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Italy tightens charity rules amid pandoro scandal involving fashion influencer Chiara Ferragni

The world’s most famous fashion influencer, Chiara Ferragni, has become the subject of a fraud investigation, after misleading her fans that by buying branded Pandoro cakes (a famous Italian Christmas cake) they would be supporting the Regina Margherita children’s hospital in Turin. 

Chiara Ferrgani is an Italian blogger, businesswoman, fashion designer and model with over 30 million Instagram  followers. Through her blog "The Blonde Salad”, she has collaborated with various fashion and cosmetics brands. She is very active on social media, often using her platforms to promote different charitable causes. Using her social media she also ran a campaign against the Italian far-right party. 

She is widely known for her charity work. On her social media she proudly boasts about her various campaigns and fundraisers for children's hospitals.  She has collaborated with various brands to create her own products, through the purchase of which people donate to fundraising. During the COVID-19 pandemic in Italy, Ferragni and her husband organised a fundraiser that brought in €3 million in a single day to benefit Milan's San Raffaele Hospital.

Before Christmas 2022, together with Balocco, she created her own pandoro cake, from which profits were supposed to be donated to Regina Margherita Hospital. The pandoro's marketing claimed that purchases were funding bone cancer research at Turin's Regina Margherita Hospital. The price difference of over 9 euros for a Ferragni-branded Balocco pandoro cake, when a normal Balocco pandoro cake costs less than 4 euros, as well as other factors, suggested that customers were misled into thinking that by purchasing the product, they were contributing to charity donations to fund bone cancer research at the Regina Margherita hospital in Turin, according to the antitrust authority's ruling.

According to the regulator, no part of the retail price or sales proceeds were given to charitable organisations. Although Balocco had given the hospital a one-time payment of 50,000 euros months before the release of the pandoro with the Ferragni brand, neither the product's sales earnings nor a portion of the price paid by consumers were given to charitable organisations. Customers were duped into believing Ferragni was supporting the charity, even though neither Ferragni nor any of the sanctioned companies under Ferragni's control made any financial contributions to the Turin hospital, according to the regulator, despite Ferragni receiving over a million euros for the branding initiative and associated promotional activities.

In December 2023, Italy's antitrust authority penalised Ferragni 1 million euros. Balocco was also fined 420,000 euros for misleading customers into believing that a portion of the cake sales would go toward supporting the Turin hospital. Reportedly Balocco intended to challenge the fine.

Following the agency fine, Ferragni made the decision to stop linking her charitable work with commercial endeavours and admitted that she had not provided enough supervision over the communications surrounding the sales of the limited-edition pandoro in an Instagram video post last month.

Ferragni expressed regret and promised to contribute a million euros to the Regina Margherita Hospital in Turin in order to make her apologies "concrete". However, she also stated that she would contest the sentence.

On December 15, Ferragni made the following statement to local media:  'I'm sorry that, after all my and my family's commitment in recent years on the charitable activity front, we persist in seeing the negative in an operation in which everything was done in good faith.'

Giorgia Meloni, Italy's Prime Minister, is among Ferragni’s critics. In a speech last month, Meloni criticised those who make money from misleading charity claims, clearly referring to Ferragni. 'The real models to follow are not the influencers who make a lot of money by wearing clothes and showing bags ... or even promoting expensive cakes that make people believe they are charitable,' stated Meloni. 'We have to explain to young people that creating (Made in Italy) products is much more extraordinary than just showing them off,' she stated during a speech for the right-wing Brothers of Italy festival.

A bill requiring more transparency from businesses that associate product sales with charitable donations is scheduled for approval by Italy's cabinet. According to a draft of the bill seen by Reuters and scheduled for approval, goods associated with charitable contributions must state the reason and beneficiary as well as the amount of the purchase price that will be donated to charity.

The bill stipulates that failure to comply with these rules could result in fines of up to €50,000. If an individual violates the rules more than once, their business activities may be suspended for up to a year.

This week, Prime Minister Meloni declared that the government was prepared to step in, citing the Ferragni case as evidence of the opaque nature of the laws governing for-profit endeavours with philanthropic objectives.

Tight regulations may increase the credibility of charity campaigns in the near run, but regulating social media advertising will remain difficult in the future, according to Matteo De Angelis, a marketing professor at Luiss University in Rome.

“It is a world that is difficult to control, there will be grey areas which will make it hard to determine what is sanctionable and what is not.”


Edited by Tatyana Kekic


Image - Il Foglio


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Tags: #Scandal #Fraud #Pandoro #ChiaraFerragni


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