A class action lawsuit was filed last week and alleges that a slew of A-list celebrities – including Justin Bieber, Madonna, Snoop Dog, Jimmy Fallon, Steph Curry, and Paris Hilton – promoted the Bored Ape Yacht Club NFTs for compensation while failing to disclose their financial relationships to Yuga Labs.
This situation serves as a cautionary tale for celebrities/influencers. It is essential for celebrities/influencers to be cautious about the companies they endorse and make sure they are complying with the Federal Trade Commission (FTC)’s endorsement guidelines. The FTC is a federal agency that is responsible for protecting consumers from fraudulent, deceptive, and unfair business practices. In the case of celebrity endorsements of NFTs, the FTC has specific rules that celebrities must follow in order to avoid misleading consumers. According to the FTC’s Endorsement Guides, celebrities must disclose any material connections they have with a company or product that they are promoting. This means that if a celebrity is being paid to promote an NFT, they must disclose that fact to consumers. And, if a celebrity accepted a free NFT in exchange for promoting it, the celebrity is also required to clearly and conspicuously disclose such a material connection. The same rule applies to celebrities/influencers that get paid to promote products and services. Additionally, the endorsement must reflect the celebrity’s honest opinion and must not be misleading. This means that celebrities cannot make false or exaggerated claims about the NFTs they are promoting. If a celebrity violates the FTC’s Endorsement Guides, they could face legal action from the FTC and/or consumers who were misled by their endorsement.
If an influencer or a celebrity promotes an NFT that turns out to be a fraudulent investment, they could potentially be held liable for any losses suffered by consumers who relied on their endorsement. In such a case, the celebrity or influencer could be sued by the affected consumers.
Therefore, it is important for celebrities and influencers to be transparent and honest about their endorsements and to make sure they are not promoting products that are fraudulent or deceptive to avoid unwanted legal consequences.