Truth in Advertising (TINA) has sent notification letters to over a dozen celebrities who promoted non-fungible tokens (NFTs) on social media platforms. With names including Paris Hilton, Gwyneth Paltrow, Tom Brady and Eva Longoria, the non-profit organization informed these celebrities that they must follow Federal Trade Commission (FTC) rules and reveal any material connection they have to the NFT companies they promote.
These letters come off the back of two earlier letters sent to Justin Bieber and Reese Witherspoon for undisclosed endorsements of NFT companies. While the websites of the NFT issuers highlight the partnerships, neither celebrity publicly revealed their association with the NFT companies in their social media posts. Both celebrities denied breaking laws, and Witherspoon said her relationship was not intended for financial gain.
FTC regulation states that if an endorser has a “material connection to a brand”, it must be disclosed as this can affect how consumers perceive their promotion and the product in question. Thus, businesses must be vigilant to ensure the influencers they partner with comply with the law.
Furthermore, TINA asserts that NFT companies have a further responsibility to educate customers about the potential risks of investing in NFTs and the speculative nature of crypto-assets. Consumer financial literacy regarding Web3 products is often limited, and most people are not in the position to risk their savings. Thus, influencers have a duty to ensure their followers are fully informed when considering investments.
The U.S. Government Accountability Office states that crypto products like NFTs are “poorly understood” which leaves consumers “subject to speculation and fraud.” Ultimately, TINA’s latest batch of letters is putting celebrities who do not educate their fanbase about the crypto-assets they promote under scrutiny.
On the other side of the pond, the UK’s self-regulatory Advertising Standards Association (ASA) recently upheld a ruling banning a promotion citing similar issues about insufficient warnings. Instead of a celebrity, it involved the Arsenal Football Club promoting a fungible fan token rather than an NFT.