Five Companies Censured For Mislabeling Natural Products
Recently, the Federal Trade Commission censured a handful of companies for making false and unsubstantiated claims. The targeted parties used the terms “100% Natural” or “All Natural” even though the products contained synthetic preservatives like dimethicone or phenoxyethanol.
The targeted parties used the terms “100% Natural” or “All Natural” even though the products contained synthetic preservatives like dimethicone or phenoxyethanol.
“All Natural” Marketing Rules
Believe it or not, there isn’t a legal definition for “natural.”
Before 62% of us were self-diagnosed Celiacs and gourmet supermarkets were a mere gleam in Robin Leach’s monocle, the rules surrounding “all natural” were as loose as Las Vegas.
Forget the Age of Aquarius, we’re living in the Age of All Natural — and regulators are particular about how marketers deploy the phrase.
Here’s the “all natural” bar:
Avoid phrases like “100% Natural” or “All Natural” unless you’re certain that every single ingredient in the product comes from Mother Nature. Furthermore, don’t take a manufacturer’s word for it; foreign factories are beholden to different regulatory standards and aren’t always upfront about the secret sauce.
Jessica Rich, the FTC’s director of Bureau of Consumer Protection cautioned:
Five Other Marketing Rules To Know & Follow
- Posting negative, false reviews on competitors’ product listings could easily be deemed trade libel or defamation. In worst case scenarios, you could be successfully sued. More than that, using fake, disparaging reviews is lying — a clear violation of the FTC’s “unfair and deceptive” marketing rules.
- Officials have censured brands and marketers over fake news sites — especially ones that used unauthorized imagery of professional anchors and newsreaders.
- Use #Ad, #Sponsored or #Paid hashtags on all social media promotional campaigns. The standard is often ignored, without punishment. But the FTC recently fired a warning shot; Retailer Lord & Taylor took the bullet.
- Clearly label native advertising. Vague headers (like the popular “Promoted Stories”) don’t cut it anymore.
- Don’t buy fake reviews. Reviews are an incredibly important part of the online marketing magic sauce, but do yourself a favor: don’t buy fake reviews! You could get sued. Amazon does NOT mess around when it comes to phony feedback and has not only filed civil claims against fake review companies, but has also sued individual reviewers!
Marketing Compliance Help, Please
Concerned you’re not operating on the safe side of the marketing legal fence?
To find out, set up a marketing audit. It’s a lot less painful than a tax audit — A LOT. And instead of looking for ways to take money from you, a marketing auditor may find ways to put money back in your pocket.
Lorenzetti, L. (2016, April 12). FTC Goes After 5 ‘Natural’ Companies for False Claims. Retrieved May 17, 2016, from http://fortune.com/2016/04/13/ftc-natural-personal-care-false/
Louisiana officials may have destroyed the state’s startup economy. Ok — granted — *destroyed* is a bit strong. But Louisiana’s legislators made their state unattractive to e-commerce entrepreneurs by passing Act 22 — a.k.a. the Amazon Tax Bill.
Check out these figures:
- In 2014, Amazon generated $79.48 billion in online sales.
- Experts expect the online retail space to grow by 20%, annually, over the next several years.
- Analysts predict it will be a $523-billion-dollar market — in the U.S. — by 2020.
Do you think Louisiana made the right choice?
What Is An Amazon Tax?
States can collect taxes from companies with a physical presence — or nexus — to a given state. Or, to put it another way: states can collect taxes from brick-and-mortar businesses, which raises costs of doing business for brick-and-mortar establishments.
But here’s the rub: currently, in about 40% of states, online boutiques aren’t subject to the same brick-and-mortar charges. Internet retailers, in states without online levies, don’t have to remit state taxes associated with online sales.
(The Amazon Tax issue is, of course, more complicated than the above explanation; but in this post we’re painting broad strokes. If you sell to customers in every state, get with an accountant or attorney to ensure compliance.)
Why Did Louisiana Opt For An Amazon Tax?
According to reporters, Louisiana legislators needed money to combat a “severe budget crisis.”
What States Have Online Sales Taxes?
At the time of this writing, 29 states have some sort of “Amazon tax.” They include:
Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin.
Amazon Won’t Work With Affiliates From SOME States
Each state’s “Amazon tax” is different. For example, Arkansas’ law caused discord between the company and State. But, a few jurisdictions away, in North Carolina, the opposite happened; before NC legislators ratified an “Amazon tax,” Amazon didn’t allow NC residents to operate affiliate accounts, but after passing the statute, Amazon added affiliate opportunities for NC residents.
Is Amazon The Only Company Affected By Online Sales Taxes?
No, Amazon isn’t the only platform affected by Amazon taxes. They can also disrupt affiliate marketers, affiliate networks, online stores, and e-commerce platforms.
Extra Credit: Quill v. North Dakota SCOTUS Ruling Established *Nexus* Standard
In 1992, the Supreme Court of the United States set the “nexus standard” in Quill v. North Dakota. A tax concern case, the question at the center of Quill was whether or not North Dakota could collect levies from a company without a physical presence in — or nexus to— the state. In the end, SCOTUS ruled that “a state can only tax businesses with a physical presence in the state.”
Ultimately, the decision created profit opportunities for e-commerce companies.
Marketplace Fairness Act
Industry associations and traditional retail outlets want lawmakers to pass a federal Marketplace Fairness Act, which would effectively dismantle Quill by replacing the “physical presence” tax standard with an “economic presence” one.
Proponents of a Marketplace Fairness Act say it would level the playing field between online and offline concerns.
Opponents argue that states should abolish brick-and-mortar-only taxes to level the playing field.
