This time three years ago, the world saw its biggest music festival disaster ever. Since the Netflix documentary ‘The Greatest Party That Never Happened’ exposed the catastrophe in detail, the use of influencer marketing has taken a hit and the festival can now be seen as one of the best examples of how detrimental this form of advertisement can be.

The young entrepreneur from New York partnered with rapper Ja Rule to bring their exclusive and luxury festival vision to life. The pair shot a promotional video featuring some of the worlds biggest super models. They also had over 400 social media influencers post a single image of a plain orange tile with associated hashtag #FyreFestival, as reported by Forbes.

Below is a screen shot of Bella Hadid’s Instagram post promoting Fyre Festival in 2017: 

What is influencer marketing?

Influencer Marketing is defined by PixLee as a form of marketing that “focuses on targeting key industry leaders to drive brand message and awareness to a specific market of consumers”.

The use of influencer marketing has grown rapidly along side the rise of social media. So much so, that it is now regarded as one of the most effective ways to advertise.

Law enforcement agencies have struggled to keep up with the fast development of this new marketing platform, creating ambiguous consumer laws and grey areas for influencers and brands to follow.

Laws surrounding influencer marketing and why influencers were sued over the Fyre Festival

After tremendous internet attention and a complete sell out of tickets (some selling for over $12,000 USD each), the highly anticipated event became the most poorly organised festival in history. The guests arrived on the Bahamian island only to find partially set up emergency tents as accommodation, wet mattresses and no food or water. In addition, the main acts for the festival such as Blink 182, pulled out the night before the festival out of concern for the quality of stage equipment and their ability to put on a good show.

Unfortunately for McFarland (seen in the image above), footage of the event was immediately publicised due to the large number of social media figures who attended the festival. The disaster landed McFarland in prison for a sentence of six years and he was also ordered to forfeit $26 million USD for infringements such as fraud, breach of contract, breach of good faith and negligent advertising.

But it wasn’t just McFarland who was sued…

Kendal Jenner, along with many other social media personalities, were sued for promoting the Fyre Festival on Instagram. Jenner’s judge claimed that her conduct demonstrated a clear lack of good faith and negligent misrepresentation. Jenner, who was payed $275,000 USD to make one post about the festival, made the following statement to the New York Times, “I definitely did as much research as I could, but sometimes there isn’t much research you can do, because it’s a starting brand and you kind of have to have faith in it and hope it will work out the way people say it will”.

The US Federal Trade Commission states that “Influencers should clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media”. This means that they need to use the correct hashtags, such as #spon, #ad or #partner or alternatively, use the built-in tools that social media platforms have created to mark posts as paid.

This means that although the promoters of the Fyre Festival were not expected to know how the festival would turn out, they were required to state that they were being paid to make their post’s, so that their audience could have made more informed judgments when consuming their content. 

The Federal Trade Commission published a brochure titled ‘Disclosures 101 for Social Media Influencers‘ on the FTC website, explaining how to follow the laws surrounding social media advertisements.

Despite these Federal Trade Commission guidelines, Tegan West on the Scrunch Blog reports that there still seems to be grey areas with no “one-size-fits-all” approach, to disclosure across platforms and content formats. In fact, the FTC actually states that advertisers have “flexibility as to how to identify native ads as ads, so long as consumers notice and process the disclosures and comprehend what they mean”.

It is also interesting to note that although consumer laws differ from country to country, the Australian Consumer Law (ACL) is almost identical to that of the US FTC’s. Australian law also prohibits deceptive advertising through section 18 of the ACL.

Due to social media being accessed across the world, sites such as Instagram have their own guidelines on branded content which can be accessed on their help page. They actually endorse sponsored content, however their policies require creators and publishers to tag business partners in their posts, when there’s an exchange of value between a creator or publisher and a business partner.

Key issues that influencers need to be aware of when producing paid content

• They must include a disclosure statement that is in “clear and unambiguous language“.
• The disclosure statement must include #Sponsored #Promotion or #Ad and must be within the first three lines of the caption.
• Even if they have been gifted something from a brand as consideration and there is no compensation involved, they must still disclose the nature of the relationship with their audience.
• If on instagram, they must tag and hashtag the brand in the caption and image.

Key issues that brands need to be aware of when partnering with influencers

Teagan West from Scrunch Blog, states that it is the responsibility of the marketers, agencies and brands to help educate influencers and encourage them to abide by the FTC guidelines and indicate the relationship between brand and influencer. If an influencer is found to have breached guidelines, there can be consequences for the influencer as well as any other party involved in the process. 

How Fyre Festival has changed influencer marketing forever

Not long after the Fyre Festival, the FTC sent out letters to over 90 American influencers to enforce thruth-in-advertising laws:

Since Fyre Festival, the Advertising Standards Association (ASA) have enforced tighter rules and regulations. Nikki from Econsultancy, claims that there has been a general overall improvement in disclosure, with influencers going above and beyond to state brand involvement.

The Fyre Festival demonstrated that influencers can have a real impact on audience perception, and in the worst cases, make them believe something is authentic and truthful, when it is in fact it is solely the result of a brand deal.