella.” According to his suit, the models paid to promote the festival – “including Kendall Jenner, Bella Hadid, and Emily Ratajkowski” – were hired “to use social media to generate ticket sales.” (Jenner reportedly netted $250,000 for her promotional efforts). 

According to a statement provided to TFL from Jung’s counsel Ben Meiselas of Geragos & Geragos, APC: “Fyre Festival and it’s promoters recklessly stranded thousands of consumers in a festival of horror, and cost them thousands of dollars on travel, lodging and time off from work. Through this Federal Class Action will make sure to hold Fyre — and all those who recklessly and blindly promoted the festival — accountable to make sure all consumers receive not only a ticket refund but also 100 percent reimbursement for travel, lodging, time off from work, and any other incidental and consequential damages.”

From the sounds of things, the influencers might end up on the hook here in both lawsuits, and even if they are not implicated, they arguably do not come out scot-free by any means. Such increased attention on them and their often illegal advertising activities, not just by way of these lawsuits but also by the FTC (as indicated by its recent push to crack down on undisclosed advertising), certainly stands to make an impact.

With such bad press and litigation in mind, not only are brands going to be forced to take a long hard look at how they are employing influencers, but the influencers themselves need to ensure that they are, in fact, abiding by the FTC’s guides in order to avoid legal ramifications. Both influencers and digital media advertisers have been given a free pass for quite some time in terms advertising disclosures but it seems that this might not be the case for much longer. 

 image: @kyliejenner Instagram 

image: @kyliejenner Instagram 

In a landmark bout of activity, the Federal Trade Commission (“FTC”) has announced that it is, in fact, watching celebrities, athletes, and other influencers on Instagram. According to a statement from the government agency, after reviewing Instagram posts by celebrities and influencers, its staff has sent out more than 90 letters reminding influencers and marketers that they must clearly and conspicuously disclose their relationships when promoting or endorsing products through social media.

According to the FTC, “The letters were informed by petitions filed by Public Citizen and affiliated organizations regarding influencer advertising on Instagram, and Instagram posts reviewed by FTC staff. They mark the first time that FTC staff has reached out directly to educate social media influencers themselves.”

The FTC’s Endorsement Guides state that if there is a “material connection” between an endorser and an advertiser (aka: a connection that might affect the weight or credibility that consumers give the endorsement) that connection must be “clearly and conspicuously” disclosed, unless it is already clear from the context of the communication. A material connection could be a business or family relationship, monetary payment, or the gift of a free product. The FTC also states, “Importantly, the Endorsement Guides apply to both marketers and endorsers.” 

Influencers, Brands Put on Notice

The staff’s letters were sent in response to a sample of Instagram posts making endorsements or referencing brands

The FTC is not publicly releasing the letters or the names of the recipients of such letters at this time. However, we do know that undisclosed posts by: the Kardashian/Jenners, A$AP Rocky, David and Victoria Beckham; actresses Anne Hathaway, Blake Lively, Ashley Benz, Shay Mitchell, and Lucy Hale; models Bella and Gigi Hadid, Irina Shayk, Emily Ratajkowski, Naomi Campbell, Chrissy Teigen, and Heidi Klum; Scott Disick, Pharrell, Steph Curry, Zlatan Ibrahimovic, Drake, One Direction members Louis Tomlinson and Niall Horan; and Jennifer Lopez, among others, were specifically cited in Public Citizen’s formal complaint to the FTC

The letters each addressed the fact that consumers viewing Instagram posts on mobile devices typically see only the first three lines of a longer post unless they click “more.” The staff’s letters informed recipients that when making endorsements on Instagram, they should disclose any material connection above the “more” button.

The FTC’s letters also noted that when multiple tags, hashtags, or links are used, readers may just skip over them, especially when they appear at the end of a long post – meaning that a disclosure placed in such a string is not likely to be deemed a valid, conspicuous disclosed. 

Still yet, some of the letters addressed particular disclosures that are not sufficiently clear, pointing out that many consumers will not understand a disclosure – such as “#sp,” “Thanks [Brand],” or “#partner” – in an Instagram post to mean that the post is sponsored. In a blog post, the FTC recently held that disclosures, such as “Ad,” “Promotion,” or “Sponsored,” or with a hashtag like “#Ad,” are acceptable forms of disclosure. 

