Fight Fyre with fire: Protecting consumers in the internet age

Fight Fyre with fire: Protecting consumers in the internet age
© Netflix via YouTube

“It’s a great time to be a con man in America,” remarks an interviewee at the end of "Fyre Fraud," Hulu’s new documentary on a 2017 music festival-turned-scam. If the rest of the film aims to prove its closing line, Fyre Fraud succeeds. 

Entrepreneur Billy McFarland organized Fyre Festival on a Caribbean island formerly owned by drug lord Pablo Escobar. It was such a disaster that Netflix and Hulu are competing with each other to tell its story, releasing rival documentaries on the scam earlier this month. Both films offer schadenfreude and cringe entertainment, but they also tell a cautionary tale. 

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McFarland managed to trick thousands of people into collectively giving him millions of dollars in exchange for a literal boatload of promises he couldn’t fulfill. If Fyre Festival proves anything, it’s this: The era of “snake oil” and “fool’s gold” may be long past, but the internet is still the Wild West.

Although internet fraud of this magnitude may appear to be innovative, it’s not. Email phishing is just a contemporary version of the old, “Your nephew is in jail! Send cash!,” telephone swindle. Last year’s contagion of “Initial Coin Offering” scams used the same pump-and-dump methods employed by fraudulent microcap penny stocks. 

The Fyre Festival scheme was just two age-old cheats rolled into one. McFarland capitalized on his youth, confidence and burgeoning reputation as a wunderkind entrepreneur to con investors with a variation of the good old-fashioned Ponzi scheme.

On the consumer front, it might be tempting to say McFarland devised a novel con. He weaponized some of the most sophisticated tools of modern marketing, wielding the internet to devastating effect, but this wasn’t so different than, say, the plot of “The Music Man” — just swap the trombones and music lessons for supermodels and Jell-O shots. 

The internet simply gives modern con artists a bigger mouthpiece than Professor Harold Hill had. It makes everything faster. All it took was a handful of Instagram influencers — including Kylie Jenner, who reportedly received $250,000 to post one picture promoting the festival — and it was off to the races. Fyre hype spread like, well, fire, and the festival sold out within 48 hours.

McFarland is now serving six years in prison. He has to pay back $26 million to investors, and festival attendees will have the chance to recoup their losses through other litigation.

Severe consequences are appropriate, but reactionary — always coming after numerous consumers have been bilked. Therefore, regulators face pressure to take real-time preventative measures, such as requiring social media platforms to take a heavier hand with their users and advertisers.

In doing so, however, they would risk crippling their great strength: dynamism. Attempting to prevent scams through case-by-case policing would likely resemble an impossible game of “whack-a-mole.” Furthermore, both protection mechanisms are insufficient, only treating the symptom of a greater problem: a lack of consumer awareness.

Instead, regulators would better serve consumers if they met them where they are, employing the same internet tools McFarland used to fleece consumers as a means of protecting them: Fight Fyre with fire.

Some already are.

The U.S. Consumers Product Safety Commission, for instance, runs a darkly funny (and surprisingly GIF-savvy) Twitter account that teaches consumers how to use certain products safely. Who knew exploding dummiessparkly unicorns and “good doge” memes could be so educational?

The U.S. Securities and Exchange Commission (SEC) has executed a similarly clever educational campaign, as part of a general effort to combat certain kinds of online fraud. Besides issuing rules and litigating bad guys, the SEC made education a central part of its campaign.

It created a scam website, www.HoweyCoins.com, to show just how easy it was to stage a cryptocurrency scam. The site went viral and received praise from (legitimate) cryptocurrency industry leaders.

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Regulators who want to prevent another Fyre Festival should take a similar approach. Besides their own consumer education campaigns, they should cooperate as much as possible with creative projects like the Netflix and Hulu documentaries.

Through entertainment, they are educating millions of consumers on how risky internet prospects can be, effectively turning the internet’s connective power back on scam artists who would otherwise use it for harm. 

It may be a good time to be a notorious con man in America, but it remains to be seen whether it’s an effective time for producing a truly innovative one. In any case, it’s certainly a good time for the custodians of consumer protection to evolve their internet game to keep pace with tech-savvy fraudsters.

Beau Brunson is a senior policy advisor at Consumers' Research, the nation's oldest consumer organization.