Lucy Guo, 30, built her reputation on disruption. After making a name for herself by creating a viral Twitter bot, she earned a prestigious $100,000 Thiel Fellowship. She then went on to build her AI startup, Scale, into a billion-dollar company, making her one of America’s richest women. In 2018, she landed a coveted spot on the Forbes 30 under 30 list. The world seemed to be at her fingertips.
Guo used her Silicon Valley credibility to found Passes in 2022. Passes is a subscription platform similar to Patreon, OnlyFans, or its primary competitor, Fanfix.
This platform empowers creators to generate recurring revenue through paywalled content and cultivate engaged fan communities. The company envisions transforming today’s content creators into tomorrow’s leading brands.
Passes has so far been another one of Guo’s wild successes. Last February, Passes announced that it had raised $40 million from A-list investors. Investors included Bond Capital, Michael Ovitz (founder of CAA and Crossbeam Ventures), Emma and Jens Grede (founders of SKIMS), Alexandra Botez (professional poker/chess streamer), and others.
The company said that it had paid out tens of millions of dollars to creators. Passes even had several creators on the platform on track to earn over $1 million per year.
Unlike its competitors, Passes allowed creators as young as 15 to make money on the platform. They are simply required to get parental consent. Consent included multiple verification levels. Creators needed a signed consent form, a video conference held with a parent to discuss the creator’s plans for the platform, a copy of the parent’s government I.D., and other checks, according to the suit.
Now, that decision seems to have put Passes in peril.
Alice Rosenblum v. Passes Inc., et al.
On February 26th, law firms Clark Smith Villazor LLP and Schwartz Breslin PLLC filed a class action lawsuit against Passes. The filing alleges that Guo and talent managers affiliated with Passes, violated State and Federal law by producing, possessing, and distributing child pornography.
“The Complaint details a scheme where the named defendants, acting on behalf of Passes, recruited young women, that they knew were minors, to create pornography before they reached the age of 18, and to distribute that child pornography on the Passes platform to paying subscribers, both before and after the subject became of age,” the announcement about the lawsuit reads.
The complaint also alleges that Passes took extreme steps to “disguise their scheme and to cover their tracks once their sexual exploitation of minor women was revealed.” One of these steps includes Passes changing their policy on minor content.
Recently, the company announced that it would no longer allow creators under 18 on the platform. The complaint also claims that Passes and Guo misrepresented their relationship with Alec Celestin, a talent manager who allegedly worked closely with Passes.
The lawsuit, filed by 18-year-old Alice Rosenblum in Florida, alleges that Passes distributed sexually explicit material of her while she was still 17. According to the complaint, talent manager Alec Celestin and former Passes executive Lani Ginoza pressured Rosenblum into creating and uploading explicit content, bypassing supposed parental consent safeguards.
Celestin and Ginoza are named as defendants in the case, along with Guo and Passes. The accusations have sent shockwaves through the creator economy.
This is an industry already fraught with concerns over child exploitation and lax content moderation. Passes has found itself at the epicenter of a growing controversy over how young internet personalities are monetized.
How Did Passes and Guo Respond?
Guo dismissed the claims in an Instagram post, calling them a “sad attempt to ruin someone’s reputation and business with false allegations for money.”
Passes, too, issued a forceful denial. According to a spokesperson, “Since its founding, Passes has worked diligently to foster a safe creator-first platform. We forbid the uploading and distribution of explicit content and actively work to identify and remove any image or video that is in violation of our guidelines.”
Passes also said that the company and Guo are pursuing “all avenues available” to defend themselves. According to Passes, Guo “never approved or condoned the posting of underage explicit content on our platform.”
On Wednesday, Passes published a public statement on the company’s blog. The statement reiterated that “these accusations are false and being wielded to undermine the success of the company.”
“This lawsuit is being used by competitors as a coordinated attempt to defame Passes’ founder and status as the premier creator platform,” the blog post reads.
“The company believes this is ultimately part of a broader smear campaign… We take the allegations described in the complaint extremely seriously as they are in violation of our platform guidelines. We disapprove of the actions allegedly taken by the plaintiff’s talent manager and any attempt to involve us in this matter is baseless, which we intend to prove.”