Get Answers To Your E-commerce Business Law Questions
Kelly Warner is an Internet law firm that works with startups, marketers, and developers. In fact, we’re one of the first firms to concentrate on legalities associated with online marketing and selling.
Founder Aaron Kelly is a preeminently AV-rated attorney, with a 10-out-of-10 on Avvo.com; named partner Daniel Warner has a photographic memory, which definitely comes in handy for clients; partner Raees Mohamed has won his share of David v. Goliath cases; associate lawyer Hansen Tong has a rocket science background. They’re an online business legal dream team.
Get in touch; let’s chat about your situation and start crafting a solution.
Guy, S. (2016, April 5). Amazon ends its affiliate program in Louisiana over a sales tax law. Retrieved May 10, 2016, from https://www.internetretailer.com/2016/04/05/amazon-ends-affiliate-program-louisiana-over-sales-tax-law
Mire, M. (2016, March 28). Louisiana’s New. Retrieved May 10, 2016, from http://www.thepelicanpost.org/2016/03/28/louisianas-new-amazon-law-raises-constitutional-questions/
Self-described “expert witness and litigation consultant” Nicholas Carroll published a think-piece on the darker side of defamation. Carroll’s stance, in a sound byte? Slander and libel ruins lives. OK, maybe that’s a bit of an exaggeration, but Carroll does appear to advocate for defamation reform and floats the idea of “sane legislation” that better compensates wronged parties.So, does he have a point? Do we need to rethink our defamation laws?
The Most Defendant-Friendly Defamation Laws In The World
The United States has the most defendant-friendly slander and libel laws in the world. And yes, austere rules means legitimately wronged parties can sometimes find themselves without legal recourse — not to mention a lifetime’s worth of unwarranted social suspicion.
This raises several questions:
- Are U.S. libel laws an example of the greater good out-weighing a few unfortunate situations where the bad guys win?
- Are such situations an unavoidable side effect of valuing free speech?
- Or, do we need to consider the compound effects of digital communications and change online libel laws accordingly?
Here’s the thing: free speech is practically sacrosanct; tweaking U.S. defamation standards is a slippery, Everest-sized, First Amendment slope. Our slander and libel laws rightly cling to caution’s side, in favor of the defendant.
But as a result, winning defamation lawsuits in the United States isn’t easy; plaintiffs need rock-solid — no, titanium-solid — cases.
The potential upside of filing a defamation claim? Damage awards can be gigantic — especially in recent years. As Carroll explains, jury awards are rising, not only to compensate for financial setbacks (lost wages or customers on account of the defamation), but also for emotional distress.
The potential upside of filing a defamation claim? Damage awards can be gigantic — especially in recent years.
10 Conversation Starters About Defamation
Regardless of where you stand on the status of our country’s slander laws, Carroll raises some arguments worth considering (even if you don’t agree with his position).
- “Loose lips or poison pens had pushed them over the brink to abnormal behavior.” That’s how Carroll described some defamation victims with whom he has corresponded. It speaks to the potentially devastating nature of slander and libel. Lately, judges and juries are recognizing just how detrimental defamation can be — and they’re starting to hand down large damage awards.
- “Dealing with defamation rationally is the exception because defamation is rarely rational.” In this quote, Carroll points out the fundamental paradox of slander and libel situations, for plaintiffs. He also describes defamers as “not only …clinical psychopaths and semi-functional sociopaths, but apparently normal people who have too much time on their hands, best summed up by philosopher Eric Hoffer, ‘People mind other people’s affairs when their own affairs are not worth minding.’”
- Carroll chose a popular trope (of uncertain — but exalted — origins) to explain the viral nature of Internet defamation, cautioning, “A lie can be halfway around the world before the truth can put on its pants.”
- Studies suggest that only 5% of defamation victims can handle the emotional fallout of slander and libel, rationally.
- The so-called Streisand effect stops people, who’ve legitimately been defamed, from taking legal action.
- Carroll identified homeowners associations, K-12 schools, churches and the small business world as hotbeds of defamation.
- Due to more training, Fortune 500 companies are more likely to “damn by faint praise” and less likely to find themselves in the middle of a defamation battle — with either employees or competitors.
- Suicide is a very real consequence of defamation.
- Carroll controversially argues that the Digital Millennium Copyright Act “gives far too much license to blogs and social media — without the responsibilities imposed on mainstream media.”
- Carroll contends that false accusations are more traumatic than actual bad deeds. He explains: “To compare reality and defamation, which one is more traumatic . . . to accidentally run over your neighbor’s dog and kill it, or be falsely accused of running over your neighbor’s dog? After 14 years of speaking to defamation victims, that’s a no-brainer: being falsely accused is far more traumatic. Killing a neighbor’s pet will distress any normal person, and they will occasionally think about it even years later. On the other hand, the normal human will immediately call the dog’s owner, or take the dog to a pet clinic themselves, and history will read ‘. . . it really broke them up . . . they drove the dog to a clinic, but it was too late.’ Being falsely accused of it can become a running psychic sore, a daily source of stress every time you get a cold look from a neighbor, or the ‘Oh, you’re the one who . . .’ look from someone you just met. When the story is fictitious, there’s no record of you driving the dog to the hospital, because the accident never happened. And where there is no crime, no alibi is possible.”
Connect With A Defamation Lawyer
Lawsuits aren’t always necessary to effectively combat an online reputation challenge. Our attorneys are top-rated, exceptionally friendly, discreet and most importantly, know all the tips and tricks to remedy defamation situations quickly. Get in touch today to explore options; let’s start restoring your good name.
Carroll, N. (2016, March 22). Defamation of Character: The Road to Emotional Meltdown. Retrieved May 04, 2016, from http://www.huffingtonpost.com/nicholas-carroll/defamation-of-character-t_b_9520124.html