The Creator Economy Is Above the Law - by Dan Chiolan

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Extra Credit<br>The Creator Economy Is Above the Law<br>How influencers get away with anything

Dan Chiolan<br>Jul 08, 2026

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Two weeks ago, The Wall Street Journal published an investigation into Polymarket’s influencer marketing campaigns. What they found was astonishing: Polymarket was running undisclosed partnerships with creators making fictional bets on a fake website designed to appear real. Audiences watched their favorite influencers win big betting on things like whether Trump would say the word “McDonald’s” at a press conference.<br>The deception was widespread. The Journal reviewed more than 1,100 promotional videos — roughly 70% of them containing simulated trades — that racked up 140 million views. Many depicted wildly profitable trades that, in reality, would have lost money. The creators were paid $2,000 to $3,000 a month and instructed not to disclose the sponsorship.

Outrage followed. Polymarket announced a “comprehensive audit” of its promotional content. Two senators demanded a federal investigation. A consumer watchdog group filed a lawsuit. The consensus: Paying college kids to fake gambling winnings for an audience of other college kids must be illegal.<br>Is it, though? This ordeal begs a question that seems to have gone unanswered: What is actually illegal for an influencer to do online?<br>The Rules

As it turns out, there are plenty of laws governing creator advertisements.<br>Under Section 5 of the Federal Trade Commission Act, deceptive advertising is illegal. If an influencer is paid to promote something, the FTC’s Endorsement Guides require them to disclose that relationship clearly and conspicuously.<br>It’s also illegal to mislead your audience for financial gain. Faking your results is illegal. Making product claims without evidence is illegal. As of 2024, the FTC’s fake reviews rule makes phony testimonials punishable by roughly $52,000 per violation. And if you’re promoting a security, the SEC requires you to disclose exactly what you were paid — a rule Kim Kardashian learned about via a $1.26 million settlement over a single Instagram post promoting a cryptocurrency.<br>It doesn’t stop there. Promote a nicotine product? The U.S. Food and Drug Administration (FDA) requires an addiction warning covering 20% of your post. Promote a prescription drug without risk information? You’ve misbranded it. Make content for kids? The Children’s Online Privacy Protection Rule applies — meaning targeted advertising to children under 13 is effectively off the table. Get paid to promote a sportsbook? You’ll likely need a license. All 50 states have additional deceptive-marketing laws. On paper, the influencer is one of the most-regulated workers in America.<br>So yes, the Polymarket campaign was definitely illegal. However, there’s a reason that Polymarket and most content creators don’t abide by these laws: They’re barely being enforced.<br>Nothing Wrong

A study published last year in Marketing Science analyzed more than 100 million brand-related posts on Twitter across 268 brands. It found that as much as 96% of sponsored posts were not disclosed. Another study assessed millions of posts on YouTube and Pinterest and found that disclosures were made only 10% and 7% of the time, respectively.

Share<br>Against a violation rate like that, the FTC’s enforcement record is pitiful: It has never obtained a monetary penalty from an individual influencer over a disclosure violation. The agency’s most aggressive action against individual creators in 2017 ended in a settlement with no fine, no refunds, and no admission of wrongdoing.<br>The one regulator that does actively enforce is the SEC — that’s where Kardashian’s $1.26 million went, along with a dozen or so other celebrity settlements. But the SEC has jurisdiction only when the product being advertised is a security, which accounts for a negligible portion of total ad spend online. Add up every fine the SEC has ever collected from an influencer and you get just $4 million — a majority stemming from the undisclosed promotion of cryptocurrencies (which is no longer regulated by the SEC). That’s as much as Kardashian makes from two Instagram posts.<br>Outside of these disclosure and securities law violations, it’s well documented that fraudulent activity represents a significant portion of online advertising. Reuters uncovered that Meta’s own internal documents projected that roughly 10% of its 2024 revenue — some $16 billion — came from scam and banned-goods advertising. (Although Meta disputes the figure.) That equates to Meta users seeing 15 billion “scam ads” per day.

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The problem with this lack of enforcement is that it comes at a time when the internet advertising industry is ascendant. U.S. influencer marketing spend hit $10.5 billion in 2025, growing 15% year over year, faster than digital ad spend as a whole. It has more than doubled since 2021. And internet...