Guest post by Niamh Herlihy

Influencer Law Clinic Series

1/27/20219 min read

“Now that we’ve established that it’s not a scam”

Air fresheners and Crocs are some of the abnormal products that influencers are paid to advertise to their audience. These consumers generally expect that there has been some level of product research by the influencer who they have a high level of trust in. However, this is not always the case. If a consumer purchases a product from a website and receives a confirmation of this, but the product is never delivered, and refunds are unable, this is called internet fraud, a growing occurrence among influencer marketing. The influencer can become involved in this scheme through advertising the fake product, providing discount codes or making the e-commerce website directly accessible through their social media. It creates the question, how is the influencer punishable?

The Controversy

Consequently, it has to be decided whether the influencer had an active role in deceiving consumers. In 2018, several influencers advertised luxury makeup brushes from a brand called Kenza Cosmetics. This business was an apparent beauty company that sold makeup, including luxury brushes. These brushes were put on a time-limited sale, whereby they were sold at 0 dollars. Influencers like Gabbie Hanna and Tana Mongeau were paid by the company to promote these products on their platforms. In Mongeau’s case, it was advertised across her Instagram stories with swipe up links for easy access. She used phrases like, “I am obsessed with so many of them, and they are really high-quality brushes”,[1] and posted a swipe uplink. Furthermore, she showed her adding the brushes to her cart on the website, where the brushes were displayed as 80 dollars cut to 0 dollars as a result of a time-limited sale with a 10-dollar shipping rate. Mongeau and Hanna’s audiences began to purchase the product. Subsequently, controversy arose when the majority of consumers never received their product and those who did receive their makeup brushes were disappointed at the makeup brushes not being a luxury quality. Kenza Cosmetics persisted in lying about the products being in transit. Their audiences started to highlight that Kenza Cosmetics may have been a scam.This conclusion was reached by the consumers quickly. Research emerged, exposing the company whereby alarming discoveries were made. For example, the company’s motto was stolen from another makeup company’s website, Pixel Cosmetics. To add fire to the flame, the terms of service were copied from a DVD company as well as the refund policy. This information was easily found through reading Kenza’s website. The brushes themselves were advertised on the website with the following statement, “This Brushes Set includes all the essential brushes for your fast or prolonged makeup session. Each brush allows a pleasant and precise application of various makeups and powders. This will be your secret weapon to create the perfect makeup!”.[2] This information quickly illustrates that this company may not be legitimate. Moreover, the brushes were then found on websites like Ali-express where they could be purchased for 10 dollars or less, revealing that these were not the luxury makeup brushes being advertised.[3]Mongeau is notorious for being infamous through past events like Tanacon and never directly responded to the controversy.[4] Hanna released a, now deleted, video on the controversy, several weeks after the original advertisement. “Now that we’ve established that it’s not a scam”,[5] Hanna played a defensive role in her narrative of the situation. In the video, she describes that brushes were a one-dollar quality brush and told her audience to, “manage their expectation”,[6] despite the brushes being advertised as luxury brushes. This raised the issue of how much research did the influencers conduct before deciding to advertise the product. Consequently, a crucial element of Hanna’s response is that she highlights that she likes to do her research and due diligence and that is why she did not immediately respond to the accusation of marketing a scam. On the contrary, she later admitted that she did not research the company before accepting payment.[7] Furthermore, Hanna stated she had been in contact with the company for several weeks and informed them of her audience’s concerns including screenshots from her followers, whereby Kenza replied that these people did not have orders with the company as well as stating that product delivery was delayed. Hanna continued with the narrative that it was not a scam despite consumers not receiving their products, akin to a contextual situation of internet fraud.

