I am sure that like me anyone who watched the Fyre Festival documentary on Netflix gasped at the level of fraud and misrepresentation that duped many innocent purchasers and investors into backing an essentially worthless project. The documentary has sparked a lively and useful debate about 'influencer fraud' and it was positive to see in response various celebrities agreeing to clearly tag advertisement posts as #ad.
There are many lessons to learn from this unfortunate event, and it serves as a reminder of the power of influencer marketing. It appears from various comments I have read online, that marketing agencies and influencers will be more thorough, do more research and try products/services before promoting them. That can only be a good thing.
However, in my experience, this is sadly not just an issue of pitching a false reality to customers via influencers. The investors were also duped out of large sums of money (US$26m was raised in total). I have seen similar frauds in practice, involving even diligent & experienced investors. Fraudsters often go to great and sophisticated lengths to deceive, and sometimes ostensible due diligence is undertaken on a fleet of false documents, causing potentially huge losses to investors (and huge windfalls to fraudsters).
Fyre Festival founder Billy McFarland was ordered this week to pay US$3 million (plus interest and legal costs) to one of his former investors, EHL Funding. As is often the case though, a Judgment is only as good as the money or assets available to satisfy it, which here seems unlikely to be any time soon given that McFarland is serving a 6 years jail sentence in Federal Prison.
The take away from this sorry tale is that large scale frauds dupe even the most experienced and savvy investors and customers – so be on guard, and the old adage rings sound; if something seems too good to be true, it probably is!