According to a statement provided to TFL from Public Citizen president Robert Weissman: “Today, the FTC has validated our concerns, sending 90 letters to influencers and also to the brands that employ them, informing them that their practices are in violation of FTC guidelines. This move is welcome, but insufficient.” 

He continued on to note: “Instagram has become a Wild West of disguised advertising, targeting young people and especially young women. That’s not going to change unless the FTC makes clear that it aims to enforce the core principles of fair advertising law.”

Now What?

While the FTC’s recent action does not come with any official enforcement action, the warning may be followed by a formal investigation and action that may include both permanent injunctive relief (which would bar the advertiser and influencer from engaging in such activity in the future) and disgorgement of any profits in connection with undisclosed sponsorships. 

Public Citizen’s campaign coordinator, Kristen Strader, stated: The FTC’s decision to send reminder letters to influencers in violation of FTC rules is only a first step. Until the FTC takes enforcement actions against repeat offenders, the culture around influencer marketing will not change and consumers will continue to be misled.”

Here at TFL have documented the extensive FTC regulation violations within the fashion industry in the past, including by the most heavily-followed influencers (see our list of the most flagrant abusers, here), as well as the industry’s top editors

Not sure how to disclose your sponsored posts, here is an easy how-to guide

THE FASHION LAW EXCLUSIVE – Alexa Chung and a handful of runway models have joined to file suit against luxury re-sale site, The RealReal. According to the lawsuit, which was filed last week in the U.S. District Court for the Southern District of New York, a federal court in New York, Chung – along with models Anastasia Kolganova, Astrid Baarsma, Leona “Binx” Walton, Briley Jones, Crista Cober, Daniela Witt, Georgia Hilmer, Grace Hartzel, Hedvig Palm, Julie Flemming, and Lineisy Montero, among others (the “Plaintiffs”), all of whom are presented by Next Models – allege that The RealReal has used their images and likenesses without the authorization to do so.

According to the complaint, “Each of the Plaintiffs is well-known as a model throughout the United States and in other countries throughout the world [and] each of Plaintiffs have earned considerable sums in exchange for the use of their name, image, portrait or likeness in connection with the sale or promotion of products or services which Plaintiffs elected to associate themselves with on terms and conditions agreeable to them.”

As such they claim that San Francisco-based The RealReal – by way of the array of street style photos that it uses on its site and in its email marketing campaigns – is “trading on their image and likeness to market and promote the use of [The RealReal’s] services to sell products through [its] marketplace.”

The Plaintiffs allege that “their agent’s general counsel, Mr. Alan Kannof, Esq., issued and delivered a letter to [The RealReal], dated April 10, 2016 … notifying it of the unauthorized uses of the Plaintiffs’ images, and demanded that [it] cease and desist all such uses, and refrain from any and all future uses of Plaintiffs’ images.” They claim that even after sending that letter and a subsequent cease and desist, The RealReal continued to use some of the Plaintiffs’ images and likenesses in their email marketing.

The complaint continues on to note, “Each of Plaintiffs’ livelihood is based upon their respective image, persona, face and physical attributes and how such images may serve to promote or advertise the sale of products or services.” In case that’s night enough, the Plaintiffs claim that The RealReal “altered, mutilated and radically changed such public images of the Plaintiffs in a cynical effort to avoid liability under state and federal law, and with full knowledge that it had not sought or obtained permission from any of the Plaintiffs, or their authorized agent, to mutilate such images.”

Moreover, they assert that despite The RealReal being a “sophisticated licensor and licensee of intellectual property,” the company did not “seek the permission or consent from any of the Plaintiffs, nor their authorized agent, to alter any of the Plaintiffs’ images and likenesses.” Instead, the e-commerce site used the imagery without authorization and has “commercially benefited from its uses of the Plaintiffs’ names, images, and/or likenesses.”

While it appeared as though the parties might be able to resolve the matter prior to the Plaintiffs filing suit, but according to the suit, The RealReal “has failed to participate in meaningful settlement discussions, despite the Plaintiffs’ counsel’s requests.”

As such, the Plaintiffs have filed suit against The RealReal citing claims of violations of New York State Right of Publicity Law, and false designation of origin under §43(a) of the Lanham Act. They are seeking compensatory and exemplary damages, injunctive relief, interest, disbursements and costs.

