Wednesday, May 1, 2019

Fake followers and fake likes have spread throughout social media in recent years. Social media platforms such as Facebook and Instagram have announced that they are cracking down on so-called “inauthentic activity,” but the practice remains prevalent. For brands advertising on social media, paying for fake followers and likes is tempting—the perception of having a large audience offers a competitive edge by lending the brand additional legitimacy in the eyes of consumers, and the brand’s inflated perceived reach attracts higher profile influencers and celebrities for endorsement deals. But the benefits come with significant legal risks. By purchasing fake likes and followers, brands could face enforcement actions from government agencies and false advertising claims brought by competitors.

Groundbreaking AG Settlement: Selling Fake Engagement Is Illegal

On January 30, 2019, the New York Attorney General announced a settlement prohibiting Devumi LLC from selling fake followers and likes on social media platforms. Attorney General Letitia James announced that the settlement marked “the first finding by a law enforcement agency that selling fake social media engagement and using stolen identities to engage in online activity is illegal.”[i]

Devumi’s customers ranged from actors, musicians, athletes, and modeling agencies to businesspeople, politicians, commentators, and academics, according to the settlement. Customers purchased Devumi’s services hoping to show the public that they or their products were more popular (and by implication, more legitimate) than they really were. The AG said Devumi’s services “deceived and attempted to affect the decision-making of social media audiences, including: other platform users’ decisions about what content merits their own attention; consumers’ decisions about what to buy; advertisers’ decisions about whom to sponsor; and the decisions by policymakers, voters, and journalists about which people and policies have public support.”[ii]

Although the Devumi settlement did not impose a monetary punishment, it opened the doors for further action against similar services, and the AG warned that future perpetrators could face financial penalties.

Buyers Beware

Although the New York AG’s settlement with Devumi only addressed sellers of fake followers and likes, companies buying the fake engagement could also face enforcement actions from government agencies and regulatory authorities. But the risk doesn’t end there—brands purchasing fake engagement could become targets of civil suits brought by competitors, where the potential financial exposure could be much greater.

Competing brands running legitimate social media marketing campaigns, and who are losing business to brands buying fake likes and followers, may be able to recover through claims brought under Lanham Act and/or state unfair competition laws, such as California’s Unfair Competition Law (“UCL”).[iii]

The Lanham Act imposes liability upon “[a]ny person who, on or in connection with any goods or services, … uses in commerce any … false or misleading description of fact, or false or misleading representation of fact, which … is likely to … deceive as to the … sponsorship, or approval of his or her goods, services, or commercial activities by another person” or “in commercial advertising … misrepresents the nature, characteristics, qualities, or geographic origin of … goods, services, or commercial activities.”[iv]

Fake likes on social media posts could constitute false statements about the “approval of [the advertiser’s] goods, services, or commercial activities” under the Lanham Act. Likewise, a fake follower count could misrepresent the nature or approval of “commercial activities,” deceiving the public into believing a brand is more popular among consumers than it is.

The FTC agrees that buying fake likes is unlawful. It publishes guidelines to help the public understand whether certain activities could violate the FTC Act. In the FAQ for the Endorsement Guides, the FTC states, “an advertiser buying fake ‘likes’ is very different from an advertiser offering incentives for ‘likes’ from actual consumers. If ‘likes’ are from non-existent people or people who have no experience using the product or service, they are clearly deceptive, and both the purchaser and the seller of the fake ‘likes’ could face enforcement action.” (emphasis added).[v]

Although there is no private right of action to enforce FTC Guidelines, the Guidelines may inform what constitutes false advertising under the Lanham Act.[vi] Similarly, violations of the FTC Act (as described in FTC Guidelines) may form the basis of private claims under state consumer protection statutes, including California’s UCL.[vii]

While the Devumi settlement paved the way for private lawsuits against sellers of fake social media engagement, buyers need to be aware that they could face similar consequences. Because of the risk of both government enforcement actions and civil lawsuits brought by competitors, brands should resist the temptation to artificially grow their social media footprint and instead focus on authentically gaining popularity. Conversely, brands operating legitimately but losing business to competitors buying fake engagement should consider using the Lanham Act and state unfair competition laws as tools to keep the playing field more even.

[i]Attorney General James Announces Groundbreaking Settlement with Sellers of Fake Followers and “Likes” on Social Media, N.Y. Att’y Gen.

[ii] Id.

[iii] Cal. Bus. & Prof. Code § 17200, et seq.

[iv] 15 U.S.C. § 1125(a).

[v] The FTC’s Endorsement Guides: What People Are Asking, Fed. Trade Comm’n (Sept. 2017) .

[vi] See Grasshopper House, LLC v. Clean & Sober Media, LLC, No. 218CV00923SVWRAO, 2018 WL 6118440, at *6 (C.D. Cal. July 18, 2018) (“a ‘plaintiff may and should rely on FTC guidelines as a basis for asserting false advertising under the Lanham Act.’”) (quoting Manning Int’l Inc. v. Home Shopping Network, Inc., 152 F. Supp. 2d 432, 437 (S.D.N.Y. 2001)).