Can celebrities who publicly endorsed FTX now be successfully sued? In the linked article it states that suing them is being justified since they played the role of “brand ambassador” of the now failed product.
Can the lawyers be serious? It seems absurd to me that a celebrity (or anybody really) who’s (implicitly) endorsed a failed product - say in a TV ad - can be civilly liable.
IANAL but yes, they can be sued successfully. Oddly enough, this is the flip side of the long-standing legal standard that celebrities have the right to control the use of their name and likeness in ads.
As far back as the 1950s, the Federal Trade Commission has held that use of endorsements and testimonials in advertising is based on the presumption that a substantial number of consumers believe that a person who endorses a product not only uses it, but has tested it, and recommends it on that basis.
In 2019, the FTC sued real estate investors/celebrity house flippers Dean Graziosi and Scott Yancey for false claims about a real estate training program. As of June 2022 the case is still tied up in the courts, but the defendants motion to have the case thrown out was denied. Steven Seagal was sued by the FTC in 2020 for a different cryptocurrency scam, and settled out of court.
Of course, that doesn’t necessarily mean all lawsuits will be successful. Did the celebrity perform “due diligence” before endorsing? Did the company provide the celebrity with enough accurate information for an informed decision? Does a jury (which is assumed to represent the ordinary consumer) believe the celebrity is even supposed to be a credible representative of the advertiser?
I remember Larry David’s ad, and it seemed more like a comedy skit than anything else. I just rewatched it, and it isn’t until the end that Larry David is asked if he wants in on the new crypto and he passes on it saying he’s “Never wrong about these kinds of things.” The joke being that his character throughout the ad kept passing on things like indoor toilets, using forks instead of fingers, refusing to sign the Declaration of Independence on the fact that stupid people would be able to vote, etc., etc. He’s just playing a character in a commercial rather than saying “I, Larry David, endorse this product and recommend it.”
What about all the other people who worked on the ad? The writer, the lighting guy, and the sound guy, wouldn’t they have as much to do with the ad as the actor? Couldn’t they also be sued?
Well, sure…as has been noted many times here, anyone can sue anyone else for just about anything – the question is whether they would have legitimate grounds for such a lawsuit.
The differences between the production crew, and the celebrities, are at least twofold:
Yeah, I have less of a feeling of being suckered by Larry David than by Tom Brady and Giselle Bundchen, who were shown calling their friends telling them to open an account, or Steph Curry, who claimed, "(w)ith FTX I have everything I need to buy, sell, and trade crypto safely,” and most particularly Kevin O’Leary, who’s supposed to be a financial expert, who said, "(to) find crypto investment opportunities that met my own rigorous standards of compliance, I entered into this relationship with FTX.”
“The upshot of this is that he’s being sued for promoting FTX in an ad where he doesn’t say a single nice thing about FTX, which feels like a pretty good encapsulation of the entire Larry David vibe.”
I’m guessing it’s that celebrities are trading in on their own name to gain the trust of viewers when they endorse a product. Tom Selleck was doing some ads for a reverse mortage company where he looks into the camera and says “Look, reverse mortages aren’t for everyone, but I think I’ve been around long enough to know what’s what. I’m proud to be a part of AAG. I trust them. I think you can too.” An ad like that strikes me as substantially different from Larry David’s where he’s not personally making any claims about the company.
This wouldn’t be the first time a celebrity endorser has been sued, has it?
That dude is screwed if it goes to trial. Larry David not so much.
Of course, that depends on circumstance. (Ignoring the “yes, you can sue anyone for anything…” line). A copywriter is working under the direction of an ad agency or the company, producing whatever he is told to produce. He is in no way suggesting he wrote this because it reflects his personal point of view and he is encouraging it. plus, he is providing text that the celebrity has the option to accept or not, and modify as required. This is substantially different from someone who is offered an opportunity to review a product and agree to promote it.
The lighting and sound guys, even less than the copy guy. They simply produce what they’ve been asked to produce. They are not providing specific encouragement that the product is acceptable on its merits, and lighting and sound have very little to do with persuasion. The commercial would provide substantially the same message content if it was a zoom call from the celebrity’s house with no lighting or sound.
IMHO, IANAL - the degree to which the celebrity may be liable probably depends on how explicit is the message that they understand and approve of the product. If Bob says “I use FTX because I know nothing about crypto and they’re supposed to be experts” than that is a different message than “I’ve looked into this crypto thing, and I know enough about finances to see it’s the best thing in the market!”
Plus, I hope that 90% of people understand that celebrity endorsements generally are meaningless. Bob the Celebrity is not gushing about these cookies because they taste like heaven. He’s being paid to say whatever…
The implication being that people who dismiss FTX are just as stupid as people dismissing all these great inventions throughout history.
