Celebrities have been quick to join NFTs, but their fans may not understand why they do so. Truth in Advertising, a watchdog group, just sent letters to 17 celebrities, including Jimmy Fallon and Gwyneth Paltrow, reminding them that it’s against FTC rules to post about something on social media without saying “Do you make money from this?”
Bonnie Patten, executive director of the group that sent the letters, told BuzzFeed News, “When it comes to NFTs, some wealthy celebrities can take financial risks, but many vulnerable consumers don’t have that option.” “Consumers deserve to know the whole story behind a celebrity endorsement so they can decide whether or not to invest in NFTs based on all the facts.”
Truth in Advertising’s letter to the celebrities also says that NFTs are “rife with deception” and that the risks are almost never mentioned when they are advertised.
“we have found that celebrity NFT promotions is an area rife with deception, including, but not limited to, a failure to clearly and conspicuously disclose the promoter’s material connection to the endorsed NFT company, as well as the omission of other material information, such as the risks associated with investing in such speculative digital assets, the financial harm that can result from such investments, and the personal benefit(s) the promoter may gain by virtue of the promotion(s).”
The letter goes on to remind the celebrity that any social media post that has anything to do with an NFT collection should say so. Even though it’s not clear how these celebrities are connected to the NFTs they’ve posted about, Justin Bieber is listed as an investor on the inBetweeners NFT project, and Reese Witherspoon’s company Hello Sunshine is a partner of World of Women NFTs. Both of these celebrities received more serious letters from the group in June.
These are the famous people who got a letter:
DJ Khaled, Drake Bell, Eminem, Eva Longoria, Floyd Mayweather, Gwyneth Paltrow, Jimmy Fallon, Logan Paul, Madonna, Meek Mill, Neymar Jr., Paris Hilton, Shaquille O’Neal, Snoop Dogg, Timbaland, Tom Brady, and Von Miller.
When a celebrity or influential person buys into an NFT collection and then posts about it on social media, they may affect the value of the entire NFT collection. Even if they bought the NFT with their own money, they are still boosting the value of what they have already spent. If a celebrity buys an NFT early on for a low price and tweets about it (like Paris Hilton did when she was on The Tonight Show and talked about her Bored Ape), this can raise the price of the NFT, so when they sell it later, they can make a profit.
To make things even more complicated, celebrities sometimes pay for their own NFTs, but sometimes the owners of the collection give them NFTs for free. Jimmy Fallon changed his Twitter avatar to a cartoon owl after the collection’s owners gave him a free Moonbird NFT as part of a plan to give free NFTs to friends or to promote the collection. Fallon’s advertising of the Moonbird collection made it worth more, but he never said that it was free. This week, Fallon got a letter from the group Truth in Advertising.
Today’s letters are gentle reminders. But in the past, Truth in Advertising has used this as the first step in a series of steps that led to the FTC getting involved. In 2016, the group sent this kind of gentle letter to a number of celebrities, including the Kardashians, but by 2017, the FTC was sending its own letters.