Lawsuits, possible FTC scrutiny, and ire from festival-goers and onlookers have Fyre Festival and its organizers struggling to stay on top of a tidal wave of legal trouble and bad PR. In the weeks since Fyre Festival fell apart before it began, eight lawsuits have been filed against the festival and its organizers, Billy McFarland and Ja Rule. To make matters worse, the FBI’s involved now, too.
Lack of adequate infrastructure, poor planning, inexperience, and misplaced priorities combined to turn Fyre Festival into a disaster. Now some ticket buyers are filing lawsuits claiming millions in damages. We spoke with a top media and advertising lawyer who weighed in on the potential legal troubles and FTC consequences facing Fyre Festival organizers and the influencers who partnered with them.
Most of the lawsuits filed thus far allege fraud and breach of contract, targeting the misrepresentation of the festival and the failure on the part of organizers to remedy or cancel the festival as soon as it discovered that it wasn’t prepared to accommodate attendees and deliver on the VIP promise that came with ticket purchase.
@scottymacphoto captured Girty Rolle Moxey and her kids playing on a swing set on Coco Plum Beach in Great Exuma, the #Bahamas. The swings were installed for the @fyrefestival, a failed event that is now said to be the focus of a federal investigation. Ja Rule (@ruleyorkcity) was Fyre’s famous face, but at the center of the controversy is Billy McFarland, a brash 25-year-old entrepreneur with a gift for networking. Scheduled for 2 weekends starting in late April, the festival was supposed to up the ante in the competitive festival market. Instead, it became a punch line. And now, authorities are looking into possible mail, wire and securities fraud, according to a source with knowledge of the matter. Among the many potential victims: ticket buyers, investors and businesses small and large, spread across the U.S. and the Bahamas. But a few days after the spectacular collapse of the #FyreFestival, the event’s would-be mastermind was still making promises. Visit the link in our profile to read more.
The organizers might not be the only ones who are on the hook, though.
“So far none of the lawsuits has named any influencers individually, but the proposed class action suits name as defendants “Does 1-100” (as in “John Doe” or “Jane Doe”),” says Amanda Schreyer, a media and advertising attorney in Boston. “This is a placeholder to allow the complaint to apply to people whose identity may become known as the case proceeds. In the cases where the complaints allege that the Does participated in the “bad acts,” the influencers could at some point be named as defendants in the cases.
One of the biggest questions surrounding the aftermath of Fyre Festival is whether or not influencers might see consequences from the FTC.
“By (positively) posting about the festival, the influencers were endorsing it,” says Schreyer. “The failure to disclose an endorsement which was given in exchange for something of value (cash, trips, tickets) is a violation of the Federal Trade Commission Act. The FTC Act broadly prohibits ‘unfair and deceptive trade practices.’ FTC actions against advertisers and agencies for failure to disclose paid endorsements have resulted in long term FTC monitoring and auditing of those companies’ business records, and fines of tens of millions of dollars.”
No action’s ever been taken against individual influencers by the FTC, but in filing complaints against companies like Lord & Taylor and Machinima and with a recent vow to start holding media companies accountable, the agency’s signaling a growing commitment to enforcing regulations on social media.
“Until recently the FTC was only going after the advertisers and the agencies, and not the influencers themselves,” says Schreyer. “Just prior to the Fyre Festival fiasco, however, the FTC sent warning letters to 90 influencers in connection with their failure to disclose their connection to advertisers in their posts. Those letters signal that the FTC might be holding influencers just as accountable for violations of the FTC Act as the agencies and advertisers who pay them.”
In the eight lawsuits already filed, there are several mentions of the impact of social media influencers like Bella Hadid, Kendall Jenner (who was reportedly received $250,000 for her post), and Emily Ratajkowski, who were paid to promote the festival but failed to disclose that their posts were ads. In failing to include a clear disclosure, the influencers violated FTC regulations.
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The now-deleted influencer posts lent credibility to the festival, and at least one lawsuit cites an undisclosed influencer advertisement as a motivating factor in purchasing a ticket.
“Private parties cannot sue for a violation of FTC Act, only the FTC can enforce it,” says Schreyer. “But private parties can sue under state deceptive trade practice and consumer protection laws.”
In short, it’s not just FTC consequences that influencers need to worry about.They could be in serious legal trouble for their connection to the ill-fated event.
“An influencer’s failure to disclose her material connection with the Festival could expose her to liability for many of the claims alleged in the lawsuits, such as false advertising, negligence, and fraud,” says Schreyer. “[I]f the influencer’s post falsely implied that that the influencer would be present at the Festival, that could strengthen the plaintiffs’ case against them.”
One of the guiding principles of these disclosures is that they must be clear and conspicuous and included in close proximity to the content in question. If the influencers involved in promoting Fyre Festival included the requisite disclosures as specified by the FTC, they might have avoided landing in the middle of the Fyre Festival mess. Their failure to do so, paired with past failures in proper disclosure, may lead to the FTC looking even more closely at influencer marketing in the future.
“If the failure to disclose a paid endorsement can be a contributing factor in a consumer’s decision to sue an advertiser, then, as the agency tasked with consumer protection, the FTC is likely going to be scrutinizing influencers’ posts more carefully from now on,” says Schreyer.
We don’t yet know what’s going to happen with Fyre Festival, at least in a legal sense. The festival organizers have made a statement on the continuing effort to issue refunds to ticket buyers, but they’ve also suggested a “next year.” In light of lawsuits, possible FTC action, and an FBI investigation, though, Fyre Festival’s future may look just as stormy as its rocky start.