On Monday, the Securities and Exchange Commission (SEC) announced charges against Kim Kardashian for accepting payment to promote EMAX tokens– a cryptocurrency offered by EthereumMax– on her Instagram account. From a PR perspective, we know there are much better ways to promote your business, through innovative storytelling or reputable news coverage. For failing to disclose that she accepted payment, Kardashian was fined $1.26 million. As we know, from our Predictions– earlier this year– businesses are recognized as self publishers by the SEC on their “websites, social media, and a number of digital media platforms for fair disclosure of information” by failing to disclose that she was paid to promote EMAX, Kardashian opened herself and EthereumMAX to SEC investigations that are still pending.
While Kardashian is far from your average influencer, with over 300 million followers, brands are still learning the best practices for working with influencers. Although we’ve covered influencers before (How to Find Social Media Influencers: The Definitive Guide, Social Media Influencers 101: What You Need to Know) as the number of influencers on social media continues to grow, brands must remain vigilant about educating themselves and any potential influencers they may work with. Part of hiring BIGfish Communications, or any other PR professionals, is making sure that they not only have a vast knowledge of social media, but also a reliable network of influencers that are aware of the risks that come with paid promotions.
Even though the average person doesn’t have nearly 15 business ventures and isn’t a lawyer, after 4 attempts at the bar exam, it should not come as a surprise to most that if you are paid to promote a business to your audience, and call for them to become investors, they should be made aware that you were paid to promote the business. SEC Chair Gary Gensler said, “Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”
Kardashian has neither accepted nor denied the charges, but she has agreed to pay the $1.26 million.
Bottom Line (tl;dr)
Tell the company’s stories, but NEVER ask audiences to invest in securities.