Famously Fake: Using the Law to Reverse the Demise of Social Media Credibility.

• Date: 01 January 2023
• Author: Dunn, Delaney

TABLE OF CONTENTS I. INTRODUCTION 55 II. BACKGROUND 59 A. Marketing Shifts 59 B. Influencers 60 1. Growing Influence 60 2. Influencer Marketing 61 3. Influencer Revenue 63 C. Deceiving Marketers 63 1. Bot Accounts 63 2. Pods 64 3. Prevalence of Deception 65 III. ANALYSIS 67 A. A Misrepresentation 69 B. Knowledge of Falsity 71 C. Intent to Defraud 72 1. Intent with Fake Engagement 73 2. Intent with Fake Followers 73 D. Justifiable Reliance 74 1. Investigations 75 2. Brand Experience 76 E. Damages 78 IV. CONCLUSION 79 I. INTRODUCTION

Caroline Calloway was arguably the first social media influencer. (1) She amassed hundreds of thousands of followers in the early days of Instagram by sharing her personal experiences, thoughts, and feelings about her life as an American traveling around Europe and attending the University of Cambridge. (2) This was a different era of social media, when sharing such intimate details with the public was shocking and the concept of social media influencers was so new that Calloway's classmates and acquaintances treated what Calloway was doing like it was a joke. (3) By spring 2015, Calloway had accumulated 300,000 followers on Instagram. (4) While this would be a relatively small following today, in 2015, it made her one of the most influential people on the Internet. A year later, Calloway graduated Cambridge with Instagram fame in one hand and a $500,000 book deal in the other. (5) She set the standard and blazed a trail for all future social media influencers to follow. The only problem was it was all--or at least mostly--fake. (6)

Calloway did not initially want to be an influencer. (7) Calloway always wanted to be a writer, and when she was rejected by publishers because no one wanted to publish or read the memoir of a nobody (even a rich nobody), she decided to become a somebody. (8) Fortunately for Calloway, there was a new social media app on the market called Instagram. (9) She recognized the potential Instagram had to offer and decided to stamp her name on it. (10) With the help of her best friend Natalie Beach, Calloway posted high-quality pictures and detailed captions about her life. (11) Her follower count soared, and thanks to Calloway, it became clear to the world that there was a market for non-traditional celebrities to build influence and fame on social media. (12) Eventually, Calloway was offered the book deal of her dreams, but she became so caught up in her Instagram fame that she struggled to finish the book that publishers had offered her half a million dollars to write. (13) Beach, always the helpful best friend, started writing the book for Calloway. (14) It was notlong after this that Calloway finally confessed something to Beach--Calloway's fame had not grown organically from years of posting interesting, aspirational content. (15) It grew because Calloway had been buying tens of thousands of followers to boost her numbers in the hopes of convincing publishers that people cared what she had to say. (16) Calloway bought her way to being one of the first truly famous Internet stars and to a lucrative book deal. (17) Not long after Beach found out, publishers rescinded Calloway's book deal without any public explanation, and Calloway's influence on social media began to wane. (18) It was only years later, when Beach decided to come out and tell her side of the Caroline Calloway story, that people found out why. (19) Today, Calloway is famous as a woman who took advantage of her fans and the companies she promoted, and lost everything because of it. (20)

She may have been the first, but Caroline Calloway was by no means the last influencer to try to buy their way to fame and fortune. (21) Today, it is even easier for influencers like Calloway to abuse the system. (22) The robust advertising agencies and marketing departments of old are being replaced with the whims of a single individual, often a teenager, who does not work for or have any longstanding relationship with the brand. (23) Companies have made this change out of necessity. (24) The repercussions of buying fake followers are usually limited to diminished credibility, though people like Caroline Calloway prove that the payoffs can be massive. (25)

