In the not-so-distant past, makeup and skin care companies used to get new customers by hiring celebrities to be official ambassadors for their brands, buying TV ads, and working with beauty editors at magazines to secure editorial placement for their products. Brands would send free products, wine and dine editors, and give them access to those celebrity ambassadors for interviews. (Being an advertiser in the magazine also increased a brand’s chances to be featured or recommended.)

This still happens, both at magazines and on editorial websites, but beauty editors are no longer the predominant “influencers” in beauty.

As social media grew, people started to trust the so-called “regular” people they were seeing on Instagram and YouTube, instead of the homogeneous models in magazines. There was an authenticity and relatability there, and soon it became evident that influencers could, well, influence people to buy stuff. It gave rise to personalities like Michelle Phan, Jeffree Star, and Huda Kattan, who all ended up with massive followings and makeup brands of their own.

The authenticity of beauty influencers has been coming under question for the past year or so, with a steady stream of scandals and an increasingly unwieldy number of influencer wannabes trying to make a career of it.

And this week, we’re seeing another big challenge to the reign of the influencers: an unveiling of the staggering sums that they are paid for their endorsements, including claims that brands are paying influencers to say negative things about competitors’ products. And it’s all wrapped in a cloak of distrust about whether influencers are actually disclosing any of this.

“If I made 60 thousand dollars in one day, multiple times a year, I don’t even know what the fuck I’d do with all that money …” wrote one user on Reddit’s r/BeautyGuruChatter. Another tweeted: “I never thought the beauty ‘community’ would come to such a cut throat time. Dang Y’all. Makeup is supposed to be fun! Personally it’s a way for me to clear my head & not focus on bad in the world when I’m playing w/ makeup. These influencers have made it stressful!”

If the influencer bubble hasn’t yet popped, the air is surely leaking out of it slowly.

The explosive influencer allegations

The “gurus” who post about makeup and skin care to large followings on YouTube and Instagram have had a rough few months. Hot on the heels of the racism scandal that has rocked that world and cost some high-level influencers a lot of income comes a new controversy about payment, deception, and transparency. It’s a global issue in the influencer economy, but beauty is getting the focus now.

Some in the industry have alleged that unnamed influencers are asking beauty brands for $20,000 to even $85,000 for a single video or Instagram post to tout their products. (Kattan revealed this year that a brand once offered her $185,000 for one post.) Even more explosive, though, were suggestions that brands were willing to pay influencers these sums to post negative reviews about competitor brands. Vox spoke to industry professionals who confirmed some of the practices and numbers. It provides a window into how marketing works more broadly in the beauty industry now and how truly opaque it all is. It can also have serious legal consequences.

The current controversy started with a video posted on Monday by Marlena Stell, a makeup artist who started filming YouTube makeup tutorials in the first wave of beauty vloggers about a decade ago. She has since launched her own brand called Makeup Geek, so she has the perspective of both a brand owner and an influencer. In her video, she alleges that her brand has not been supported recently by influencers because she couldn’t afford to pay them the fees they were asking. The video has almost 600,000 views.

“Where does it become a racketeering business and it’s all about the money and not about the passion for the business? I could not afford to pay $60,000 for a video or $20,000 for one post on Instagram,” she says in the video. “I was really struggling personally as a brand owner. I’m an influencer, and I know what it’s like. I get it.”

Those five-figure amounts were shocking to beauty fans, who left almost 17,000 comments on the video. Huge influencers like Samantha Ravndahl weighed in too. Ravndahl tweeted, “I’m the first person to agree that there are many influencers who are absolute garbage humans who only care about money. But there is a whole community beyond that, flourishing with integrity and passion. Don’t let a few bad apples spoil the bunch.” In other words, #NotAllInfluencers.

Then a skin care blogger who goes by the handle @HeyAprill posted a screenshot on Twitter showing an Instagram caption written by Kevin James Bennett, a makeup artist and brand consultant who has been working in the industry for 30 years. Bennett posted on Instagram and praised Stell for bringing transparency to the issue. He then went one step further and added some numbers of his own.

