Monthly Archives: November 2013

Political Defamation: Two Case Studies

picture of the inside of the capitol building to represent political defamationFree speech standards prevent a lot of political defamation cases from taking off. That said, they still happen. In fact, two such lawsuits recently hit U.S. headlines. One resulted in a closed door settlement, and the other is just beginning.

Political Defamation of Character Case #1: Blogger Makes Deal with Washington, DC Publicist

FishbowlDC is the TMZ of Capitol Hill. A company under the WebMediaBrands umbrella, FishbowlDC is a pundit site with its favorites and foes; publicist Wendy Gordon fell into the latter group.

Things became legally contentious when FishbowlDC created a weekly column called “Wendy Wednesday.” Gordon says the site used the column to spread “false and humiliating descriptions” of her and her PR tactics. Gordon described it as an “unprovoked, online smear campaign.” So, she filed a defamation lawsuit against WebMediaBrands.

Welp, the case never made it to a jury. As is wont to happen in DC, the parties struck a behind-closed-doors deal. Gordon filed a dismissal notice at DC Superior Court a few days later. That’s what you call using a lawsuit to get your adversaries’ attention. Apparently, it worked in this case.

Political Defamation of Character Case #2: Long Island Lawyer Screams Libel Over Campaign Marketing Piece

A defamation showdown involving a Nassau County legislator and his campaign rival is revving up on Long Island. Lisa Daniels, a lawyer with political aspirations, sued Howard Kopel, incumbent representative of the 7th Legislative District, for defamation.

Political Mailer Results In Libel Lawsuit

Daniels, who ran against Kopel in a recent election, is suing her opponent over a political mailer. She’s asking for a cool $100 million.

What slight of political warfare could be worth $100 million? Well, Daniels is irate over accusations that she displayed “poor judgment” as counsel in a contentious child custody case. Daniels had become personally involved in the case and temporarily became the child’s guardian. Tragically, after litigation ended, the young boy died after falling out of a bunk-bed.

In her lawsuit, Daniels’ argues that the mailer unfairly draws a parallel between her and the boy’s death.

Kopel Swears He Didn’t Engage in Any Political Defamation

Kopel insists he had nothing to do with the political mailer, but he does concede that the race with Daniels “turned very, very nasty.” He didn’t indicate, however, if any PACs paid for the marketing piece.

Do you have a defamation issue? Do you need to speak with a lawyer with an encyclopedic knowledge of defamation law? If yes, contact Aaron Kelly, founding partner of the Kelly Warner Law Firm. He’s a top-rated attorney with rates priced for your budget.

Kevin Trudeau: Marketer Jailed For Consumer Fraud

Kevin Trudeau marketing jail
TV pitchman Kevin Trudeau recently battled the Federal Trade Commission. In the end, Trudeau lost. Now the notorious weight loss marketer must spend some time behind bars.

Why? Keep reading.

When You Disregard FTC Orders and Edicts, Expect Legal Trouble

The FTC says the “easy weight loss” infomercial kingpin lied to their faces and willfully disobeyed a 10-year-old commission consent order that demanded Trudeau refrain from making “misleading” advertisements. So, the FTC slapped him with criminal contempt charges.

Don’t Exaggerate In Your Marketing Materials

Meet Kevin Trudeau: Weight Loss Infomercial King, Extraordinaire!

If you find yourself awake in the wee hours of the night, you’re probably familiar with Kevin Trudeau, a veteran on the infomercial circuit. For years, he peddled his *miracle* weight loss system called, “The Weight Loss Cure ‘They’ Don’t Want You to Know About”. In infomercials, Trudeau waxed poetic about his diet plan that allowed for steak, potatoes, and hot fudge sundaes. It sold like fireworks on July 4th. Unfortunately, Trudeau sold a lot of hot air, and the FTC caught up with him.

Assistant U.S. Attorney Marc Krickbaum put it bluntly:

“[Trudeau] chose to make his book sound way better than it was to sell more books and make more money.”

You see, the problem with Trudeau’s book is that it doesn’t deliver on what he promised. Instead it advocates expensive solutions like prescription hormone injections and month-long, spa-like therapies. Oh, and according to the book, his method won’t work unless dieters stick to a 500-calorie-a-day diet! (For the record, eating only 500 calories a day is bad for your health.)

Marketer’s Failed Defense: “TPTB Are After Me Because I’m An Outspoken Critic.”

In his defense, Trudeau’s attorneys argued that their client was an outspoken natural cures advocate who regularly railed against government and big pharma. The lawyers hoped to frame Trudeau as a persecuted truth teller, mercilessly harassed by the evil powers that be.

