Amazon Censured Over Kids’ Apps That Encourage Spending

Amazon COPPA settlementAmazon settled an FTC COPPA case. Federal regulators charged the online retailer with improperly billing parents for a cumulative $70 million for purchases made by their children.

Amazon’s marketplace is filled with apps and games aimed at children, but some didn’t have protections to prevent underage in-game purchases for virtual “stars” and “coins.”

The problem has persisted for years, and in 2014, FTC Chairwoman Edith Ramirez touched on the issue. At the time, she explained: “Even Amazon’s own employees recognized the serious problem its process created.” Another related event sparked in May 2016. But it took until April 2017 for Amazon and the FTC to settle on an agreement.

Last Tuesday an Amazon spokesman explained:

“Since the launch of the Appstore in 2011, Amazon has helped parents prevent purchases made without their permission by offering access to parental controls, clear notice of in-app purchasing, real-time notification for every in-app purchase and refund assistance for unauthorized purchases. The court here affirmed our commitment to customers when it ruled no changes to current Appstore practices were required.

“To continue ensuring a great customer experience, we are happy to provide our customers what we have always provided: refunds for purchases they did not approve. We have contacted all eligible customers who have not already received a refund for unauthorized charges to help ensure their refunds are confirmed quickly.”

Amazon set up a Web page where affected parties can request refunds: https://www.amazon.com/gp/mas/refund-orders/in-apprefund.

If you have an Amazon account, use the platform’s Message Center to find additional information about refunds.  The FTC recommends that specific questions about this matter should be directed to Amazon by phone at 866-216-1072.

The legal tussle between the FTC and Amazon is a reminder to developers and app companies to follow the guidelines enumerated in the Children’s Online Privacy Protection Act. 

Kelly / Warner is a full-service law firm that helps entrepreneurs and businesses with digital and Internet law issues, in addition to FTC online sales and promotions matters.

Article Sources

Elmore, C. (2017, May 31). Amazon earned $70M unlawfully from kids, FTC said. Are you due a refund? Retrieved July 18, 2017, from http://www.kiro7.com/news/local/amazon-earned-70m-earned-unlawfully-from-kids-ftc-said-are-you-due-a-refund_/528400744

Is It Legal To Post Online Reviews Of My Product?

is it legal to post reviews of your own productsCan I post online reviews of my products? Since we regularly work with online product sellers, it’s a question we frequently field. The answer: Only if you prominently disclose your connection to the product. Because it’s against FTC regulations to litter the Internet with phony product reviews that appear impartial but aren’t.

Note: Officials regularly execute fake review stings. In fact, the Federal Trade Commission recently censured a trampoline company for the offense.

What happened? Well, a trampoline company — which we’ll call “Acme Bounce” (not real name) — presumably wanted to boost sales. To shorten a long story, representatives from the company allegedly bought some domains. According to reports, those websites present as impartial-trampoline review sites featuring “expert” advice. “Acme Bounce” regularly received top marks on said sites.

Well, things weren’t necessarily as they appeared. To shorten a long story, according to the FTC, “[One of the trampoline review websites] was operated by [Acme Bounce] and the company owners.” Additionally, some of the comments on the sites were “not authentic,” and instead “created by the owners of [Acme Bounce].”

In the end, “Acme Bounce” had to pay a sizable fine and agree to certain provisions.

The Four Main Rules Of Online Reviews

Steer clear of an FTC online review-related conflict by following these five rules.

  • Don’t write and post reviews of your products under another person’s name to make it appear like it’s a neutral consumer. If you post a review of your own product, the first line of said review should be something along the lines of, “I am {NAME}, the person who sells this product.”
  • If you give your product away in exchange for a fair review, the reviewers must disclose any material benefit received in exchange for posting an “honest opinion.” If you sell on Amazon, note that any type of incentivized review is off limits. [LINK]
  • Understand that if you hire a marketing company to promote your products, you’re responsible for said promotional company’s actions. The “I didn’t know what they were doing” argument doesn’t work when it comes to unfair and deceptive marketing. [LINK]
  • Remember: Factual claims made in promotional materials must be backed up with data and test results.

Click here for a full list of online marketing Do’s-and-Don’ts. [LINK]

Connect With An Online Product Marketing Attorney

Are you grappling with an online marketing or online sales issue? Perhaps you want to avoid future pitfalls and are looking someone to perform and online marketing audit? Either way, our team has considerable experience working with brands and professional marketers. Get in touch today to begin the conversation.