The statement adds, “We have retained a law firm, and we intend on defending ourselves vigorously against these meritless claims.”
The Complicated Question of Teenage Content Creators
The case underscores a broader contentious issue that is at the forefront of the creator economy lately. As teens cultivate massive audiences online, platforms are scrambling to manage the ethical minefield of underage creators.
Sites like Patreon and Fanfix have banned minors outright. Other platforms like Instagram have allowed minors to amass large audiences online and charge subscription revenue. Critics say these policies can create a dangerous environment where adult men interact with underage girls’ content.
Some even pay for access directly. However, many young creators and their families feel that it’s unfair to restrict these young girls’ ability to express themselves online just because men are creeps.
The lawsuit also comes at a time when moral panic is raging across America about how kids express themselves online. Politicians and media pundits have seized on examples of child exploitation in the creator economy to justify sweeping regulations.
Often, these regulations restrict young people’s ability to communicate and connect. Ultimately, this could harm the most vulnerable children.
The Kids Online Safety Act (KOSA), for instance, is a law proposed to “protect” minors. In actuality, the law is a broad and dangerous censorship bill. It would allow the government to dictate what content platforms can host and what young people are allowed to see.
The Free Speech Issues Go Beyond Just Young Creators
Under the guise of keeping kids safe online, lawmakers on the federal and state levels are pushing for regulations that would force social media platforms to hand over vast amounts of user data. This would effectively let the state determine what speech is appropriate.
These laws set the stage for mass internet regulation under the pretense of child safety. They also conveniently ignore the actual predators and exploiters who profit from young creators.
For instance, at the state level, laws targeting family vloggers have been hailed as a win for protecting exploited child influencers. However, the reality is far more complicated.
Some of these laws claim to ensure that kids who appear in YouTube vlogs or TikTok videos receive a share of the earnings from advertising on those videos. However, there are concerns that the real goal of some of these laws is to establish dangerous legal precedents that could be weaponized to restrict speech online.
By treating teen creators as inherently vulnerable and incapable of consent, these laws strip young people of agency. They assume that every minor online is being manipulated or exploited. These laws don’t target the actual bad actors.
They don’t target the management companies and other corporate entities profiting from these young influencers. Instead, these regulations have sought to restrict what minors themselves can post and share. This results in more government control over online speech.
Regulations Are Targeting Creators, Not Content Managers
Rob Freund is a lawyer for content creators who has been following the Passes suit. Freund says that if there’s one thing that actually needs regulation, it’s the shady management companies. Often, these alleged talent agents treat young creators like a meal ticket.
These middlemen wield enormous influence over the teen influencer landscape. They promise lucrative brand deals while pocketing massive cuts and pressuring kids into creating increasingly risqué content.
“To me, it’s not like we don’t have laws that are supposed to protect against the things here that [allegedly] happened,” Freund said, “but the industry itself, if you’re a young creator, it’s hard to tell who’s legitimate or who isn’t. Especially if the creator is very young and sees an opportunity to make money or start their career. They don’t know what kind of red flags to look out for, not just in the context of platforms like this, but creator manages generally.”
“There’s a lot of [bad talent managers] that have no qualms about putting together so-called management agreements where they take up to 80% of a creator’s revenue,” he added.
The Passes Lawsuit Is An Opportunity To Shed Light On Young Creator Issues
Freund said that he hopes the lawsuit against Passes raises more awareness of how exploitative the industry can be. We don’t know whether or not Passes knew what the talent manager implicated in the lawsuit was doing.
However, it’s concerning that a talent manager would be encouraging young talent to post potentially violent content. Hopefully, this lawsuit will bring more transparency to that side of the creator economy, he said.
“A lot of creators don’t understand that they might have legal recourse when things go south,” he said. “They think, there’s nothing I can do. Or they don’t want to seek out legal recourse, because they don’t want someone to google them and see that there’s court records of them involved in the production of explicit content.”
As the lawsuit against Passes plays out, the issue of child influencers will undeniably be thrust further into the spotlight. It will be a feeding frenzy for regulators and the media.
Freund said that if there’s one thing creators should take away from this, it’s that “There are people out there that are completely fine, morally, with lying to you and exploiting you,” he said. “Exploiting is their goal.”
