Crypto influencers who use fictitious views, followers, and “likes” to enhance their social media profile could soon be subject to significant fines from the Federal Trade Commission (FTC) of the United States.
The FTC declared on August 14, 2024, that new federal regulations to stop fraudulent reviews and misleading social metrics had been unanimously passed by its commissioners. These regulations may go into force as early as October, but they will take effect 60 days after being published in the Federal Register.
The sale or acquisition of phony social media influence indicators such as views and followers that are generated by bots or account takeovers is expressly forbidden by the new legislation.
The regulations target people and organizations that should have known, or knew, that the social metrics were fictitious, particularly when those measures are utilized to distort influence in order to benefit a business.
The FTC’s operation involves false reviews
The FTC has also broadened the scope of its enforcement action to encompass reviews that are artificially manufactured or posted by people who haven’t really used the product or service.
The new regulations also address dishonest tactics pertaining to insider reviews, celebrity endorsements, and the removal of user reviews from review websites. Penalties for violators might reach $50,000 for each offense.
Rob Freund, an advertising attorney located in the United States, emphasized the extensive reach of the regulations and pointed out that anyone utilizing fraudulent techniques to increase metrics such as views, likes, or subscribers will be in breach. Selling or buying followers is not appropriate.
FTC Chair Lina Khan emphasized fake reviews as a significant issue, stating that they waste time, money, and market resources, and the final rule will protect against fraud against Americans.
Influencers Advertise Bitcoin Frauds
Influencers, such as FaZe Clan, are promoting purported cryptocurrency ventures with their sizable fan bases, like the 2021 campaign for Save the Kids, a new token in the quickly developing cryptocurrency space.
The initiative, supported by influencers and FaZe Clan, aims to use the growing crypto market to help children in need. The project, which has millions of followers, is seen as a win-win situation for investors and a good cause, with many teenagers playing a significant role.
Save the Kids, a token promoted by its promoters, experienced a significant drop in value after its launch, leading to significant losses for investors. The token’s value is now virtually worthless. Furthermore, a spokesperson of Save the Kids stated that the organization donated more than $80,000 to Binance Charity in June 2021, however Binance Charity does not accept altcoin campaigns.
Scammers’ tactics have evolved over time, with the “pump-and-dump” scheme being a common one. Before selling off their holdings, influencers push new tokens to increase their value, leaving their followers with nothing. Save the Kids is not an isolated incident; it represents a broader pattern of influencers promoting crypto projects that ultimately collapse, leaving followers financially burdened.
CSGOLotto, a 2016 digital platform that allowed users to gamble using “skins,” was one of the earliest examples of influencer-driven scams.
The Bottom Line
The FTC has introduced new regulations aimed at curbing deceptive practices in the sale and purchase of fake social media metrics, such as followers and likes, and addressing fake reviews and misleading celebrity endorsements. Penalties for breaking the rules could reach $50,000 per time.