Bennett wrote that “a brand I consulted with asked me to inquire about working with a top-level beauty influencer,” and alleged that the influencer’s management team asked for $25,000 for a “product mention in a multi-branded product review,” $50,000 to $60,000 for a “dedicated product review,” and $75,000 to $85,000 for a “dedicated negative review of a competitor’s product.” The last one was arguably the most shocking since paid/sponsored positive posts are a known entity in the industry but posts to bash competitors are not.

“I wanted to back up Marlena a little bit. I was like, ‘Wow, this could totally destroy your business,’” Bennett said on a call with Vox. He declined to disclose the unnamed influencer, citing privacy and client relationship concerns. Bennett stands by those numbers, which he said came via a call with the influencer’s management. “Examples like that do not get sent in any printable or retainable copy. You’re told verbally. They don’t want any record.”

Bennett clarified several times that he “respected the hustle” of these influencers and that his biggest concern was that they did not often disclose they were being paid for posting. (More on this in a bit.) “I don’t hate influencers. I dislike people who give the industry that I’ve devoted three and a half decades to a bad name,” he said. “They make us look like a bunch of thugs. This is what pays our bills.”

HeyAprill’s tweet and Bennett’s accompanying Instagram post were then put on blast by James Charles, who tweeted it with commentary to his own 1.5 million Twitter followers. Charles is a 19-year-old beauty guru with 7.6 million Instagram followers and 7.8 million subscribers on YouTube. He was the makeup brand Covergirl’s first ever Coverboy; in fall 2017, he had his own racist tweet scandal, from which he recovered. He’s been influential in the industry as part of a burgeoning and popular group of “beauty boys.” He wrote, “I’ve NEVER heard of this happening and believe what you want, but most of us DO disclose sponsorships …”

So is any of this true? In short, yes.

How influencer marketing works in the beauty industry

Influencers get paid in several ways. There is YouTube ad revenue, which is dependent on subscriber and view count. In recent years, YouTube has decreased the amount of income an influencer can make this way, in a process that has been dubbed the “adpocalypse.” So influencers are counting more and more on other sources of income, generally from brands.

Brands will pay for anything from a single mention in a video to an actual collection collaboration with an influencer. Historically, when trusted influencers mentioned products, their viewers purchased them. (A Nivea men’s aftershave went viral 15 years after it launched when a popular guru said in a video that it made a good makeup primer.) Brands want to harness that selling power.

MAC, a popular and beloved makeup brand, is a great example of this shift. It has done collaborative makeup collections throughout the years with celebrities like Mariah Carey, Rihanna, Brooke Shields, and even Catherine Deneuve. But this year, influencer Patrick Starr landed a year-long deal with MAC to release multiple collections with the brand.

The rates that made the rounds on social media this week are real, according to influencers. Chloe Morello, who has 2.5 million YouTube subscribers, said in a tweet: “Based on what I make, this would be for around the 3 million subs mark ... for a dedicated video. larger than that would be heading towards the 100k area.”

An Australian YouTuber named Alex, who goes by the handle Pretty Pastel Please, also weighed in. Like Stell, she straddles the worlds of the paid and the paying, as she has a full-time job in marketing and works with brands that pay influencers. She has since posted two videos on the subject. In the first, she said of Bennett’s post, “That’s all true.”

No one is quite sure how much influencer marketing is “worth.” Back in 2017, an agency representative told Digiday that she calculates $1,000 for every 100,000 followers as a baseline. In Alex’s second video, she went into detail about how CPM, a common marketing term that means cost per thousand impressions, is used to calculate influencer fees. With that metric, she illustrated how an influencer could justify asking for $30,000 or even $60,000 for one video.

Not everyone can command those rates, though. Gil Eyal, the founder of HYPR, an agency that helps brands find influencers to work with, says it depends on the platform. “On Instagram, they would need at least a million, and probably more, highly engaged followers. On YouTube, for a dedicated video that could be a 200,000 [follower] influencer,” he said in an email, referring to the broader influencer population. “Generally speaking, [over $50,000] is reserved for the bigger players. Smaller influencers make way less — $100 to $1,000.”