Article Sources

(2017, June 8). FTC Tramples Fake Reviews. Retrieved July 07, 2017, from http://www.jdsupra.com/legalnews/ftc-tramples-fake-reviews-74147/

Davis, W. (2017, May 31). FTC Charges Trampoline Sellers With Creating Fake Review Sites. Retrieved July 07, 2017, from https://www.mediapost.com/publications/article/302115/ftc-charges-trampoline-sellers-with-creating-fake.html

Amazon Review Loophole & Feedback Blackmail: E-commerce

Amazon review loophole

Is There A Marketing Loophole When It Comes To Up-Voting Amazon Reviews?

The ever-evolving nature of online business is a source of both excitement and exasperation for entrepreneurs.  Boundaries are repeatedly being pushed, often pitting pioneers against the proverbial “powers that be.”

Take, for example, the semi-recent Amazon review changes. A few months back, a tornado barreled through the e-commerce industry: Amazon had banned incentivized reviews. No longer could sellers offer free products in exchange for honest feedback. Ostensibly, the move hurt companies relying on the technique for product launches.

But instead of throwing in the towel, marketers did what they do best…adjusted. Many started offering “list optimization” and “list maintenance” services. How did the new system work? Promotions experts enlisted users to up-vote helpful reviews; instead of writing posts, operatives boosted positive reviews.

It was a genius approach; because if you look closely at Amazon’s interface, a question sits at the bottom of each review: “Was this review helpful to you?” Nowhere does it indicate that review-rating is dependent on product purchase. After all, (and theoretically), reviews are tools for potential buyers — and potential buyers find some reviews more helpful than others during the decision making process.

Regardless, Amazon insists its algorithms unearth these types of up-vote networks. “We have machine-learned processes to detect inauthentic customer insights including the manipulation of helpful votes and will ban vendors, sellers, and reviewers who are found to be out of compliance with our policies,” explained a spokesperson for the company.

Marketing Blackmail: Sabotaging A Listing To Drum Up Business?

A recent New York Post article did a story involving an Internet law issue that we’re also starting to hear rumbles about.

Here’s an excerpt.

The scenarios can get nastier still, according to one merchant who markets skin-care products on Amazon. Asking not be identified for fear of retribution from these vendors, the merchant said his product was a best-seller on Amazon in mid-April, when shoppers were scooping up 450 units a day.

Earlier this month, however, he noticed that all of the negative reviews — about eight of them — were on the top of his page, though the vast majority of his reviews were positive.

The merchant reached out to a “list optimization” vendor who’d previously sent him an e-mail advertising its services. The vendor, whose company the merchant declined to identify, offered to “clean up” his problem for $350 or to provide “listing maintenance” for $1,000 a month.

The skin-care merchant declined the services. The next morning the number of negative votes climbed to 160. On the following day it was 260.

The vendor called him back and suggested that one of the merchant’s competitors — whose positive review votes had, maybe not coincidentally, risen by a lot — was responsible for the negative votes.

The vendor reiterated his offer, upping the cost to $2,000 because the problem had grown exponentially. The vendor also offered to “screw the competitor’s site” according to the merchant.

Blackmailing businesses, via fake review manipulation, undermines “truth-in-advertising” standards and various Federal Trade Commission “unfair and deceptive” marketing rules. If someone is unfairly attacking your website or product listing, in this manner, let’s talk. Our team has helped hundreds of businesses with online review issues of this nature.

Want to read more about online feedback legalities? Head over to the consumer review law section.

Mogul Says Amazon Is Great For Brick and Mortar Retail

Amazon great for brick and mortarAmazon and other online retail destinations are killing brick and mortar stores. That’s the common sentiment wafting its way around Wall Street. But mall mogul Rick Caruso thinks the opposite.

“Amazon Is Great For Retail”

At the Milken Global Conference, Rick Caruso bucked consensus, asserting that “Amazon has been great for retail.” Why does Caruso, a principal of the famed “Grove” shopping mall in Los Angeles, believe online Amazon could be brick and mortar’s saving grace?  He points to an emerging trend: Brands starting online, becoming successful, and then branching out into physical stores. Caruso cites Warby Parker — the wildly popular eyeglass company with Internet roots — and Amazon’s bookstores as two examples.

