August 19, 2022
By Sharan Kaur Phillora
Celebrities like Justin Beiber, Reese Witherspoon, and 17 others were accused of shilling non-fungible tokens (NFTs) by watchdog consumer group Truth in Advertising (TINA.org). NFT shilling is when NFTs are promoted by someone, influencing others to invest.
Here’s what we know:
The not-for-profit watchdog advocacy group said that they investigated the celebrities in question and found their promotion “an area rife with deception.” The alleged promotion by the celebrities seemed conspicuous as they failed to prove their “material connection” with the promoted NFTs, explained TINA.org.
According to TINA.org, the accused celebrities could be violating the Federal Trade Commission (FTC) rules on the Use of Endorsements and Testimonials in Advertising and the requirements for influencers.
The rule mandates that the influencers must make clear disclosure of the product they are endorsing. Legal action against such a violation hasn’t been seen as of yet. But class action suits against such influencers exist. For instance, Elon Musk was flagged by watchdog organizations for endorsing Dogecoin.
To make matters more complicated, although sometimes celebrities pay for their own NFTs, other times they are gifted free ones by the collection owners. When Jimmy Fallon changed his Twitter avatar to an image of a cartoon owl, it was after he was gifted a free Moonbird NFT by the collection’s owners as part of their plans to give free NFTs to friends or explicitly for marketing purposes. Fallon’s promotion of the Moonbird collection raised its value – but he never disclosed that was a freebie. Fallon received a letter from Truth in Advertising this week.
Earlier, the SEC also warned investors against celebrity-endorsed investment products. “Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws,” the SEC explained.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.