How the (shady) influencer deals go down

There are online marketplaces like Octoly and Tribe that exist to match influencers with brand campaigns. While most are aboveboard, Alex said in her video that she has seen brands post campaigns that “specifically said ‘we are willing to pay more if you are willing to say that our product is better than the other one,’ or that you recommend our product over the other one.” (She also notes that some platforms remove these requests because they’re not appropriate.)

The allegation that influencers are possibly posting negative reviews at the behest of brands is surprising. It’s important to note that so far, no one has been willing or able to name either a brand or influencer who has actually produced this kind of paid content. But Eyal says it’s happening across other industries like video games and fashion too.

“The intense competition between influencers often leads them to do inappropriate things in order to stand out. Remember that while they have hundreds of thousands of followers or sometimes millions, most of these influencers are interchangeable, and many of them can barely pay their rent,” he says.

“Think about the advantages. No need to disclose, because no one will assume this is paid. Negative content is a breath of fresh air, and none of the audience will ask if it’s legit or if the influencer has sold out. The brand gains the benefit without having to worry about being ‘on brand,’ showing their logo, or whether or not the audience will think the post is authentic. Win-win, right?” He also clarifies, “It’s not always disingenuous. Influencers should and do criticize products they don’t like.”

Both Bennett and Eyal said this type of deal request often comes from an influencer’s management team, so the influencers themselves truly might not know that their teams are offering this “service” on their behalf. Obviously it crosses the line if an influencer consents to creating that content. And Eyal notes that if a brand gets caught paying for this type of negative coverage, the PR fallout could be damaging.

Is any of this illegal?

Bennett’s frustration with a lack of influencer disclosure has merit. They haven’t always been great about it. In April 2017, the Federal Trade Commission sent warning letters to influencers and celebrities reminding them to “clearly and conspicuously disclose their relationships to brands” when posting on social media. The FTC’s Endorsement Guides recommend using words like promotion, sponsored, paid ad, or simply #ad. While many influencers do disclose their paid sponsored posts, some likely don’t.

When reached for comment, Stell said via email, “My opinion is that paying influencers isn’t the problem, considering this is a full-time job for many of them. The problem is disclosing the information of being paid to talk about a product so fans can make an informed decision on their purchases. Influencers and brands alike are to blame for this lack of transparency.”

In her first video in response to the Marlena Stell revelations, Alex told viewers of seeing a beauty campaign offer (she declined to say what it was for) with a large budget on an influencer marketplace. The next week, she saw several large beauty influencers promoting the product without disclosing that it was paid. Could they all have been posting coincidentally about the same product? Yes, but it seems unlikely.

It’s still an area the FTC keeps tabs on, according to Michael Ostheimer, an attorney in the division of advertising practices at the FTC. “We do continue to have investigations and cases involving issues related to the endorsement guides,” he said on a call.

While it’s sometimes obvious when a positive review is paid for, it would be difficult to know if a post or video making negative claims about a product had been paid for. Ostheimer said, “I’m not aware of this happening, but I wouldn’t say it doesn’t happen.”

It’s a practice that’s not explicitly addressed in the FTC’s endorsement guide. It might have legal implications, however, if the influencer lied about disliking a product on behalf of another brand. “If the person was saying negative things that either were not true or that they did not believe, that would be deceptive and it would be deceptive advertising against a competitor,” he said. “And the failure to disclose that one is paid by the competitor would be deceptive, in my opinion.”

There’s been a lot of chatter within the beauty industry about whether the influencer bubble is popping. The racist tweet scandal illustrated the damage that influencers can do to themselves and the business model. It’s been a pain point in the industry recently, with companies increasingly hiring micro-influencers with 20,000 to 100,000 followers. They tend to have better engagement and conversion, meaning they sell the stuff they talk about.

Stell said in her video that executives from “multibillion-dollar companies” asked for her advice about influencers, telling her, “We feel like we’re losing traction and we want to support them, but this is the amount we’re getting charged for it and we don’t see a return on it.” These large fees and potentially shady practices could prove to be the pin that pops the bubble.