Hacker News Reader

Comment by edmundsauto | Hacker News Reader

The question is whether we should hold them legally accountable to have that knowledge (or at least having done some basic research). In some sense, being a brand ambassador is to lend your credibility and honor to a product. Whether society is better or worse is an open question, as there would be pretty obvious workarounds and it might just add noise to the regulations.

I do think people should be generally accountable for what they promote. Otherwise there is an open loop, where individuals and companies can get the upside without a corresponding downside of accountability. That inherently unbalanced the scales, which is a bad incentive.

View on HN

Who in their right mind thought Larry David personally was lending his honor and credibility to FTX?

And who in their right mind takes financial advice from a basketball or football star?

So if Merck hires some actor to advertise a new prescription painkiller, and that drug later turns out to cause heart attacks, should the actor be held legally accountable?

Yes, duh.

Medical decisions shouldn’t be based on actors attractiveness… it should be based on efficacy and safety.

I think we can distinguish between an actor playing a role and a famous person hired to endorse a product. If this means commercials revert to having all no-name actors because the law tilts towards endorsement, so be it.

Please explain how such a law could ever possibly comply with the constitutional vagueness doctrine, and with 1st Amendment protections on freedom of expression.

> explain how such a law could ever possibly comply with the constitutional vagueness doctrine, and with 1st Amendment protections on freedom of expression

Fraud is not protected by the First Amendment [1]. This is old law.

[1] https://crsreports.congress.gov/product/pdf/IF/IF12180

Fraud isn't protected, so that is how you would handle the 1st amendment. Whether the person was acting as an actor or was endorsing it as a celebrity is a matter of fact for the jury. It actually doesn't even sound that hard to demonstrate. Tom Brady wasn't paid 10MM (or whatever) because he is that much of a better actor. He was paid to be himself and endorse a product.

But how do you define "celebrity" in a legal sense. Why is Jimmy Noname not culpable but Chris Pratt would be? And what if Jimmy Noname did an FTX ad and the following year got the lead role in the most successful movie of 2023? Is he retroactively a celebrity endorsement?

Mercedes' Formula 1 car had like 6 FTX ads on it this season. Why isn't Mercedes or Lewis Hamilton in this class action?

You wouldn't define celebrity. You would define endorsement. And you would let the lawyers present evidence and let a jury decide whether they thought the person was endorsing it.

I'm not sure it's a good idea, but it's an interesting idea. And the follow on effects of making endorsements things that people actually believe in would be a nice world.

I assume Mercedes/Lewis Hamilton weren't included because the lawyers went by whoever did it on the superbowl. Cause it was an easy list to find. And a lot of Americans don't know anything about F1 so it's under the radar.

None of the celebrity endorsers committed fraud. You didn't answer the question.

You mean, because they were merely negligently misleading instead of intentionally misleading? Yes, it's seems to not be under the current definition of fraud. I thought we were discussing a counterfactual that the OP suggested where negligent endorsements were actionable under a law similar to fraud.

Fraud was used by me as an example of the 1st amendment being okay with certain commercial speech being actionable.

Good question. Fundamentally, I don't think pharmaceutical advertising should be allowed. Broadly, I agree that the implementation matters and there are lots of edge cases. My primary objective is skin in the game: when people capture the upside of their brand identity, they are also exposed to the downside. If someone isn't trying to use their identity to promote something, it is out of scope.

In the "anonymous actor" situation, they are not trying to use someone's brand/honor so the perverse incentives don't appear to be present.

> if Merck hires some actor to advertise a new prescription painkiller, and that drug later turns out to cause heart attacks, should the actor be held legally accountable?

Of course. Nobody is sending them to jail. But at the very least, their earnings should go the victims. (Analogy: if your employer perpetuates fraud, they go to jail and you lose your job.)

> Analogy: if your employer perpetuates fraud, they go to jail and you lose your job.

My previous earnings aren’t taken. None of the contractors that did work for the company get their payments clawed back.

> they go to jail and you lose your job

You don't have to give your paycheck back though.

> don’t have to give your paycheck back

You may if you’re senior enough. Public figures pushing nonsense are in positions of influence. It’s mind blowing that an emerging opinion on this forum is the beneficiaries of fraud should be immune from consequences.

From a guy who laid bricks in a FTX office, to Tom brady, draw us a line. Let's see how deep guilt by association goes in your head, and how you would regulate this.

