U.S. regulators have delivered their first case against fake social media influence by settling with a company that sold YouTube views and Twitter followers to celebrities and brands. Regulators also reached a deal with a cosmetics brand caught making fraudulent reviews to boost its products online.
On Monday, the Federal Trade Commission announced the twin settlements, both striking at the heart of inauthentic marketing tactics online, which is an issue major brands have complained about for years.
In one instance, Devumi, a marketing company that peddled social media influence, was accused of selling fake online followers to help raise the visibility of videos on YouTube and to juice follower counts on sites like LinkedIn and Twitter, according to the FTC.
Devumi had already settled with New York’s attorney general, following a New York Times exposé last year. The Times report found that Devumi generated fake followers for stars like John Leguizamo and noted luminaries like Louise Linton, who is the wife of Treasury Secretary Steven Mnuchin.
On Monday, Devumi agreed to pay $2.5 million to the FTC but was ordered to pay only $250,000 of the settlement—provided it does not breach the terms of the deal. The FTC described the deal as the “first-ever complaint challenging the sale of fake indicators of social media influence, which are important metrics that businesses and individuals use in making hiring, investing, purchasing, licensing and viewing decisions.”
Major brands, like Procter & Gamble and Unilever, have been prodding the social media industry to get a better grip on their data and measurement practices, particularly as those numbers relate to so-called “influencers.” Influencers are popular online personalities hired by brands for their social media prowess. Brands want to have confidence in the number of followers and views generated from ad campaigns that use influencers.
On Monday, the FTC highlighted another scourge of the marketing world—fake online reviews—in its settlement with Sunday Riley Modern Skincare, the cosmetics firm.
Fake reviews are more of an e-commerce problem than a social media problem, affecting sites like Amazon, where companies try to insert favorable comments about their products and services.
Sunday Riley employees were accused of swarming the company’s product pages on Sephora’s website to leave positive reviews. Sephora identified the coordinated effort and took down the reviews, but Sunday Riley employees returned using new internet addresses to cover their tracks and leave new reviews, according to the FTC.
The FTC did not release details of its settlement with Sunday Riley, but it said it would publish a description of the consent decree soon.