Jury Votes Guilty For Consumer Fraud In A Flash

But alas, the marketing gods were not on Trudeau’s side. Less than an hour after deliberations began, the jury came back with a guilty verdict. Not only that, but Trudeau was taken into custody immediately – a rarity for these types of white collar crimes.

In Addition To Jail, Marketer Also Slapped With $37 Million Fine. Ouch.

In a related civil case, a court fined Trudeau a cool $37 million for violating his FTC order. The pitchman insists he doesn’t have the money; federal officials are convinced he’s got several, shall we say, “healthy” offshore accounts.

Make Sure Your Marketing Materials Don’t Cross The Consumer Fraud Line, Twice

Well, friends, let the case of Kevin Trudeau serve as a warning. The FTC may have a reputation for being wishy-washy, but think of the department as a voracious vampire that thrives on second-offense blood. If the commission slaps you on the wrist once, don’t do it again!

Consumer Fraud Lawyer With FTC Defense Experience

If you do find yourself in trouble with the Federal Trade Commission for the first, second, or third time, get in touch with Kelly Warner Law. We have a wealth of experience defending startups and online marketers against FTC charges.

Major Newspaper: “Don’t Pay Attention To Headlines”

picture of an old time newsie cartoon to represent defamation lawsuit against the Mail on Sunday These days, thanks to the seminal 1964 New York Times Co. v. Sullivan ruling, it’s rare for a newspaper to lose a defamation lawsuit in the U.S. – but The New York Post may prove an exception to the rule.

NY Post Entangled In High-Profile Defamation Lawsuit Over Boston Marathon Reporting

In the wake of the Boston Marathon bombings, before the responsible parties were identified, the Post covered their April 18th edition with a picture of 16-year-old Salaheddin Barhoum and 24-year old Yassine Zaimi. The words “BAG MEN” in bold type ran across the top, with the subheading, “Feds Seek These Two Pictured At Boston Marathon.”

Unfortunately for the paper, the people pictured weren’t the bombers. As you might imagine, the pair is suing for libel, negligent infliction of emotional distress, and false light invasion of privacy.

Despite the Post’s blunder, the daily is sticking by its interpretation of the incident, insisting that the photo used was “emailed to law enforcement agencies seeking information about these men, as our story reported. We did not identify them as suspects.”

Headlines Are Just “Attention-Getters”?

In a recent lawsuit-related document, the Post is argued that the headline is merely an “attention-getter” that shouldn’t be read as a “true reflection” of the story inside. Furthermore, the paper maintains it played no part in “influencing readers to jump to conclusions.”

Let’s recap. A nationally recognized newspaper is using “Oh, people know our headlines aren’t real,” as a legal defamation defense.

Welp, good night and good luck, I guess.

Fake Testimonial Writers Are Being Fined Everywhere

picture of asian coins
The FTC in Taiwan is now fining authors of fake testimonials and reviews.

Just like the United States, Taiwan has a federal consumer watchdog agency that goes by the acronym FTC. The agency, headed by Wu Shiow-ming, recently added an amendment to its nation’s Fair Trade Act that places penalties on fake review writers.

Samsung Hired Students To Trash Competitors’ Products Online

The Taiwanese FTC recently busted Samsung for hiring students to write positive product reviews. Not only did the students rave about Samsung online, but the paid product reviewers also trashed products made by Samsung’s competitors.

When preparing for the fake testimonial case, Shiow-ming’s minions culled through 30,000 posts on 4,000 different websites. In the end, the agency slapped the tech company with an NT $10 million fine (about $340,000 US).

Moving Forward, Writers Of Fake Testimonials Will Be Held Responsible

The students hired by Samsung were not held liable in this case, but that will change soon, as Taiwanese officials amended their Free Trade Act. Moving forward, writers of phony reviews can be fined up to NT $25 million (about $840,000 US).

What About In The United States? Are Fake Testimonials Legal?

Think fake reviews are a-ok in the United States?

Think again.

Fake reviews fall under the “unfair and deceptive” marketing umbrella.

To read more about the issues with paid and fake testimonials in the U.S., go here, here and here.

Contact An Online Marketing Business Lawyer

Need a lawyer with online marketing and business law background? Contact Kelly Warner Law. Our top-rated team focuses on all things tech-related.

Is HCG Legal? Yes. But Be Careful How You Market It

dietary supplement marketing FTC HCG Legal caseIs HCG legal? Yes. But overstating its efficacy could land you in trouble with the FTC.