The retail luminary also praised Amazon for forcing “retailers to be smarter and know their customers better.”

Are Indoor Malls Doomed, Though?

Caruso, however, doesn’t think all retail was created equal. “You’re not going to save indoor retail…The malls are going to die unless you reinvent them,” he predicted, but positively concluded that “good brick and mortar is going to flourish.”

Also at the conference was Ross Perot, Jr. who is equally enthusiastic about Amazon. And it’s no wonder, as Perot’s company is developing eight new Amazon fulfillment centers. He marveled at Amazon’s growth and called the company’s rise “stunning to watch.”

Future Product Delivery Plans For Amazon and Uber

Ostensibly excited about Amazon-partnership programs still in the development stage, Perot also touched on Uber Elevate. A joint venture between Uber and Amazon, the project would involve “drone stations” where Amazon packages “take off” on drones, and then dock on top of Uber cars for the last mile of the delivery journey.

About Kelly / Warner: E-Commerce and Online Business Consultants and Contract Negotiators

Kelly / Warner is a boutique law firm that works with e-commerce businesses across the United States and around the world. To learn more about our practice, we invite you to visit the online retail and business law sections of our site.

Are you ready to speak with an attorney about an online business or e-commerce matter? Get in touch.

Reminder: The FTC Punishes Influencers That Don’t Disclose

social media influencer rulesHi there, social media influencer: noteworthy things are happenings in the e-commerce world! Make note: 1) the FTC put celebrity endorsers on notice, and 2) Amazon is rolling out a new social media “influencer” program. In this post, we’ll summarize the events and then review a few social media marketing legal “don’ts.”

FTC to Social Media Celebrities: We’re Watching You

After a consumer watch group applied some pressure, the Federal Trade Commission sent letters to 90 celebrity social media influencers. To paraphrase the message: Stop being tricky with disclosures. Truth-in-advertising rules apply! It’s against regulations to disguise that you’re getting cash-money to hawk products.

According to FTC regulations, any person with a “material connection” to a given product must “clearly and conspicuously disclose relationships to brands” when promoting.

Don’t Try To Bury or Hide Disclosures

Hiding disclosures is also a no-no. Compliance requires that all declarations be made before the “more” button, to accommodate diminished screen real estate on cell phones.

The FTC’s action marks the first time the commission directly reached out, with unsolicited guidance, to celebrity endorsers. So far, no measures have been taken. However, if any of the letter recipients continue to flout guidelines, they’ll most likely be slapped with a gigantic fine.

When asked why it chose to focus on this issue, a spokesperson from the advocacy group explained:

“Instagram has become a Wild West of disguised advertising, targeting young people and especially young women. That’s not going to change unless the FTC makes clear that it aims to enforce the core principles of fair advertising law.”

Amazon’s Influencer Program: Do You Know The Rules?

In Amazon’s manifest destiny quest to claim all things retail, as of late, the company has been concentrating on fashion. And, like most style brands, the e-commerce behemoth is enlisting social media influencers to market and promote.

Still in its beta phase, the program is “invitation only” — and according to Amazon, participants don’t have a say in product selection.

So, who is Amazon asking to join this Amazon influencer promotional hive? According to reports, the company considered “various factors, including but not limited to number of followers on various social media platforms, engagement on posts, quality of content and level of relevancy for Amazon.com.”  Amazon was also sure to clarify that “[t]here is no set cut-off and influencers across all tiers and categories are represented in the program.”

Social Media Marketing Crib Sheet

So, what legal issues must Amazon influencers consider when promoting products? What disclosure tactics don’t pass FTC muster? Here’s a quick list.

  • Don’t bury disclosures in a long string of hashtags. The Federal Trade Commission considers it deceptive.
  • Don’t use #sp (for sponsored) or #partner as the only disclosures. They’re not clear enough.
  • Don’t use #Thanks [Brand] as a disclosure. The phrase does not meet FTC truth-in-advertising standards.

Click here for a more in-depth list of social media marketing dos-and-don’ts.

Contact An E-Commerce Business Consultant

If you’re an Amazon influencer or social media promoter with questions for an attorney who handles online marketing issues, get in touch. Our team has helped hundreds of online business entrepreneurs with everything from affiliate marketing contracts to FTC investigations. Our rates? Exceptionally reasonable. Our knowledge-bank? Invaluable. Let’s chat; we have the answers and know-how you need.

