By: Jack Taylor
Social media platforms’ influence over consumer behavior has exploded in recent decades. While scrolling through their feeds or checking on their friends’ accounts, users of social media are exposed to various paid advertisements from companies in all sectors. To catch the eye of the otherwise disinterested passerby, many of these advertisements include images of well-known celebrities and public figures. These “endorsements” supposedly make the advertised product or service more legitimate and attractive. However, there is growing concern around the world regarding situations where the so-called endorser is actually not connected with the product at all, but the company uses their likeness anyway. Recently, the Australian Competition & Consumer Commission (“ACCC”), Australia’s competition watchdog, filed a lawsuit against Facebook owner, Meta Platforms, for allowing such practices to take place. In order to properly protect American consumers, the United States federal government should take similar action.
The Australian lawsuit alleges that Meta Platforms failed to prevent scammers from using its platform to promote fake advertisements featuring well-known celebrities. The government argues that these advertisements could have misled Facebook users into believing that they were actually endorsed by the celebrities featured in the communications. Furthermore, the lawsuit contends that Facebook “aided and abetted or was knowingly concerned in false or misleading conduct and representations by the advertisers.” The Australian government desires to establish the principal that social media platforms are liable for the content of the advertisements it publishes and have a duty to take “sufficient steps” to address false or misleading advertisements.
Although the actions of the Australian Government may be connected with the unauthorized use of an individual’s likeness for commercial purposes, the main reason for its lawsuit against Meta is to protect consumers. By using well-known figures as endorsements, a product or company increases its appeal and legitimacy. This is especially concerning when the company is not in actual existence or uses scams and other deceptive manners to conduct business. The Australian’s concerns are not without merit. The ACCC has identified several instances where consumers are harmed by this practice, including one individual who lost more than $480,000 by investing in a phony crypto currency company. Images of Australian business leaders, TV hosts, and politicians added to fake quotes make up the content of these phony advertisements. Facebook has declined to address the matter in detail but said, “we will review the recent filing by the ACCC and intend to defend the proceedings.”
Regardless of the Australian case’s outcome, nations around the world need to address this issue more clearly and impose stricter penalties for large social media companies that fail to implement adequate safeguards to prevent false endorsement content. In the United States specifically, more federal enforcement is needed to protect consumers and prevent fraud. The Federal Trade Commission (“FTC”), would be the agency to head up this endeavor. The FTC’s mission is to protect consumers and competition by preventing anticompetitive, deceptive, and unfair business practices. It is quite clear that using false celebrity endorsements to misinform consumers into buying a phony product constitutes a deceptive business practice. As a result, the FTC should follow the lead of its Australian counterparts and increase its enforcement practices against social media platforms, such as Facebook, that aid and abet in these scams.
Fortunately, there are signs that the FTC is beginning to take the issue more seriously. The agency announced in late 2021 that it settled with a company that sold a weight-loss tea endorsed by celebrities including Cardi B and Jordan Sparks. Although the celebrities were aware that their likeness was being used as an endorsement, the advertisements were still considered deceptive because they did not adequately disclose that the celebrities were paid to promote the product. In October of 2021, the FTC also released guidance documents detailing that the agency will begin to take false endorsements more seriously and bring more cases for violations. However, the new guidelines mainly focus on the advertisers themselves and not the social network companies whose platforms the endorsements appear on.
On a daily basis, modern consumers are exposed to various forms of marketing strategies, aimed at convincing them to spend money on their product. Although most advertisements contain healthy amounts of puffery, the consumer can normally see through this and exercise rational judgment. Unfortunately, it is more difficult to exercise this level of restraint when the advertisement is misleading and deceptive. This is surely true when it comes to false endorsements from well-known individuals. The Australian government has begun to address this issue by holding large social media networks responsible for false endorsements that appear on their platforms and, to protect consumers, the United States should follow suit.
Student Bio: Jack Taylor is a second-year law student at Suffolk University Law School. He is a staffer on the Journal of High Technology Law. Jack received a Bachelor of Arts Degree in Business Management from Merrimack College.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
