Letitia James, the attorney general of New York, announced a settlement on Wednesday with Devumi, a company that sold hundreds of millions of fake followers on Twitter and other social media platforms before going out of business last year.
The settlement is one of the first major efforts by regulators and law enforcement officials to investigate the shadowy market of social media fraud, where armies of fake accounts are sold to businesses, politicians and celebrities seeking the appearance of influence.
Ms. James’s investigation was prompted last year by a New York Times report that detailed how Devumi — then based in Florida — had earned millions of dollars peddling fake accounts to customers in New York and other states. Many of the accounts, known as bots, borrowed likenesses and personal details from real people, helping them avoid detection and deletion by Twitter.
Devumi had at least 200,000 customers, including reality TV stars, professional athletes, comedians, models and pornographic actors, who bought anywhere from a few thousand to a few million fake followers to boost their online profile. Revelations about Devumi prompted Twitter to immediately block the company from accessing its systems, crippling the business.
Devumi itself relied on fiction: The company advertised a New York office that did not exist, and Devumi’s founder, German Calas, claimed degrees he had never actually earned.
Last summer, Twitter, crediting The Times, stripped tens of millions of suspicious accounts from its users’ follower counts, hoping to stamp out the sale of fakes.
The settlement was first reported by CNN.
“Bots and other fake accounts have been running rampant on social media platforms, often stealing real people’s identities to carry out fraud,” Ms. James said in a statement. “As people and companies like Devumi continue to make a quick buck by lying to honest Americans, my office will continue to find and stop anyone who sells online deception.”
Mr. Calas did not respond to an email seeking comment.
Whether the settlement will have any immediate impact is unclear. Mr. Calas, who now lives in Colorado, dissolved his social media marketing companies last summer and fall amid negative publicity. In the agreement, signed last month, Mr. Calas did not admit or deny Ms. James’s findings, and the settlement requires a relatively small fine of $50,000, intended to cover the cost of the inquiry.
But Ms. James’s investigation could set the stage for further crackdowns on rampant consumer fraud and deceit on social media platforms, where so-called influencers — users with large followings — can earn a significant living selling endorsements and product placements.
Ms. James found that Devumi’s sale of fake accounts and online engagement violated New York laws against fraud and false advertising.
In selling the appearance of social media influence, according to the settlement, Devumi misled both customers who believed they were buying real followers and members of the public whose thinking, such as deciding which candidates or policies were popular, could have been influenced by the fraud.
The attorney general also found that Devumi’s sale of fake accounts using identifying details stolen from real people violated a New York statute that prohibits impersonating someone with an intent to obtain a benefit or defraud another person.
Her findings come just months after California took action on the issue, approving a new law that will curb the deceptive use of bots.
Jonathan Albright, a researcher at Columbia University focusing on misinformation, described New York’s case as a breakthrough in tackling social media fakery.
“Ideally, it will provide a template through which the bulk sale of online deception and false advertising can be prosecuted,” he said.