It’s an ad and a clear endorsment and I am dissapointed in Larry David for doing it. He doesn’t get away with it because it is done in s humorous way.
Even if you are right about the 90%, that leaves 10% who, since they admire Bob and want to emulate his success, decide to buy the product. Bob would be straight on to his lawyers if someone said that he endorsed their product without his consent (and a contract) so it’s only fair that he should bear some responsibility for the quality of anything he endorses.
I do wonder how far this might go though. How about an athlete with a logo on their shirt? Or a tennis player who has their name on a brand of racquets?
Is an actor in a commercial automatically endorsing the product being advertised? Can I sue Flo if Progressive screws me over? What about John Hamm, who appears in some Progressive ads? Maybe the difference is that in one case they are playing a role, while in another they are themselves?
There’s definitely a difference between an actor, and a “paid commercial spokesman,” but in either case, I would suspect that there’s also a question of to what extent that person can reasonably be perceived to be an expert in the product or service, based on the content of the ad.
Stephanie Courtney (the actress who plays Flo) is just that, an actress, playing a clearly fictional role as an insurance salesperson; I don’t think that a reasonable person can or should expect that she (the actress) is an expert on auto insurance, nor that she is giving an explicit personal endorsement of Progressive.
And, while Jon Hamm is appearing as “himself” in some Progressive ads, it’s pretty clear that he’s playing a fictionalized, comedic version of himself, rather than acting as a paid spokesperson; it could possibly be argued that Larry David was doing the same thing (not unlike the role he plays, as “himself,” on Curb Your Enthusiasm).
But, someone mentioned Tom Sellick upthread, who’s been doing ads for a reverse mortgage company: in those ads, not only is he speaking as himself, but in at least one of those ads, he specifically gives reassuring language about reverse mortgages (and that company) being safe to deal with, and thus, there might be a higher expectation on the part of the viewer that Sellick himself is presenting himself as knowledgeable about reverse mortgages, and is giving financial advice.
And, as also noted, related to the crypto ads, if you have an actual finance expert giving an endorsement in the ads, then that person is probably at an even higher risk in this situation.
Yes, I would think there would be a difference between a comedian like Larry David riffing, and Warren Buffett speaking approvingly of crypto and FTX’s investment practices.
If litigation happens, I will bet all of these “personalities” settle out of court to make this go away. Nobody wants to go to trial without some certainty they will win.
As for Larry David, I would think it would be a very bitter check for him to have to write. The ad doesn’t look like he’s endorsing THX at all. I guess the joke’s on him. Maybe he will fight it. Nah.
There’s got to be a line in the sand somewhere, right? You don’t see a difference between Tom Selleck looking into the camera and telling us directly that we can trust AGG and Milina Vayntrub selling us AT&T, Stephanie Courtney selling us Progressive Insurance, or Joe Isuzu selling us, uh ,whatever an Isuzu is?
I’m not sure if there’s much basis to the lawsuits. The problems at FTX were from a failure of internal controls due to the management/owners being able to specifically circumvent processes that were in place to prevent from happening the kind of thing that happened. If FTX had been correctly cordoned off from Alameda Research, there would be no problem with FTX, and only Alameda would go under. There would be no expectation that any of the people that were endorsing the product would ever be able to know that it was possible for SBF and his allies to divert the funds for FTX’s sister company’s use, because on the surface FTX forbid that sort of practice.
The fact that this took place in crypto space makes it looks like a failure of crypto, but it really isn’t. While it’s fallout from the crypto bear market, the price of crypto hasn’t really fallen all that much since then compared to what would happen if people thought the whole system was undermined by what SBF did. This could have been any financial company that stole their user’s funds to prop up their bad investments. It was entirely due to outright lying by the executives and owners at FTX that this came to pass, and there was no clue anyone not working directly on the code that enabled it could have had before the situation imploded.
These are good points, but there is the other aspect: one of the selling features of crypto is that it’s not dependent on governments to keep it safe, often by investors who are sceptical of government regulation.
Then, as you say, there is a failure caused by dishonest management, which government regulation is meant to prevent, which triggers calls for regulation of crypto exchanges. There’s definitely an ideological/philosophical tension there about the relationship between crypto and government.
Regulating financial intermediaries has a long, storied, and mostly sordid history. Scumbags pop up in the gaps between current regulations, steal an eye-popping sum, authorities whack-a-mole that particular scam, lather rinse repeat. Whether it was Spanish royal bonds in the 1500s or FTX last week, the tune is the same, just with new words to the same old music.
The idea that financial intermediaries working mostly in the conventional economy don’t need regulation because one tippy end of their business is synapsed to the magical talisman called “crypto” is ludicrous on its face once someone, e.g. me, chooses to say in plain English what’s really going on.
But it does make for mongo opportunities to fleece the incautious. Which often seems like the main motivating factor behind most financial intermediation.