Devumi, LLC (“Devumi”) and its owner and CEO, German Calas, Jr. (“Calas”) have agreed to settle the Federal Trade Commission’s (“FTC”) complaint alleging that Devumi and Calas engaged in deceptive online marketing tactics in violation of the FTC Act. In this first-ever type of complaint, the FTC alleges that Devumi and Calas sold fake indicators of social media influence – which are important metrics which businesses and individuals utilize in making purchasing, investing, hiring, licensing and viewing decisions.
According to the FTC’s complaint, Devumi and Calas used their websites Devumi.com, TwitterBoost.co, Buyview.com, and Buyplans.co to sell fake followers, subscribers, views and likes to users of various social media platforms, including Twitter, LinkedIn, YouTube, Pinterest, Vine and SoundCloud. For example, the FTC alleges Devumi and Calas filled more than 58,000 orders for fake Twitter followers; sold more than 4,000 fake YouTube subscribers and over 32,000 sales of fake YouTube views; and sold more than 800 fake LinkedIn followers. The FTC alleges that by selling and distributing fake indicators of social media influence, Devumi and Calas provided their customers with the means and instruments to commit deceptive acts or practices, which is itself a deceptive act or practice in violation of the FTC Act.
Under the terms of the proposed settlement, (i) Devumi and Calas are banned from selling or assisting others in selling social media influence to users of third-party social media platforms; (ii) Devumi and Calas are prohibited from making misrepresentations, or assisting others in doing so, about the social media influence of any person/entity or in any review/endorsement of any person, entity, product or service; and (iii) Calas is ordered to pay a monetary judgment of $2,500,000 – the amount the FTC alleges Calas was paid by Devumi.
Takeaway: As we have previously blogged, both federal and state regulators are continuing efforts to address deception in the e-commerce marketplace, by bringing enforcement actions against those who engage in fraudulent ad traffic and fraudulent social media activity.