The owner of company that allegedly sold fake social media followers and endorsements to musicians, athletes, actors and other would-be influencers has agreed to a $2.5 million fine to settle charges brought by the Federal Trade Commission.
The proposed settlement calls for German Calas, Jr., owner and CEO of the defunct Devumi, to pay $250,000 of the fine, with the remainder suspended.
“Indicators of social media influence are important metrics that businesses and individuals use in making hiring, investing, purchasing, listening, and viewing decisions,” the FTC writes in its complaint, unveiled Monday. “If these metrics are misleading because they are faked, that could induce consumers to make less preferred choices.”
The FTC specifically alleges that Devumi sold more than 4,000 fake YouTube subscribers, and more than 32,000 fake YouTube views to musicians and other clients. Devumi also allegedly sold more than 800 fake LinkedIn followers to businesses -- including advertising firms, financial services companies and human resources firms.
The company allegedly sold more than 58,000 fake Twitter followers to “actors, athletes, musicians, writers, and other individuals who wanted to increase their appeal as influencers,” and to “motivational speakers, law firm partners, investment professionals, experts, and other individuals who wanted to boost their credibility to potential clients for their services.”
The fake followers allowed purchasers “to deceive their potential clients about their influence, whether clients were seeking to hire them as influencers or to hire them for other services,” the FTC alleges.
The FTC's move comes nine months after Devumi agreed to pay $50,000 to New York, to resolve similar allegations. Former New York Attorney General Eric Schneiderman began investigating the company last year, shortly after The New York Times reported on Devumi's practices.