Influencers are out there peddling all kinds of products. As you probably already know, an influencer making a social media post that promotes a product is required to disclose if they are being paid for the endorsement. This is governed by the FTC. Most influencers add “#ad” or “#sponsored” to a post, which is good enough for the FTC (Federal Trade Commission).
When promoting investment products, the regulatory standards are higher. When Kim Kardashian made an Instagram post promoting the cryptocurrency EthereumMax’s EMAX, she included #ad, but the SEC (Securities and Exchange Commission) that that was not enough (see SEC press release). Karsashian paid a fine of $1.26 million!
To clarify this a bit, you can watch (and maybe show in class), this fun (yes, really) video from SEC Chair Gary Gensler. To get more of the background on this case, read “Why Kim Kardashian’s $1.26 million SEC settlement over her crypto promo mattes–especially for millennial and Gen Z investors” (CNBC.com, October 3, 2022).