Alibaba Counterfeits: A Legal Overview & Avoidance Tips

alibaba's counterfeit problemIf you run an e-commerce operation you know: counterfeits can be a problem. And U.S. sellers and buyers are suffering the consequences. In this post, we’ll discuss the current state of “product knockoff” affairs — specifically the “Alibaba counterfeits” issue — and then offer a few ideas on how to ebb the rising knockoff tide.

The Global Counterfeit Conundrum

Alibaba: A Collection Of Retail Sites

What, exactly, is Alibaba? An online company based in China, think of Alibaba as eBay, Amazon, and ThomasNet all rolled into one. Broadly speaking, Alibaba consists of three main parts:

  • A manufacturers marketplace where people can find assembly plants and people to make products;
  • Taobao — a cross between eBay and Amazon; and
  • Tiān Māo (“Sky Cat”) — an online retail portal that caters to a higher-end clientele.

Alibaba’s Rising Star

An international online retail force, China’s Alibaba is reportedly worth $260 billion — and climbing. The Asian e-commerce hub, having masterfully positioned itself on the global stage, is quickly amassing the power to create — and disrupt — market niches.

Knockoff Central

If you’re dealing with Alibaba counterfeits, you’re not alone. Everyone seems to be feeling the pinch — from large luxury conglomerates to single-person startups.

So, what are some common scenarios?

Massively Reduced Knockoffs

Example: Vintage Industrial, a Phoenix furniture company that employs a couple of dozen people and crafts handmade tables starting at $5,295, is now competing with manufacturers in China who are selling its exact designs for a mere $24.

Supply Chain Leaks Result In Knockoffs

Example: A jewelry maker’s plans were stolen after she went on a supply trip to China. Now, her one-of-a-kind designs are being mass produced and sold at a much lower price point around the world and online.

Bespoke Clothing Mass Produced

Example: A two-person U.S. clothier, which sewed items by hand, found identical copies of its fashions for sale on an Australian retail website. After inquiring, the designer learned that her clothes were mass-produced in Asia and sold in stores around the world.

Stolen Pictures

Product photos are another hot commodity on Alibaba — and counterfeiters regularly abscond with manufacturers’ marketing materials. Not only do swindlers swipe designs, but they also run off with promotional content.

How can you, a product seller or marketer, stop fraudsters? There’s no silver bullet. However, formally registering intellectual property can help in certain circumstances.

Why Is It So Difficult To Shake Counterfeiters On Alibaba?

You may be thinking: Why don’t business owners inform Alibaba of the knockoff problem? Well, here are some hurdles.

  • Paperwork Pile Up: As one Alibaba counterfeit victim explained, the paperwork required to formally launch a counterfeit claim on the platform is prohibitively time intensive, to the point where it’s nearly impossible for smaller companies to accomplish.
  • Scouring The Site: Since the problem is so pervasive, to effectively catch counterfeiters, companies must spend hours scouring Alibaba’s multiple sites– and most people simply don’t have the resources to indulge in the practice.
  • Unpredictable Reporting Functionality: When asked, Alibaba spokespeople have explained that the company scans 10 million images a day and has removed nearly 400 million suspect product listings over the past year. But, if you ask entrepreneurs under product attack, they’ll probably explain that Alibaba’s counterfeit reporting functionality is spotty.

Jack Ma’s Promise To Help “Make America Great Again”

Several months back, when President Trump was still PEOTUS, he met with Jack Ma — Alibaba’s founder. When the pair emerged from behind closed doors, Ma was pledging to create one million American jobs. No, his company wasn’t hiring a million American workers, but he vowed to help stateside sellers break into the rapidly expanding Chinese e-commerce milieu.

Considering Counterfeit Problems, Is It Wise For U.S. Businesses To Enter Into The Chinese Market?

But a question looms: With the current counterfeiting climate, can U.S. brands effectively launch recognition in overseas markets — especially if their products are used “as reference” for knockoff goods sold at a fraction of the cost?

Take Vintage Industrial, the Arizona-based furniture maker. Its custom-made tables start at $5,295, but a Chinese manufacturer copied the company’s designs, had them mass produced, and is now selling them for $24 a pop.

