Fyre Fraud

Who wouldn’t want to go to a festival on the white sands of a Bahamian island when Emily Ratajkowski, Kendall Jenner and Bella Hadid are promoting it? In December 2016, that’s what Billy McFarland, the now infamous and fraudulent co-founder of Fyre Festival, was betting on when he released an envy-inducing trailer and promotional blitz by way of select influencers’ Instagram feeds. With a tone reminiscent of Yacht Week, the trailer promised two luxurious weekends on Pablo Escobar’s former private island in luxury “domes” and meals by celebrity chefs. By now, you know that wasn’t exactly what happened.

After watching Netflix’s Fyre: The Greatest Party that Never Happened this weekend, I wondered: When influencers are hired to promote a festival, concept or business, that turns out to defraud thousands of people for millions of dollars, what’s their responsibility in all of this? It’s clear that Billy McFarland committed fraud by lying to investors and concert-goers (and he’s been sentenced to six years in prison and forfeit $26 million), but what about the influencers? Their role in the scam is tangential, but nonetheless led to them getting sued—but not for the reason you might suspect.  

What exactly got them in trouble?
Violating Federal Trade Commission (FTC) regulations. Many of the model-influencers paid to promote the festival on their Instagram feeds failed to indicate that they received money in exchange for the post. They are now facing fines from the FTC and lawsuits from concert-goers, who are suing for misrepresentation.

Why does this matter?
 A class action lawsuit has been filed in US District Court by Mark Geragos naming Ja Rule, Billy McFarland, Fyre Media and 50 Jane Does as defendents. Although unconfirmed, Refinery29 reports that model Kendall Jenner is one of them, having been paid through Kendall Jenner, Inc. a reported $250,000 for promoting the festival. The problem? Her now-deleted Instagram post failed to disclose to her followers that she was paid for (what the FTC calls a “material connection”). 

Is Kendall covered?
If Kendall Jenner, or any of the Jane Does cited in the class action lawsuit, purchased media liability insurance, this likely would cover their legal fees and judgements against her related to the Fyre Festival. The policy is meant to cover negligence for media-related issues. With the changing landscape of the media and the advent of influencers and their agencies, we’re likely to see an uptick in the purchasing of this type of insurance.