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.
Troutman Pepper State Attorneys General Team
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Ashley Taylor – Co-leader and Firm Vice Chair Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation. |
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Clay Friedman – Co-leader Clayton is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice, multidisciplinary teams with decades of experience crafting effective strategies to help deter or mitigate the risk of enforcement actions and litigation. |
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Judy Jagdmann Judy is a partner in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based in the Richmond office. She brings experience serving as chair and commissioner of the Virginia State Corporate Commission (VSCC) from 2006 through 2022, which includes regulating the utilities, insurance, banking, and securities industries. She also served as Virginia’s attorney general from 2005-2006. |
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Stephen Piepgrass Stephen leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He focuses his practice on enforcement actions, investigations, and litigation. Stephen primarily represents clients engaging with, or being investigated by, state attorneys general and other state or local governmental enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, with a particular focus on heavily regulated industries. |
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Michael Yaghi Michael is a partner in the firm’s State Attorneys General and Regulatory Investigations, Strategy + Enforcement (RISE) Practice Groups, nationwide teams that advise clients on consumer protection enforcement matters and other regulatory issues. |
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Samuel E. “Gene” Fishel Gene is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) practice, based in the Richmond office. He brings extensive regulatory experience, having most recently served as senior assistant attorney general and chief of the Computer Crime Section in the Office of the Attorney General of Virginia, and as special assistant U.S. attorney in the Eastern District of Virginia for 20 years. |
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Tim Bado Tim is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, where he represents corporations and individuals facing potential civil and criminal exposure. Tim’s experience in government investigations, enforcement actions, and white-collar litigation spans a number of industries, including financial services, pharmaceutical, health care, and government contracting, among others. |
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Chris Carlson Chris Carlson represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general. |
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Blake R. Christopher Blake collaborates with clients on matters related to government contracting, investigations, and disputes. His senior-level government experience generates valuable insights and strategies for clients across a variety of industries. |
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Natalia Jacobo Natalia is an associate in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice. She focuses her practice on two primary areas: government contracting and state attorney general work. |
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Namrata Kang Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising. |
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Michael Lafleur Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general. |
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Susan Nikdel Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes. |
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John Sample John is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He focuses his practice on a wide range of general and complex litigation matters, including shareholder disputes, fraud, products liability, breach of contract, and Biometric Information Privacy Act claims. |
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Whitney Shephard Whitney is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation. |
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Trey Smith Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice. He focuses his practice on helping financial institutions and consumer facing companies navigate regulatory investigations and resulting litigation. |
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Daniel Waltz Daniel is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and State Attorneys General team. He counsels clients in connection with navigating complex government investigations, regulatory compliance, and transactions, involving state and federal government contracting obligations. Drawing on his broad experience as a former assistant attorney general for the state of Illinois, Daniel is a problem solver both inside and outside the courtroom. |
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Stephanie Kozol Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department. |