Criminal Liability for Scams

Did Hanna and Mongeau get involved in a scam? A scam is a type of scheme that involves fraudulent activity, in other words, a deceitful act for personal gain. This can be a federal criminal offence. Under 18 U.S. Code § 1341,[8] during interstate cases, by committing fraud you can face a hefty fine and imprisonment of up to 20 years. Behaviour like this qualifies as a mail and wire fraud as the product is mailed as a result of fraudulent activity. There are three different elements to be fulfilled to commit the act: communication via mail or wire, material deception, and devised a scheme to defraud or had intent to do so.[9] Firstly, was their wire and mail fraud? They did not commit mail fraud as it was Kenza who mailed the product, the influencer’s direct relationship with the consumer does not involve the use of mail. However, the internet is a form of wired communication, so this is technically fulfilled. A case has never been tested of this situation whereby a person is paid to promote a scam across their social media. However, under Durland v. United States,[10] it states that statute must be read to include “everything designed to defraud by representations as to the past or present, or suggestions and promises as to the future.”[11] This broad scope can be used in the situation between the influencers and their audiences as there was communication through the internet, thus there was wire fraud.Moreover, was there a material deception? In other words, did the influencer’s actions make it more likely for the product to be bought? The relationship between an influencer and their audience is unique. The influencer’s audience has a level of trust in them through the influencer’s content. The influencer creates content for their audience and sometimes develops material to produce a strong connection with them. This is demonstrated when influencers use phrases like, “I did it for you guys” or “You know I have your best interest at heart”, this forms a trusting relationship between the parties. In simpler terms, the audience trusts the influencer’s opinion and that they will not take their trust for granted. The influencer through advertising the products to their audience did make it more likely for them to buy the product, especially as they believed the products to be good as a result of the influencer’s content. Did they devise a scheme to defraud or had the intent to do so? Though it is unknown who the person behind the cosmetic company is, it is unlikely to be the influencers who devised the scheme. There are three levels of criminal intent in the US: malice aforethought, specific intent, and general intent.[12] These relate to how the mental attitude of the Influencer connects with the conduct carried out. Malice aforethought relates only to murder, specific intent refers to the Influencer having a high level of awareness of what has been done (i.e. intends to bring about a harmful result, knowingly did something illegal) and general intent is seen as the intentional performance of a criminal act.The mental attitude aspect, in other words: the motive, in the US, can be analysed under the Model Penal Code’s intent distinction:[13]

  • acting purposely – the defendant had an underlying conscious object to act

  • acting knowingly – the defendant is practically certain that the conduct will cause a particular result

  • acting recklessly – the defendant consciously disregarded a substantial and unjustified risk

  • acting negligently – the defendant was not aware of the risk, but should have been aware of the risk

Therefore, they need criminal intent and motive. Malice aforethought is not applicable in this case, and neither is specific intent: it is highly unlikely that Hanna wanted her audience to be duped. This is illustrated through Hanna’s level of research, she admitted not researching the company. Therefore, it must be examined whether there was general intent. She should have been aware of the risk of falsely advertising and marketing a scam. If Hanna did research, she could easily determine that this was a scam, therefore, Hanna at least acted recklessly and negligently. If so, she had general intent through committing a criminal act with intention. Thus, the requirements under § 1341 are fulfilled and technically,[14] the Influencers are punishable under this Article. However, Influencers in this type of situation have yet to be punished under the Article and the precedence has not been created. It is still up for the Courts to decide whether the influencers are criminally punishable; though Hanna’s actions fulfil the Article, she is not the creator of the scam which is Kenza. The Courts must decide if people in Hanna’s position are punishable for their marketing of the product and contribution to the scam or whether they themselves were defrauded. From Durland’s reasoning,[15] it must be decided whether the influencer was appropriating the payment despite the entrapment of the faithful consumers by the Courts.

