By Chris Roberts
Never take financial tips from advertising. And never, ever take financial tips when it’s advertising and they don’t tell you it’s advertising.
Kim Kardashian peddled EthereumMax’s crypto asset in Instagram posts in June 2021. What she didn’t do was tell her audience that she was paid $250,000 for the sales pitch.
That’s against the law, and she’s going to pay.
The U.S. Securities and Exchange Commission said she will pay $1.26 million to settle the charges, which includes a $1 million penalty. The SEC’s press release quoted SEC Chairman Gary Gensler as saying that everyone, from “celebrities and others,” must follow the law that “requires them to disclose to the public when and how much they are paid to promote investing in securities.”
The SEC is among the federal agencies with rules requiring social media influencers and others to tell audiences when they’re being paid to pitch a product or service, or receive anything for free or at a discount. The Federal Trade Commission’s Disclosures 101 for Social Media Influencers spells out the minimum standards.
The statement says Kardashian did not admit or deny the charges. That’s another reminder that law and ethics are not the same thing, and we live in a world where people are penalized without acknowledging their transgression.
And it’s not the first time members of the Kardashian family have been accused of selling stuff without making it clear. The Food and Drug Administration in 2015 forced Kim Kardashian to remove a sales pitch for a morning sickness drug, and Variety in 2016 reported on a group that claimed it found 100 Instagram posts with product placement not noted as ads.
The sales pitch, by the way, was a bad one. The crypto asset’s value fell 99% from its peak in Spring 2021.