Is It Illegal/Unethical to Conduct Affiliate Marketing With Fake Personas or Non-Existent Influencers?

The answer is: probably. The specific facts will determine if it is illegal and/or unethical to use fake personas and non-existent influencers to engage in affiliate marketing. It also depends on which party has created the fake persona/false influencer.

The general legal principles are as follows:

• Deceptive business practices are illegal
• False advertising is illegal
• The use of frauds and deceits to deprive people of their money — or other things of value — is a form of theft under the laws of every State

With affiliate marketing, a provider of goods and/or services contracts with an “affiliate” — who could be a person or a company — to promote the goods/services. Often, the arrangement is a pay-per-sale or pay-per-lead. Let’s look at a hypothetical example involving a person — let’s call her Patty — who operates a gardening website. A company that sells garden tools and accessories contracts with Patty — the owner of the website — to promote certain garden tools. Let’s call the company “GardenCo.” Patty might use the tools in a video or discuss the tools in an article. Let’s assume that Patty has a link on her webpage that allows a reader/viewer to go to GardenCo’s website to buy the tools. Generally, Patty will be paid a commission on that sale. So far, so good.

However, there is a legal issue if Patty does not disclose to her viewers/readers that she gets a commission from GardenCo for any sales that result from using her link. The Federal Trade Commission has explicitly said that it is false advertising to fail to disclose that one is promoting a product/service in exchange for money or other consideration.

Putting that aside, let’s consider the circumstances where Patty and her website are completely fake. “Patty” is not real; all images and video of “Patty” are computer generated, and, likewise, the content of the website is entirely generated by an AI computer program. There are two possibilities here. First, some third party created and now controls “Patty” and her website and contracted with GardenCo without disclosing the fake persona and CGI-created website content. Second, GardenCo created and controls “Patty” and her website. In the first case, that third party has committed fraud and deception against GardenCo and viewers/readers. In the second case, GardenCo has committed fraud and deception.

Let’s focus on the second case, where GardenCo created and controls “Patty’s” website. The fraud and deception lie in the fact that consumers perceive “Patty” as independent and separate from GardenCo. As such, if “Patty” praises and recommends the garden tools, that praise and those recommendations are seen as personal and are more persuasive. By contrast, if GardenCo praises its own tools, that is to be expected because, of course, any business will praise its own products and services. The fraud in this example is also well-planned, pervasive, and long-running. This is precisely what would be called a “scheme to deceive.”

Of course, the legal and ethical issues mostly vanish if GardenCo is up-front about “Patty” and her website. Most issues are resolved by a simple notice at the top of “Patty’s” website saying: “This site is owned and operated by GardenCo.” Moreover, the fact that “Patty” is fake could be turned into a marketing opportunity with the phrase: “Patty is our wonderful state-of-the-art CGI spokesperson. Enjoy the show.”

Contact the False Advertising and Deceptive Business Practices Attorneys at Revision Legal

For more information, contact the experienced FTC Compliance Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.