> draw us a line

We have centuries of case law on this. If I lose money in a fraud, you can be sure as hell I’ll sue everyone who took cash out. Naïveté is not an excuse for misconduct.

Why did you find it mind-blowing? Even though you disagree, shouldn’t you find it unsurprising that most people think that ignorant employees or contractors didn’t do anything wrong, especially below the level of executive? What experiences led to your surprise?

> shouldn’t you find it unsurprising that most people think that ignorant employees or contractors didn’t do anything wrong, especially below the level of executive?

We aren’t the first generation asking these questions. Most of this is settled law. Profiting from perpetuating fraud generally involves clawbacks. Where the thresholds lie is a matter for courts. But everyone involved will be drawn into that process. If you find that distasteful, consider whether you are profiting from fraud.

Ah, I see. You’re confused. You’re thinking of precedent for individuals aware of it, who knowingly perpetuated it (who can typically be charged criminally) and you’re perhaps conflating it with situations where innocent employees at a company lost retirement investments or jobs due to the collapse of the fraudulent company.

While it’s true that these are old questions, it simply is not settled law that claws back money from employees who worked at a company doing wrong but didn’t perpetuate the fraud themselves.

So, the answer to my question might be that you acquired a misunderstanding of the law at some point. You also believed that most people in HN are versed in this area of business law so expected them to see this your way.

> thinking of precedent for individuals aware of it, who knowingly perpetuated it (who can typically be charged criminally) and you’re perhaps conflating it with situations where innocent employees at a company lost retirement investments or jobs

Nope. If they were aware, that’s criminal. If they were bystanders, that’s just tough luck. We are discussing liability.

Promoters have been held responsible for fraud, particularly around securities promotion, for over a century. This isn’t arcane law. It’s commonsensical for anyone not making their living peddling fraud.

Maybe they should be. If no actor is willing to take the risk then would we be worse off with less ads for prescription drugs being advertised on TV.

Do you think it's reasonable to assume that actors wouldn't take the risk in order to get paid in an industry that is notoriously competitive to get paid in? I could see a lot of people simply chalking it up to "Well, hopefully nothing bad happens...?" That is also assuming they even fully appreciate the risk that they'd be taking on. It certainly doesn't seem like it would be in the interest of the ad agency to make them aware of their share of culpability.

what about the person operating the camera?

it seems there is some conflation between a "brand ambassador" and someone hired to film a commercial.

if someone takes direct interest as payment for filming something, and they further go out and endorse it, then they are a brand ambassador.

if someone gets paid once for doing a job (or some residual per play), but nothing further, that sounds like payment for hire.

What if a famous person endorses an alcoholic beverage company and it later turns out alcohol contributes to disease or death?

Should be bidirectional. They pay me for the liver disease, I pay them for losing enough anxiety to get lucky.

The difference here is that Brady and Bundchen not only received payment in equity as brand ambassadors they also invested into a stake of FTX. The conflict of interest is probably more actionable but the official role could make him subject to being an insider. Obviously there is a lot of negligence to go around here but if we swapped Ja Rule for Brady and FTX for Fyre Festevial (and Bahamas for Bermuda) we can see that some lawyers have gainful employment for a while.

How is this a conflict of interest? That’s the first time I’ve seen it presented this way. If they received equity, are their interests not more aligned with customers?

I would say they're less aligned because they now have an incentive to sell it for the highest price and convince others to buy it. The interests are opposite.

But equity is supposed to go up in value because of profit and growth and whatnot, not just in price. That's why you buy it. At least in a normal universe. They still need to know there was a scam going on to be culpable for it.

Though I can see taking whatever cash payments they got back, if it rightfully belongs to scammed customers.

Read my other comment, this is mostly about the true relationship since they are not simply being paid for an appearance. Given everything that transpired, was Brady's interests aligned with customers? Tough to say yes.

> The conflict of interest is probably more actionable but the official role could make him subject to being an insider.

What? No. Kardashian was fined because she advertised crypto without disclosing she was paid for the ad. Presumably these celebrities already made those disclosures, or it's understood since everyone knows TV ads are paid.

As far as I know, people do not have to disclose payment for TV ads because that would make TV advertising dead. Rather, I'm thinking more from the perspective that getting the CEO of a company (unbeknownst to the viewers) to pump up the company without saying they are a substantial insider is the problematic part. The issue is not failing to disclose payment but failing to disclose that your true relationship.

Reply on news.ycombinator.com