Fyre Festival | How did it become the biggest business scam?

How many people have heard the saying ‘when something goes wrong, it makes you more determined to get it right’?

27-year-old Entrepreneur Billy McFarland had taken this saying to the extreme with what you could call a ‘fake it till you make it’ business plan.

Creator of the Fyre Music Festival, he promised a three-day party with a VIP experience on the island of Great Exuma in the Bahamas, in the early summer of 2017. Charging festival-goers up to an extravagant $12,000 per ticket for music, gourmet meals prepared and served by celebrity chefs, and private villas, that simply…  just didn’t exist.

McFarland received 26 million dollars in investment when his initial pitch fraudulently over promised the investment opportunity to his potential investors as well as the experience to festival goers.

The power of social media allowed McFarland to convince the likes of supermodel and social media influencers Kendall Jenner, Hailey Baldwin and Gigi Hadid to advertise this extravagant event, and also allowed a false and misleading account of the nature of the festival.

In short, this is fraudulent misrepresentation.

Misrepresentation occurs when a representation made by one person to another is false, or that when made, the person making it knew that the representation was false or made the statement recklessly without knowledge of its truth. The purpose of the false representation is to induce another to enter into a contract. (The law of misrepresentation only applies in this sense if the claim had been brought into England and Wales).

The event experienced problems related to security, food, accommodations, medical services and artist relations, resulting in the festival being postponed indefinitely.

People slept in tents, ate packaged sandwiches and were then stranded on the island after the Bahamian government barred any more flights from landing.

It’s the perfect example to teach future and current business people about what happens when marketing is not aligned with other departments of a business.

Fraudulent advertisement is why McFarland was sentenced to a six-year prison sentence after pleading guilty to defrauding investors out of millions of dollars in various ticketing schemes.

So perhaps we can all look at this completely false advertisement as a ‘How not to set up a business’ guide.

To any entrepreneur; please do your research and sell your products or services using facts rather than fiction.

If you are stepping into an investment, do your due diligence carefully to ensure that you understand the benefits and risks of the opportunity, and that you trust the people you are collaborating with.

For advice on setting up or investing in a business, or if you have any queries on issues raised, please contact Richard Lozano, Taylor Bracewell’s Employment Solicitor on 01302 341414, or you can email Richard on richard.l@taylorbracewell.co.uk