For example, the Federal Trade Commission initiated proceedings against *Sam Smith* (not real name), president of a company that sells hCG weight loss products. (We’ll call the company Acme HCG. ) The FTC isn’t happy with Smith because the agency believes he crossed the marketing compliance line – even after a warning letter from the FTC.

First Things First: Is HCG Legal? What Is It?

Human chorionic gonadotropin (hCG) is a hormone produced by the placenta and other types of cancers. When used in certain ways, hCG can result in various desirable side effects, like weight loss.

On the flip side, it’s also a performance enhancing “drug” favored by baseball players.

How Much hCG Did Smith Sell?

There is no doubt about it, Smith is a good at what he does. The hCG salesman offloaded  a whopping $13 million worth of product in 2010. Where did he sell his goods? Facebook, YouTube and via various online retailers and affiliate marketers. He also made it into Rite-Aid, Walgreens and GNC.

The FTC Sent A Warning Letter First, Which Smith Apparently Ignored

Why Aren’t The Retail Stores Listed As Defendants?

You may be wondering: why aren’t the retail stores that carried the product listed as defendants? In most cases, retail stores are not liable for product deficiencies. As a GNC spokesperson explained when interviewed about the Wright case, “[GNC] relies on the vendor to ensure ‘that the products are safe and compliant with all applicable laws and regulations.’”

This lawsuit should not come as a shock to Smith. According to reports, the FTC sent him a warning letter last year. In it, the commission reminded the hCG salesman that it had banned the sale of homeopathic hCG products and warned Smith that he was violating the Food, Drug and Cosmetic Act. In essence, the FTC gave him a chance to fix his marketing materials, but he chose not to pay heed.

Why Did Smith’s Weight Loss Marketing Material Get Him Into Legal Trouble?

The  marketing materials, some of which featured Carmen Electra, were chock full of promises consumers love to hear, like “rapid and substantial weight loss.” For example, a testimonial on one website reads, “I don’t really like to exercise, it’s hard to get it in when I am a stay at home mom…I did GCG and lost 10 to 15 pounds in 30 days.”

According to HCG Platinum products’ instructions, all weight loss hopefuls had to do was “take a few drops before meals” to lose 1 to 2 pounds a day “for multiple weeks.” The products also included another set of crucial instructions: it works best if you stick to a 500 to 800 calorie a day diet. (Hmmmmm, wonder if the low calorie recommended has anything to do with the weight loss.)

And the last nail in Wright’s coffin? Some ads also contained a few unsubstantiated scientific claims.

Speak With An FTC Compliance Attorney

Need a business lawyer with  FTC compliance experience? Get in touch. Our firm has helped numerous dietary supplement marketers untangle themselves from FTC webs.

JOBS Act: More Startup Opportunities?

Startup Law: JOBS Act
 Dubbed the “Jumpstart Our Business Startups Act,” the Jobs Act democratized the way companies can market investment opportunities.

Startups Can Crowdsource Initial Stock Investments

Crowdsourcing is a confirmed hit, but rules still apply. The act, however, removed some crowdfunding obstacles. Most notably, Title III of the Act removed various registration and investment requirements, which paved the way for startups to crowdsource certain investment stocks.

JOBS Act Perk For Startups

Increases The Shareholder Reporting Threshold

Not only does the JOBS Act permit the online sale of startup stocks, but it also extends the financial reporting start date, from two years to five.

Additionally, in the past, companies had to register with the SEC when their assets reached $10 million and they had 500 shareholders. Once this section of the JOBS Act goes into effect, the shareholder number will increase to 500 “unaccredited” shareholders or 2,000 total shareholders.

Redefines Emerging Growth Company

The Jumpstart Our Business Startups Act also redefines “emerging growth companies.” Under the new rules, companies that gross less than $1 billion in the most recent fiscal year qualify as emerging.

Why are EGCs beneficial? They’re exempt from certain filing disclosure requirements.

More Marketing Freedom

The JOBS Act also lifts certain solicitation regulations. Specifically, it removes the ban on “general solicitation.” How does that help? Startups can approach different types of investors, which betters one’s chances of getting funded.

Is There Anything That The JOBS Act Prohibits?

All in all, the JOBS Act received widespread support in the tech sector. And, if all goes according to plan, it should open the door for a lot more startups. However, if you are planning on trying to build an investment fund via crowdfunding, think again. Officials decided that is not allowed.

Startup Lawyer

Kelly Warner focuses on Internet and technology law. As such, we work with many startups. Learn more about our online business practice here, or contact us with any questions.