Can followers sue for financial losses from promoted scams?

With the rise of influencer marketing, social media has become a powerful platform for promoting products. However, as influencers increasingly endorse products and services, there are growing concerns about scams, false advertising, and misleading claims. Followers who purchase products based on these promotions may face financial losses if the products turn out to be fraudulent or ineffective. This raises the question: Can consumers or followers sue influencers, brands, or platforms for the financial losses incurred due to such promoted scams? While there are legal protections in place for consumers, suing for damages in the context of influencer marketing is complicated and often requires meeting specific legal criteria.

Can Followers Sue for Financial Losses from Promoted Scams?

• Legal Grounds for a Lawsuit: To sue for financial losses due to promoted scams, followers must typically prove that they were misled by false or misleading advertising, that they suffered financial damages as a direct result, and that the party they are suing is legally responsible for the promotion. Common legal grounds for a lawsuit include:
• False Advertising: If a product was promoted with misleading or unsubstantiated claims (e.g., miracle cures, instant weight loss), followers may have grounds for suing under consumer protection laws, which prohibit deceptive or unfair advertising practices.

Example: A health supplement is promoted by an influencer, claiming to cure a specific disease in a short time, but the product is ineffective or harmful. If the influencer knowingly made false claims, followers could argue that this constitutes fraud.

• Breach of Contract: If an influencer or brand made specific claims about a product or service that were not delivered, followers might argue that there was a breach of contract, particularly if a purchase was made based on specific promises or guarantees.
• Fraud: If the promotion was part of a deliberate scam, with the intent to deceive followers and defraud them, a fraud lawsuit might be applicable. This would require showing that there was intent to deceive or mislead.
• Parties That Could Be Held Liable: Followers may not only have the option to sue the influencer who promoted the product but also the brand that manufactured the product and the platform that allowed the advertisement to be published. In some cases, all parties may be held liable depending on the circumstances.
• Influencers: Influencers have a legal responsibility to ensure that the products they promote are truthful, accurate, and not misleading. If an influencer knowingly endorses a fraudulent or misleading product, they could be held accountable under consumer protection and advertising laws.
• Brands: The companies or brands behind the products being promoted are often responsible for the claims made in advertisements. If a brand knowingly uses an influencer to promote a scam or deceptive product, it can be held liable for the financial harm caused to consumers.
• Social Media Platforms: While platforms like Instagram or YouTube typically have legal protections against being held responsible for content created by third parties, there are exceptions. If a platform is made aware of fraudulent content and does not take action to remove it, they could potentially be held liable, especially if they profit from the content.

Example: If an influencer endorses a skincare product with misleading before-after images and the brand and platform fail to remove the post despite multiple reports, the platform might be found partly responsible for enabling deceptive advertising.

• Legal Protections for Consumers: In many countries, there are consumer protection laws that protect individuals from misleading and fraudulent advertising. These laws vary by jurisdiction, but generally, consumers have the right to seek legal action if they are defrauded through deceptive advertising.
• In the U.S.: The Federal Trade Commission (FTC) regulates advertising and marketing practices. The Truth in Advertising laws require that advertisements, including influencer endorsements, be truthful and not misleading. If an influencer promotes a product with false claims, they can be held liable for violating these regulations.
• In the EU: The Unfair Commercial Practices Directive protects consumers against misleading advertising. The law allows consumers to seek redress if they have been harmed by deceptive or misleading marketing practices.
• In India: The Consumer Protection Act, 2019 provides consumers with rights related to the purchase of goods and services, including the right to be protected from unfair trade practices. If a product promoted by an influencer is fraudulent, the consumer may seek compensation through the Consumer Court.
• Types of Lawsuits Followers Can File:
• Class Action Lawsuits: If the product was promoted to a large audience and many followers have suffered the same harm, a class action lawsuit may be an effective way to pursue legal action. In a class action, a group of affected consumers sues the defendant collectively, sharing the costs and benefits of the case.
• Individual Lawsuits: In cases where the financial loss is significant for an individual or where the follower can prove they were particularly targeted or harmed, they may pursue an individual lawsuit for damages.
• Small Claims Court: For smaller financial losses, followers might opt for small claims court, which typically allows for the resolution of consumer disputes without the need for expensive legal representation.
• Challenges in Suing for Financial Losses:
• Proving Liability and Damages: One of the key challenges in such cases is proving that the influencer, brand, or platform is directly responsible for the financial loss. Followers would need to demonstrate that the claims made by the influencer were indeed false or misleading and that they were directly harmed by those claims.

Example: If a follower buys a product after seeing a before-after claim, they would need to prove that the product was ineffective or harmful and that the influencer’s promotion directly led to their financial loss.

• Difficulty in Identifying Responsible Parties: In some cases, it may be difficult to identify which party is ultimately responsible for the scam. If an influencer promotes a product that is manufactured by a third party and sold via an online marketplace, it may be challenging to hold the right party accountable. Determining whether the influencer, the brand, or the platform is liable requires careful legal analysis.

Example: A follower may have purchased a product based on an influencer’s endorsement, but the product was sold through a third-party platform like Amazon. In such cases, determining whether the influencer or the platform is liable could be complex.

• Jurisdictional Issues: If the influencer, brand, or platform is located in a different country than the consumer, it may complicate the process of filing a lawsuit. International legal disputes often require navigating complex rules regarding jurisdiction, making cross-border lawsuits difficult and costly.

Example: A U.S. consumer who buys a product promoted by a European influencer might face challenges in suing if the influencer or brand is based overseas.

• Example: Suppose an influencer with a large following promotes a weight-loss supplement with claims like lose 20 pounds in 2 weeks without scientific backing. A follower buys the product, uses it, and experiences no weight loss, plus some health complications. The follower then learns that other consumers experienced similar results and files a lawsuit.
• Steps to take:
• Filing the Complaint: The follower files a lawsuit against the influencer, the brand that manufactures the supplement, and the platform that hosted the promotion, claiming deceptive advertising and financial loss.
• Proving the Claims: The follower must present evidence that the product was ineffective and that the influencer's claims were false.
• Seeking Compensation: The follower may seek compensation for their financial losses, medical bills, and potentially emotional distress caused by the misleading advertisement.

Conclusion

Yes, followers can sue for financial losses from promoted scams, but it requires proving that they were misled, that the advertising was deceptive or fraudulent, and that the party responsible be it the influencer, brand, or platform can be held liable. Legal action is possible under consumer protection laws, but success depends on proving the fraudulent nature of the promotion and the direct harm caused. While such lawsuits can be complex, they offer an important tool for holding influencers, brands, and platforms accountable for misleading advertising.