Federal Trade Commission Act

Subsequently, Hanna is still punishable under § 52 of the Federal Trade Commission (FTC) Act for the dissemination of false advertisements.[16] The FTC objective is to protect consumers from unfair conduct in the market.§ 52 of Federal Trade Commission Act(a) Unlawfulness It shall be unlawful for any person, partnership, or corporation to disseminate, or cause to be disseminated, any false advertisement—(1) By United States mails, or in or having an effect upon commerce, by any means, for the purpose of inducing, or which is likely to induce, directly or indirectly the purchase of food, drugs, devices, services, or cosmetics; or(2) By any means, for the purpose of inducing, or which is likely to induce, directly or indirectly, the purchase in or having an effect upon commerce, of food, drugs, devices, services, or cosmetics.(b) Unfair or deceptive act or practiceThe dissemination or the causing to be disseminated of any false advertisement within the provisions of subsection (a) of this section shall be an unfair or deceptive act or practice in or affecting commerce within the meaning of section 45 of this titleSimilarly to the material deception qualification in the criminal sphere, the FTC Act asks for the influencer to have induced the purchase of cosmetics, as previously explained, Hanna has enabled a material deception. Under § 54 of FTC Act,[17] Hanna faces penalties and imprisonment still. The FTC has taken numerous cases to influencers and has created guides on proper disclosure for influencer marketing. In 2020, the FTC took the decision to review the guides as they had begun to outdate themselves.[18] The future guides must be analysed to determine whether they are fit for purpose and deal with influencers relationship with internet fraud.

Other Instances

Unsurprisingly, it is not just these influencers committing these frauds, nor is it just American influencers. Influencers themselves have tricked other influencers into scams to expose the level of scrutiny that influencers have into the products they are advertising.Jack Dean, from the YouTube channel JaackMaate, created a video titled “I Tricked Love Island Stars Into Promoting My Terrible Fake Brand”.[19] Dean created a luxury face cream that was in fact Johnsons and Johnson’s Baby Lotion. He established a fake website and social media accounts, the website contained questionable descriptions about the products, “The most powerful bomb since Hiroshima”.[20] These bold statements were included to deter influencers from advertising the product on the presumption that they research into it. Additionally, he included false quotes from the people he was asking to advertise the product as well as the following quote by himself, “This is complete b*******, entirely made-up product just to see if Love Islanders will promote it”. [21]Several influencers did promote it.Influencer pranksters Josh Pieters and Archie Manners created the video, “I Tricked Influencers Into Promoting Gravel”.[22] The influencers who were given the gravel, promoted the product on their social media, believing it was moon rocks. These situations exposed how many influencers do not research products that they promote. As a result of this, they end up promoting scams. ConclusionTo conclude, are Hanna and Mongeau liable? Under the FTC Act, they did have false advertisements and should be punishable. Whether they are punishable under the Criminal Code must be decided by the Courts willingness to create this new precedence. In the years to come, this may be developed to uncover the culpability of influencers in these situations as videos posted by Dean and Pieters illustrate the low levels of responsibility the Influencer has. This needs to be fixed by giving the Influencers high levels of accountability. The balancing of the interest must take place to ensure Influencers cannot make a quick buck while defrauding millions. Consumers deserve to be protected, and fraudulent activity by influencers should be criminally punishable. As the saying goes, “If it sounds too good to be true, it probably is”, a mindset Influencers should have in the future when deciding to market products.

[1] Gabbie Hanna Kenza Cosmetics Scam accessed 5 January 2021.

[2] Victims of the scam highlighted these elements of the now taken down website on media platforms like in this link

[3] A set of brushes available on AliExpress that were advertised by Kenza Cosmetics

[4] Gracie Strawser, “Online Product Fraud” Millersville University.

[5] Gabbie Hanna Kenza Cosmetics Scam accessed 5 January 2021.

[6] Ibid.

[7] Gracie Strawser.

[8] 18 US Code 1341

[9] Ibid.

[10] Durland v United States 161 US 306 16 S Ct 508.

[11] Ibid.

[12] Legal Information Institute, Cornell Law School accessed 5 January 2021.

[13] Ibid.

[14] 18 US Code 1341

[15] Durland v United States 161 US 306 16 S Ct 508.

[16] § 52 of Federal Trade Commission Act.

[17] §54 of Federal Trade Commission Act

[18] FTC Seeks Public Comment on its Endorsement Guides, Federal Trade Commission accessed 5 January 2021.

[19] I Tricked Love Island Stars Into Promoting My Terrible Fake Brand accessed 5 January 2021.

[20] Ibid.

[21] Ibid.

[22] I Tricked Influencers Into Promoting Gravel accessed on 5 January 2021.