Endorsements are not a new concept for those in the spotlight. Companies contract – often to the tune of millions of dollars – with sports icons to wear their gear, and movie stars seated at the wheel of luxury vehicles to build their brand through an established fan base.

There's nothing inherently wrong with paying someone to rep your product. And if collaboration results in a win-win situation, why wouldn't you agree to use your status to boost profits?

Don't businesses accept risk?

Perhaps entities should recognize the potential downside to attaching a generous portion of their revenue to an influencer. For as much as a celebrity might increase sales, their personal reputation could have a detrimental effect on the company.

Consider the strategic partnership Adidas ended with Kayne (Ye) West. The retailer anticipates a $246 million loss in Q4 – both because of Ye's social media comments and the company's seeming hesitation to cut ties.

Endorsement contracts typically specify the financial gains attributed to stars for their promotions. But nobody seemed concerned about that before crypto became all the rage.

Penalties for promotions

Celebrities weren't the ones to introduce decentralized banking. Yet regulators (still unsure of how to handle smart contracts) are jumping at the chance to penalize them for publicity.

Kim Kardashian got “caught” with her alleged lack of transparency in hyping a token because she didn't tell her followers how much money she received for so doing – an obligation unrequired for other products.

Is Kiki qualified to give investment advice? Probably not. Is Ye a professional athlete? No.

So, why would using your name, image and likeness be illegal in one scenario versus another? And what defines the line between a company taking a loss and individuals paying fines?

Guidance for unclear guidelines

The ability to defend your actions may be the only semblance of certainty in a space with rules that have yet to be defined. As is, that begins with learning how to comply with ambiguity.

Schedule a Free Consultation