When the celebrities advertise NFT Projects on social media, a consumer advocacy organization reminded them that they must disclose their affiliation to an NFT collection.
When they advertise it on social media, a consumer advocacy organization reminded them that they must disclose their affiliation to an NFT collection.
Celebrities have embraced NFTs at a rapid pace, but their reasons for doing so may be difficult to understand.
A consumer watchdog organization called Truth in Advertising, just sent letters to 17 celebrities, including Jimmy Fallon and Gwyneth Paltrow, informing them that failing to disclose material relationships (i.e., “Do you make money off of this?”) when discussing something on social media is against FTC regulations.
“When it comes to NFTs, some celebrities are able to take financial risks due to their wealth, but many vulnerable consumers don’t have that luxury,” Bonnie Patten, executive director of the group that sent the letters, told BuzzFeed News.
“Consumers deserve to understand the full picture behind a celebrity endorsement so that they can make fully informed decisions on whether or not to invest in NFTs.”
The celebrities were also sent a letter from Truth in Advertising, which stated: “NFTs are rife with deception, and the promotion of them nearly always omits any mention of the dangers they entail.”
we have found that celebrity NFT promotions is an area rife with deception, including, but not limited to, a failure to clearly and conspicuously disclose the promoter’s material connection to the endorsed NFT company, as well as the omission of other material information, such as the risks associated with investing in such speculative digital assets, the financial harm that can result from such investments, and the personal benefit(s) the promoter may gain by virtue of the promotion(s).
The letter also reminds the celebrity that material connections to an NFT collection should be made known in social media postings.
While it’s uncertain what relationship these celebrities have to the NFTs they’ve spoken about, there are two in particular where the connection is obvious: Justin Bieber and Reese Witherspoon, both of whom are listed as investors on the inBetweeners NFT project, and Hello Sunshine, Witherspoon’s firm, which is a partner of World of Women NFTs, both received more stern letters from the group in June.
The names of the 17 Celebrities who received the warning are:
- DJ Khaled
- Drake Bell
- Eva Longoria
- Floyd Mayweather
- Gwyneth Paltrow
- Jimmy Fallon
- Logan Paul
- Meek Mill
- Neymar Júnior
- Paris Hilton
- Shaquille O’Neal
- Snoop Dogg
- Tom Brady
- Von Miller
When a celebrity or influencer promotes an NFT collection on social media after buying into it, the value of the whole NFT portfolio may be affected. Even if they paid for the NFT with their own money, they’re still boosting the value of their own investment by purchasing early. This can increase the value of an NFT, allowing them to profit when they sell later on.
Furthermore, although celebrities are known to pay for their own NFTs at times, they are occasionally given free ones by the collection’s owners. When Jimmy Fallon changed his Twitter avatar to a cartoon owl image as part of the collection’s plans to give away NFTs to friends or expressly for marketing purposes, he was given a free Moonbird NFT as part of the plan.
The Moonbird collection’s promotion increased its value – but he never mentioned it was a freebie. This week, Truth in Advertising sent Fallon a letter.
Truth in Advertising is known to run such escalations, while in the past, they have sent such letters to Kardashians and many other celebrities as well.