Demand for fake followers is growing every day, and social media companies have done comparatively little to curb the rampant use of fake followers on their platforms. (26) The truth of the matter is social media companies do not want to get rid of fake accounts. (27) One study conducted by Ars Technica found that Facebook leaves up 95% of fake accounts on their social media platforms, even after those accounts are reported. (28) Twitter has even been known to verify fake accounts as celebrities or influencers to such an extent that they recently had to suspend their verification process entirely. (29) On the rare occasion social media companies have made attempts to curb fake followers or engagement, they have always taken action against websites selling fake followers rather than influencers purchasing them. (30) Facebook Inc., now called Meta, has personally filed several lawsuits against companies selling fake Instagram followers, which would be admirable if any of them had amounted to anything. (31) Only one company, who was previously the subject of a New York Times investigation, experienced any substantial consequences for their actions. (32) The odds that social media companies will take action, and the odds that action will be effective, are negligible and insufficient to deter these websites. (33)

To prevent further damage, action must be taken to curb the demand. Brands experience immense damage, estimated at over $1 billion in 2019 alone, with that number growing as influencer marketing grows. (34) Given that social media platforms are not helping, brands themselves deserve to be empowered to mitigate the damage. (35) If we hope to see any real, concrete change, brands need to be given the opportunity to pursue the influencers who are creating the demand for fake followers. This can be done under current law by interpreting the definition of fraud to encompass the actions of these influencers.

This Note will begin with an explanation of how influencer marketing came to prominence in the marketing industry. It will then examine the role of influencers, why they have influence, and why marketers use them as a resource. The Note will then look at why and how influencers deceive marketers using bots and social pods and what damage it may do to brands. Following the Background section will be an analysis of how these influencers may be held liable. This section will consider whether influencers may be charged with fraud at the state level in order to curb their online falsifications. The elements of fraud--misrepresentation, knowledge of falsity, intent, and justifiable reliance--will each be considered, as will potential defenses influencers may raise to each, and factors that may limit which brands may utilize this method. The Analysis will also briefly discuss the resulting damages that are required for brands to experience for influencer activity to be considered fraud.

2. BACKGROUND

   1. Marketing Shifts

      Since Caroline Calloway's rise to fame, there has been a significant shift in the marketing industry towards influencers. (36) The advent of digital marketing methods has been slowly pushing traditional marketing out of frame for years. (37) Digital marketing, or marketing using the Internet, has significant advantages over traditional methods such as newspapers and television. Digital marketers can easily track relevant data, such as how many people see an ad and with which ads consumers interact. (38) This data can help marketers customize ads to individual consumers and improve the overall quality of ads. (39)

      Unfortunately, digital marketing has exacerbated some of the worst issues facing marketers. Over the last few decades, the number of ads the average consumer sees per day has risen to between 4,000 and 10,000; but as the number of ads has grown, the effectiveness of each has lessened. (40) Consumers are understandably burnt out. (41) They are tired of boring and irrelevant ads, have shorter attention spans, and treat marketers with a healthy amount of mistrust. (42) Most ads do not factor into the consumer decision-making process, and marketers are essentially paying for expensive background noise. (43) This is where influencers can be of great benefit.

   2. Influencers

      Influencers are social media users who have the ability to influence the decision-making processes of their audience. (44) Influencers can exist at a macro or micro scale; users with as few as a thousand followers are referred to as "micro-influencers," while household names with hundreds of millions of followers are considered "macro-influencers." (45) Most celebrities have large fanbases who listen to what they have to say, and while many of them could likely be considered influencers based on their persuasive power, the name usually only applies to those who became popular first and foremost for their activity on social media. (46)

      1. Growing Influence

         Influencers, regardless of the size of their audience, have to spend time investing in a relationship with their followers. (47) Influencers build a personal brand by making followers feel like friends, which leads their followers to trust and value the influencer's opinions. (48) This is one manifestation of "parasociality," a psychological concept referring to one-sided relationships where one party falsely perceives or misinterprets the existence of a friendship or relationship with the other. (49) This most commonly exists between celebrities and fans who believe they have a personal relationship with the celebrity, who they believe cares about them individually. (50) Parasocial dynamics are marked by significant power imbalances between the object of parasociality (the celebrity) and the perceiver of...