On October 21, 2019, the Federal Trade Commission took action against two companies alleged to have engaged in the business of false online reviews and social media influence. In the first case, the FTC entered into a consent decree with cosmetics marketer Sunday Riley, LLC, and the company’s owner, who sell products at Sephora stores and online at Sephora.com. According to the FTC’s complaint, disguised as ordinary consumers, Sunday Riley employees and Ms. Riley herself posted fake 5-star reviews of the company’s products on Sephora’s website. Under the terms of the FTC’s agreement, the company and its principal are barred from posting fake reviews, must clearly identify endorsers, and must instruct staff on their disclosure obligations. The FTC vote on the action was 3-2, with Commissioners Chopra and Slaughter dissenting on the grounds that the settlement did not include a monetary payment or an admission of guilt.
In the second action, Devumi, LLC, and its principal German Calas, Jr. were alleged to have sold fake indicators of social media influence (including fake followers, subscribers, views, and likes) to users of social media platforms, including Twitter, YouTube and LinkedIn. Devumi’s customers included actors, musicians, athletes, lawyers, investment professionals and others who wanted to increase their online appeal and boost their credibility. By selling fake indicators of influence, Devumi is alleged to have provided its customers with the means and instrumentalities to deceive the public. The consent decree bans Devumi and Mr. Calas from engaging in the business of social media influence and imposes a $2.5 million monetary judgment (suspended upon payment of $250,000). The Commission’s vote to accept the settlement was 5-0.