Fyre Away...
Risk and Influencers
In 2017, the Fyre Festival (the brainchild of promoter Billy McFarland and rapper, Ja Rule) was supposed to be a huge, luxury, exclusive music festival on a private island in the Bahamas. The promoters sold tickets for thousands and thousands of dollars and attendees got bad weather, tents instead of five-star accommodations, no food, and no music. In 2019, a bankruptcy trustee brought multiple lawsuits against the Fyre Festival seeking to pay back creditors who lost money in the event.
One of the festival’s marketing strategies was to have famous models, such as Kendall Jenner, post on social media about the festival to generate buzz and interest. Ms. Jenner was paid $275,000 to do ONE post about the event on her social media, but neglected to disclose that she was a paid influencer of the event. Not one single #ad. She communicated to her sizable audience the allure of the Fyre Festival, including that “announce[d] my G.O.O.D. Music Family as the first headliners”, which misled consumers into thinking that her brother-in-law Kanye West was also performing.
The bankruptcy trustee argued that the payment to Ms. Jenner’s company was “fraudulent and avoidable” under New York’s bankruptcy law and thus, repayable as part of the discharge of Fyre’s debts. Further, her misleading post was also fraudulent and meant to induce customers to purchase tickets to an event that was described as more successful than it actually was. The trustee argued that such amounts should be redistributed to the festival’s defrauded investors.
Under the FTC, influencers must disclose their material connections with the brands they represent on social media. If there is no disclosure, the FTC could go after both the influencer and the brand to enforce compliance. The Fyre Festival should remind influencers and celebrities that they’re also liable under other laws that apply to any company entering into contracts with third parties- in this case, fraudulent business schemes and a unsavory partners.
As part of the settlement, Kendall Jenner agreed to pay $90,000 in exchange for waiving any other claims against her company.
Why This Matters
Know what you’re getting into. Know what you’re representing. Kendall posted an orange square and was paid $275,000. It’s a strong reminder of not only the power of influencers, but the risk of exposure when an influencer fails to disclose material (large or small) connections between themselves and the brands they endorse on social media.