United States: In Groundbreaking Settlements, Attorneys General Find Fake Social Media Engagement Illegal

On January 30, 2019, the Office of the New York Attorney General ("NY AG") and the Office of the Florida Attorney General ("Florida AG") announced settlements with Devumi LLC and its offshoot companies ("Devumi"), which sold fake social media engagement, such as followers, likes and views, on various social media platforms. According to the NY AG, such social media engagement is fake in that "it purports to reflect the activity and authentic favor of actual people on the platform, when in fact the activity was not generated by actual people and/or does not reflect genuine interest."

These settlements are the first in the United States to find that selling fake social media engagement constitutes illegal deception and that using stolen social media identities to engage in online activity is illegal. The NY AG emphasized that the New York settlement sends a "clear message that anyone profiting off of deception and impersonation is breaking the law and will be held accountable."

Devumi grossed $15 million dollars from 2015 to 2017 by selling fake social media engagement through bots and "sock puppet" accounts. A sock puppet account is the account of one person who is pretending to be many others. In other words, it is multiple accounts controlled by the same user. Some of the fake accounts used real social media profiles without the profile owner's consent or knowledge.

The company also sold endorsements from social media "influencers" without disclosing that the endorsements were paid for. An influencer is a social media user with a substantial following, who monetizes their online popularity by endorsing goods, services and events to their followers.

According to the settlements, these business practices deceived customers by affecting their perception of opinions, ideas and goods and thus affecting their decision-making concerning what goods to buy and which opinions and ideas had garnered public support. Devumi further deceived its own customers, some of whom were unaware that they were purchasing inauthentic endorsement and fake social media activity.

Under the New York settlement:

  • The NY AG found that Devumi's conduct violated:
    • New York Executive Law §63(12) and New York General Business Law §§ 349 and 350, which prohibit misrepresentation, deceptive acts or practices and false advertising, and
    • New York Penal Law §190.25, which prohibits impersonating a real person and, with the intent to obtain a benefit or defraud another, doing an act or communicating by internet website or electronic means;
  • Devumi did not admit or deny any wrongdoing and agreed to pay a $50,000 fine to cover the cost of the inquiry;
  • Devumi is prohibited from:
    • engaging in the advertising, promotion, offering for sale or sale of social media engagement from non-existent people that purports to be from existing people;
    • misrepresenting, expressly or by implication, that social media engagement from non-existent people that purports to be from existing people is authentic social media engagement;
    • misrepresenting, expressly or by implication, that an endorser of a product or service is an independent user or ordinary consumer of the product or service; or
    • failing to disclose any material connection between an endorser and (1) Devumi, (2) any other individual or entity affiliated with the product or service, or (3) the product or service;
  • Devumi must take reasonable steps to ensure compliance with state law if and when engaging with endorsers and endorsements. To sufficiently comply, Devumi must:
    • provide endorsers with a clear written statement of his or her responsibilities to disclose a material connection with Devumi in any online video, social media posting, or other communication, and Devumi must obtain a signed and dated statement from the endorser, acknowledging receipt of that statement and expressly agreeing to comply with it;
    • establish a system, which at a minimum must include reviewing online videos and social media postings, to monitor and review the representations and disclosures of such endorsers;
    • conduct an initial review of all endorsements before compensating any endorser for an endorsement campaign; and
    • terminate and cease payment to any endorser who does not clearly and conspicuously disclose his or her material relationship with Devumi, or misrepresents him or herself in any manner; and
  • Upon the NY AG's request, Devumi must produce reports that showing the results of its monitoring efforts.

Under the Florida settlement:

  • The Florida AG has investigated Devumi's practices pursuant to the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA");
  • Devumi shall comply with FDUTPA;
  • Devumi must pay $50,000 in investigative fees; and
  • Devumi is prohibited from:
    • purchasing, guiding, controlling, or managing any social media accounts generated using any natural person's personal information, regardless of whether such social media accounts originated within Devumi, or via third-party providers;
    • utilizing any natural person's personal information without that natural person's express, written consent to generate social media account activity intended to increase consumers' popularity or social media presence;
    • scraping any natural person's personal information without express, written consent, regardless of whether that information is available to the public;
    • advertising, selling, or offering to sell products or services from natural persons when the social media account activity intended to increase consumers' popularity or social media presence are from bots;
    • making any misrepresentation regarding or fraudulently endorsing any individual, product or service;
    • providing paid endorsements without clearly and conspicuously disclosing that the recipient compensated Devumi for such endorsements;
    • making any representation in the course of providing paid endorsements which would lead a consumer acting reasonably to believe that the social media accounts making the endorsements are owned or operated by natural persons when in fact such accounts are bots; and
    • misrepresenting that Devumi's products or services are approved by any social media platform or are risk-free.

Notably, neither settlement addresses the legality of customers purchasing fake social media engagement.

In Groundbreaking Settlements, Attorneys General Find Fake Social Media Engagement Illegal

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