Instagram is opening up an investigation into several influencers who were promoting a giveaway for one lucky winner to receive a free car — after following their demands.
16 influencers announced on May 18 via Instagram Stories that they would be giving the winner a choice between a brand new 2020 Hyundai Accent SE or the cash equivalent, which is roughly $16,000.
This situation is an example of a “loop giveaway,” which is super controversial on the platform and borderline a violation of Instagram’s anti-spam policy.
A loop giveaway is when a group of influencers host a giveaway together, rather than hosting their own individually. In order to be considered, you have to follow all of the influencers on Instagram. While it seems like a straightforward and easy entrance fee into a giveaway that could potentially win you a free car, the purpose is to boost all of the influencers’ follower counts so that they can get bigger deals and partnerships.
Often, these giveaways are described by the influencers as “a way to give back” to their loyal followers.
Critics of loop giveaways explain that they’re a loophole to buying followers — which, under Instagram’s policy, is considered spam.
It’s also a major problem considering how impressionable younger Instagram users can be. They have no idea what consequences can come with the simple promise of $16,000 for just following some influencers.
One of the big ones is taxes. Lisa Greene-Lewis, a CPA and tax expert for TurboTax, told BuzzFeed, “The recipient has to claim the car on their taxes and will be taxed at the fair market value of the car.”
A loop giveaway is also a disaster decision for the influencers themselves. By “artificially” growing their followings to get better advertising deals, these influencers are also pitting themselves up against higher tier influencers who have authentically grown their fan base.
“Brands are getting smarter,” Carly A. Heitlinger told BuzzFeed.
This means that brands — and consumers — are able to identify when influencers don’t have a natural following, which impacts which influencers brands are willing to partner with.
A loop giveaway, in reality, might actually kill any chance of these influencers moving up in the ranks. It’s a lose-lose situation for everyone.
If you enjoyed reading this article, you might also like reading about this influencer who faced backlash for leaving NYC with her family in an RV amid the pandemic.
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