Victims or chumps? Tom Brady lawsuits raise questions over celebrity endorsements

  • 4 min read
  • Dec 17, 2022

Victims or chumps? Tom Brady lawsuits raise questions over celebrity endorsements

Patriots football fan Michael Liviratos is doing something that was once considered offensive in New England: He’s suing former Patriots quarterback Tom Brady. Liviratos, 56, filed a lawsuit seeking unspecified damages from Brady and “Shark Tank” host Kevin “Mr.” Fantastic” O’Leary for marketing FTX and digital currencies.

Livieratos basically argues that after he invested nearly his life savings before the collapse of FTX, it screwed him over. Leaving aside his decision to base financial decisions on commercials made by an athlete, Liviratos’ lawsuit raises difficult questions about the liability of celebrities who are paid corporate spokespeople.

Brady is not alone. Other famous fans have also been sued, including his ex-wife, supermodel Gisele Bundchen.

There is no doubt that celebrities can sell their fans by offering products based on little knowledge or competence. However, the question that arises for consumers is whether being a victim is the same as being a victim.

“As a New England Patriots fan my whole life, you can imagine the impact Tom Brady will have,” Liviratos told The Washington Post. One can certainly imagine how a celebrity can persuade you to buy a car to look as cool as Matthew McConaughey. However, few of us would bet our life savings on his financial advice. In fact, if my Lincoln was a lemon, I wouldn’t blame McConaughey that this car wasn’t “my sweet spot.”

In fact, McConaughey illustrates the problem in these court cases. He says a few words in each ad and says almost nothing about Lincoln’s abilities. In one, she simply grins before falling back, fully clothed, in a pool. You have to look hard to know he’s selling cars – McConaughey was selling McConaughey, and the car was just an add-on.

No one would have thought McConaughey took the car apart or compared other cars before he drove away a truckload of money for commercials. The question is, should we assume that Brady did more research before telling people to get into cryptocurrencies?

However, according to the complaint, O’Leary and Brady “promoted, assisted and actively participated in” FTX’s “offer and sale of unregistered securities.” He is accused of “aggressive marketing” for FTX’s “deceptive” practices.

Brady, along with his ex-wife, became interested in FTX last year and agreed to donate millions of dollars to FTX’s effective altruistic mission. Notably, it appears that Brady and O’Leary may have lost the company as well.

An earlier action called Sam Benkman-Fried, Tom Brady, Gisele Bundchen, Stephen Curry, Golden State Warriors, Shaquille O’Neal, Udonis Haslam, David Ortiz, William Trevor Lawrence, Shuhei Ohtani, Naomi Osaka, Lawrence Jane David and Kevin O’Leary. The title of the accused

The class action alleges that “some of the biggest names in sports and entertainment have either invested in FTX or served as brand ambassadors for the company. A number of them hyped FTX to their social media fans, which led retail customers to embrace FTX’s enticing platform.

The litigants argue that these celebrities helped create a “house of cards” run by a “Ponzi scheme” in which FTX entities commingled clients’ funds to sustain the fraud.

States like Texas are also investigating Brady and others for their role in the company’s alleged fraud.

Brady has hired Latham & Watkins to defend him in these lawsuits.

I am extremely skeptical of liability theories. There is no evidence that these celebrities knowingly lied. The commercials also feature a different theme than actor Ryan Reynolds portraying as the owner of Mint Mobile. He not only produces but produces the product.

Celebrities routinely endorse products, from hair gel to hamburgers. They read from scripts, and few believe they are experts in the products they want.

These commercials clearly contain personal endorsements that they are good and appropriate. Tom Selleck can be seen nightly on television extolling the AAG with the enthusiasm of a carnival: “And let me tell you something: If I thought reverse mortgages benefited every American senior, I wouldn’t be here. Or worse, it was a way to take you home.”

There is no indication that AAG committed fraud, or that Selek is wrong in its claim that “I believe I know what’s what” when it comes to reverse mortgages. However, even if Selleck refuses his “what” as “anything” at a later date, his credit—not his responsibility—must be the issue.

However, some celebrities have settled similar cases in the past. In 2018, the Securities and Exchange Commission (SEC) prosecuted former boxing champion Floyd Mayweather Jr. and music producer DJ Khaled for their roles in the initial coin offering. They agreed to pay interest, penalties and interest on their advertising.

Similarly, the SEC this year settled with TV star and entrepreneur Kim Kardashian for promoting the Ethereum Max (EMAX) cryptocurrency without disclosing the payment she received. He paid $1.26 million without pleading guilty.

For Kardashian, the main difference is that the wire is placing a bond product versus a simple product. Most products fall under US Federal Trade Commission (FTC) approval guidelines. It only requires “plain and clear language” indicating that a commercial plan is part of an “advertising” or “sponsored” feature.

It’s worth noting that Kardashian labeled her EthereumMax post as an “advertisement,” but the SEC considers a crypto-asset a security and not just another product. Under SEC rules, celebrities promoting crypto-asset securities must disclose the nature, source, and amount of compensation received for the promotion.

Kardashian captures the craze of celebrity endorsement. The Kardashians Slurpees are a popular pop culture entertainment option with zero nutritional value. They are a family that rose to fame by claiming fame without any significant skill or worth other than celebrity.

Taking investment advice from Kim Kardashian is the ultimate example of an idiot and her money will soon be gone. However, when you make a Kardashian or a Brady your financial advisor based on a 30-second commercial, whose fault is it?

We live in a culture dominated by celebrities. For all our progress as a species, probably more people know and follow Kim Kardashian’s advice than the Dalai Lama. In fact, few of us want to imagine the Dalai Lama in Lululemon yoga pants, and I doubt it will lead to a shopping frenzy.

Ultimately, though, celebrities sell themselves—and the rule for consumers is still the “warning rule” or “buyer beware.”

Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University. Follow him on Twitter @JonathanTurley.

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