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Fame and False Advertising: The Fyre Festival Fraud

ACFE Insights, 30.1.2019

Netflix’s new documentary Fyre: The Greatest Party That Never Happened (dir. Chris Smith, 2019) chronicles the saga of a failed luxury music festival in the Bahamas. The event’s promoters defrauded top investors, the local Bahamian community, and hundreds of individuals who paid high prices in the hopes of listening to famous bands and DJs while surrounded by lavish beach houses and scenic waterfront views.

Co-founded by Billy McFarland, a wealthy entrepreneur and businessman, and rapper Ja Rule, Fyre Festival was created to promote the Fyre music booking smartphone app, but after gross mismanagement and empty financial promises, the festival failed miserably. It left attendees without shelter or food; investors, day laborers, and staff with little to no pay; and Ja Rule, McFarland, their employees and their business all facing several lawsuits, which ultimately led to McFarland’s six-year prison sentence and ordered forfeit of $26 million for wire fraud.

The fraud
Ja Rule and McFarland had lofty goals for the Fyre Festival. McFarland planned on purchasing a Bahamian island formerly associated with Colombian drug lord Pablo Escobar for the location. He planned to construct luxury tents, beach houses, and villas for attendees and VIP guests, which included models and social media influencers. McFarland flew out a group of well-known models and hosted a series of well-documented private parties among the warm sand, fancy yachts and crystal blue water, which he and his publicity team used as advertisement for the festival. The models were paid to post on their social media accounts, and interest in the festival skyrocketed. Within 48 hours of ticket releases, 95% had been sold.

Fyre was slated to occur four months later but did not even have an operations team at that point. McFarland hurriedly hired a staff of event planners and music industry coordinators to manage a $38 million budget for travel, catering, talent and construction. He took out several loans, and as his marketing became more widespread, he garnered capital from wealthy investors with the promise of a successful and extravagant experience. He also promised the Bahamian Board of Tourism and the local university significant returns and a boost to the local community. As the documentary shows, McFarland continuously promised more and more than was ever available, such as delectable sushi menus, posh cabanas for rent and exclusive VIP lounges. Unfortunately, none of these “exclusive” offerings had been built or ordered, and were likely impossible to squeeze out of the budget.

When festival-goers arrived at the site, they were shocked to find dirt lots with no performers, disaster tents instead of luxurious villas, and styrofoam containers with lettuce, pasta, or cheese sandwiches instead of the indulgent five-star meals they had been promised. It became evident that the promotional images they’d seen all over social media were part of a false advertising scam into which they’d poured thousands of dollars.

Lessons learned
The Fyre Festival fraud showcases the ease with which social media can be used in our age of modern technology to promote false realities and influence financial decisions. The festival had a marketing strategy that focused on “selling a dream, selling a vacation, selling a concept,” as one staff member noted. The successful use of social media speaks to the power that celebrities have to dictate consumer action, and the documentary questions whether the models, along with McFarland, defrauded the public or were just as unaware as consumers.

Social media can be used to manipulate the truth of financial investments. As the festival date approached and attendees hadn’t received any information or seen new promotional content, they began pressing for details on Instagram. The documentary reveals that Fyre’s publicity team responded by deleting the comments to preserve their image and leave consumers in the dark about their purchases.

The scandal shows how closely tied fraud and the digital age are, pressing consumers to evaluate the necessity for evidence of secure transactions with guaranteed results, given how uncomplicated it is to make purchases online. As McFarland became increasingly aware that the festival would fail, he thought of ways to make more money, including ticketed events and an RFID bracelet, which attendees linked to credit cards to have an easier way to pay. Most attendees never received a refund for their Fyre Festival purchases. McFarland took advantage of how easy it has become for consumers to press a button on their computers and shell out money for something that is relatively unknown, yet seems crucial for social experience.

Netflix’s documentary points to a larger phenomenon of financial decisions that are increasingly guided by celebrities and social media influencers, and are made without verified information and guaranteed outcomes. It urges consumers to investigate their online purchases and stay attuned to high-class fraud attempts by investigating further details before making a purchase.

For a detailed look into the festival’s failure, watch the Netflix documentary

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