[co-author: Stephanie Kozol]*
Last week, a bipartisan coalition of 30 state attorneys general (AG), led by Florida, Illinois, New York, and Texas, reached a settlement with Cameo — an online service that allows fans to pay for customized messages from celebrities — establishing state AGs’ expectations regarding a company’s duty to include disclosures identifying the connection between a paid endorser and the business brand being endorsed. The settlement with Cameo not only demonstrates that state AGs are scrutinizing whether companies are complying with federal laws and regulations such as the Federal Trade Commission’s (FTC) endorsement guidelines, but also their willingness to establish clear, bright-line rules for compliance that other companies should heed.
Background
Baron App, Inc., the company that operates Cameo, is best known for creating an online service that allows fans to pay for customized messages from celebrities — i.e., paying $150 to get William Daniels (Mr. Feeny from the TV show Boy Meets World) to wish your sibling a happy birthday or good luck before going off to college. This service was all in good fun.
However, in 2020, Cameo expanded its business model to include a “Business Cameo” service, which allows businesses to book celebrity talent for personalized video endorsements of their businesses (think Larry Thomas a/k/a the Soup Nazi supporting your local bagel shop). The states alleged that Cameo failed to ensure that these celebrity endorsements included appropriate disclosures that the celebrities were being paid to promote the product or service.
Under the terms of the settlement, Cameo agreed to implement measures to address the concerns raised by the AGs. These measures are designed to provide greater transparency in celebrity endorsements and ensure compliance with the FTC’s endorsement guidelines and state consumer protection laws. Specifically, the settlement outlines the following key requirements:
1. Cameo will establish comprehensive programs and policies to ensure compliance with endorsement compliance standards, including:
a. Implementing a watermark or similar disclosure system to clearly indicate when video content is a paid endorsement.
b. Providing clear statements to both endorsers and customers regarding compliance requirements with FTC endorsement guidelines and applicable laws.
c. Establishing a robust monitoring and review process for endorsement campaigns, which will include periodic reviews of randomly selected videos.
2. The company will create a reporting mechanism allowing third parties to flag videos that may not comply with Cameo’s terms of service or applicable laws.
3. In cases where third-party noncompliance is identified, Cameo commits to taking specific actions. These may include notifying advertisers, requesting the removal of noncompliant content, and potentially prohibiting advertisers from booking future endorsement campaigns for a minimum of six months.
4. To ensure ongoing compliance, Cameo will maintain detailed records of its compliance efforts.
5. Cameo must conduct an initial review of booking requests where its personnel are involved in drafting or editing material portions. If noncompliance is identified, Cameo must notify the advertiser, refrain from releasing the video, and potentially disqualify the advertiser from future campaigns.
6. For videos without a Cameo watermark, the company must perform periodic reviews of a random selection of 5% of videos (up to 100 per month) to ensure proper disclosure of material connections.
7. Cameo is required to implement a system that prevents endorsers and advertisers from submitting new booking requests until they have acknowledged receipt of and agreed to comply with specific statements regarding endorsement guidelines.
Further, Cameo agreed to improve its refund process for improperly booked endorsement campaigns.
The settlement also includes a financial component. While initially set at $600,000, the amount was adjusted due to Cameo’s demonstrated financial constraints. The company will pay $100,000 upfront ($25,000 to each of the four lead states), with the remaining balance suspended. This suspension is contingent on Cameo’s compliance with the agreement over the next three years.
Why It Matters
This settlement marks a significant milestone in digital advertising regulation. For the first time, we see state AGs directly applying and extending the FTC endorsement guides to third parties involved in celebrity endorsements, demonstrating a push for greater clarity in influencer marketing. By setting concrete standards for transparency and accountability, the agreement signals increased scrutiny of digital endorsements. Companies facilitating celebrity shoutouts or personalized messaging should take note, as the settlement establishes expectations for platform responsibility, including monitoring third-party advertisers.
*Senior Government Relations Manager