UPDATED (September 14, 2017): Following the filing of an amended complaint by the models in May, the parties appear to have settled their differences out of court. According to a joint stipulation to dismiss the case with prejudice, “The parties, through their respective attorneys of record, [stipulate] that this entire action, and all claims and counterclaims contained therein, have been settled by the parties, and shall be dismissed with prejudice,” with each side bearing its own attorneys’ fees and costs. Any settlement that they entered remaining confidential.

* The case is Chung et al v. The RealReal, Inc., 1:17-cv-00849 (SDNY).

 image: @emrata Instagram

image: @emrata Instagram

Undisclosed paid ads are a serious problem on Instagram, running through the fashion industry and beyond, and the Federal Trade Commission (“FTC”) has yet to take action to enforce its policy, said Public Citizen, the Campaign for a Commercial-Free Childhood and the Center for Digital Democracy in a letter addressed to the governmental agency on Wednesday.

The letter was a follow-up to a letter the groups sent to the FTC on September 7, which documented more than 100 examples where products were featured in celebrity, athlete and personality Instagram posts but were most likely undisclosed ad campaigns or came about as a result of a material connection between the parties. The letter sent on Wednesday includes 50 new examples of undisclosed influencer posts on Instagram, including posts by David and Victoria Beckham; Pretty Little Liars actresses Ashley Benz, Shay Mitchell, and Lucy Hale; models Emily Ratajkowski and Heidi Klum; Kris Jenner, Kourtney Kardashian; Chrissy Teigen, Scott Disick, and Jennifer Lopez.

The FTC has a longstanding policy stating that paid endorsements should be clearly identified with #sponsored, #advertisement or #ad hashtag. In line with its “unique dual mission to protect consumers and promote competition,” the FTC issues guidelines to aid the public in ensuring that advertisements are not misleading and thus, do not violate Section 5 of the FTC Act, which provides that “unfair or deceptive acts or practices in or affecting commerce are declared unlawful.” However the FTC has yet to respond to the groups’ request to enforce its own policy

“The practice of undisclosed influencer advertising covertly promotes products that could harm consumers, especially teens and young adults,” according to a joint statement from the parties on Wednesday. A core principal of fair advertising law in the United States is that people have a right to know when they are targets of advertising. On Instagram, disguised ads are rampant; deceived consumers often believe celebrities are making unbiased endorsements of brands. They don’t realize that those celebrities are paid and may not even use the touted brand.

The letter also points to an emerging form of influencer marketing that uses average consumers as marketing agents, and cites Influenster and BzzAgent as the primary agencies. As we told you earlier this year, on the heels of its “7 bags for 7 cities” contest this spring, Versace launched another contest, this time to coincide with the release of its Greca Stars aviator sunglasses. Taking place from May 4th to 17th, the contest called on consumers to “either take a selfie with the Greca Stars in selected Versace boutiques worldwide and then post it online with the #VERSACESELFIE tag, or they can check the brand’s @VersaceHomeWW, @DVHomeMilan and @VersaceBoutiques to spot a selfie of Donatella Versace sporting the sunglasses.”

A smart initiative, the contest got Versace fans to promote the brand on social media (something brands normally pay influencers large sums to do) for largely no cost to the brand at all, save for the few pairs of Greca Star sunglasses that were awarded to contest winners. The problem: The contest was probably illegal, in violation of the FTC’s guidelines. 

A Public Citizen survey shows that many users of Influenster and BzzAgent are not disclosing that they have received a free product, deceiving their followers in the same way that celebrity “influencers” do. The organization blames Influenster and BzzAgent, not their users, for this systematic deception.

“Consumers are being bamboozled by the digital scam known as influencer marketing. Products are being pitched using deceptive tactics, tricking a consumer into believing they are receiving legitimate advice or recommendations online,” said Jeff Chester, executive director of the Center for Digital Democracy. “The FTC needs to crack down on these 21st Century scammers, and ensure that the public is treated fairly by digital advertisers.”

“There is abundant evidence that children and teens are particularly vulnerable to advertising masquerading as ‘content.’ The longer the FTC lags on this issue, the more children and teens are subject to this form of unfair and deceptive advertising,” said Josh Golin, executive director of the Campaign for a Commercial-Free Childhood.

The letter at hand comes on the heels of a similar letter that Truth in Advertising Inc., a Madison, Connecticut-based organization, filed with the FTC earlier this year, alleging that Kris Jenner and the Kardashian/Jenner family “are engaged in deceptive marketing campaigns.” The FTC seemingly failed to take action in connection with that letter, as well.