Not only is rampant counterfeiting plaguing honest sellers, but the United States Trade Representative’s office recently slung Alibaba’s Taobao on the Notorious Markets List — a directory of marketplaces — both online and off — known for trafficking in pirated and counterfeited goods.

One of the reasons Taobao landed on the list is because the USTR believes that “smaller firms have a harder time qualifying for Alibaba’s streamlined program for removing fakes [and] often encounter more bureaucracy and longer response times than larger ones.” Alibaba insists the accusation is “false,” but a spokesperson acquiesced that “there are places that our system can be improved to make them more effective, efficient, and user-friendly.”

Who Is To Blame: Alibaba v. Chinese Government

Who takes responsibility for the counterfeit outbreak? As you may have already suspected, Alibaba thinks that the “primary responsibility of protecting brands rests with the brand itself.” Additionally and controversially, the company’s founder, Jack Ma, famously placed blame on the Chinese government.

As far as Chinese officials are concerned, however, they think Alibaba could do more to thwart fraudsters.

Why Isn’t The Chinese Government Taking A Harder Stand On Counterfeiters?

You may be reading this and wondering: Why doesn’t the Chinese government take a harsher stance when it comes to intellectual property infringement — especially since the nation is notoriously strict when it comes to other Internet laws?

In a word: Growth.

Believe it or not, the United States Patent and Trademark Office didn’t come along until 1975. In fact, the 1790 U.S. Copyright Act expressly permitted the copying of foreign works. Why? Because when you’re a young country — or a nation in the midst of an expansion spurt (like today’s China) — reproducing foreign goods is an efficient way to spark a national economy. Think of it this way: After the Revolutionary War, many an American fortune was made recreating British products. And now, as the Chinese economy grows, a similar phenomenon is playing out.

What Can U.S. Businesses Do To Battle Alibaba Counterfeits?

Unfortunately, there’s no magic to keep product thieves at bay. However, you can do things that will throw fraudsters off your scent.

  • Vet your supply chain, thoroughly. The most common way for product plans to land in the wrong hands is via a leaking supply chain link. So, before you sign contracts or otherwise enter into agreements with overseas manufacturers, vet like your business depends on it — because it may!
  • Use U.S. manufacturers. Yes, it may be a bit more expensive, but by using stateside fabricators, not only are you helping to support our national economy, but you’re giving yourself an added layer of intellectual property protection. Looking for a U.S. manufacturer? Try ThomasNet.com.
  • Become A Job Creator. Calculate how much you’re losing to counterfeit activities. Then talk to an e-commerce consultant about how much it would cost to either a) hire an inside person who is responsible for monitoring and handling online counterfeit issues or b) work with an e-commerce lawyer who can step in on your behalf when fraudsters rear their larcenous heads.

Connect With An E-Commerce Consultant

Aaron Kelly, Raees Mohammad, and Daniel Warner are Kelly / Warner Law. A decidedly tech-friendly firm, their team works with countless online sellers and marketers — both domestically and internationally.

The Kelly / Warner team solves counterfeiting problems, sets up business structures, secures intellectual property registrations, and does just about anything an online business could need…legally speaking, of course.

To read more about other e-commerce issues, please head to the online retail section of the website. If you have questions for Aaron, Raees, or Dan, get in touch today.

Made in the USA: What Are The Labeling Rules?

Made in the USALately, people are talking about U.S. manufacturing — which made us take note of a recent FTC action. The nation’s consumer watchdog busted a company for marketing its products as “Built in the USA” and “Proudly Built in the USA.” Why? Well, according to the agency, many of the brand’s products were “wholly imported” and didn’t qualify as “Made in the USA.”

It’s More Than A Marketing Slogan

“Made in the USA” is not just a marketing slogan. It’s a legal term of art — specifically a “country of origin” label. Using it inappropriately constitutes a regulatory breach — and sometimes rises to the level of fraud.

What Products Can Be Labeled Made in the USA?

When is it appropriate to use “Made is the USA” or “American Made”? When a “product is all or virtually all made in the United States.” What constitutes “virtually”? It depends on the product. For a firm answer, speak to a product marketing attorney about the specifics of your situation because different rules apply to different product categories.

Inappropriately Using “Made in the USA” Can Result In Large Fines

The company mentioned at the top of the post settled with the FTC and didn’t admit any wrongdoing. But they did acquiesce to a 20-year monitoring agreement. However, don’t assume everyone gets a proverbial slap on the wrist. The FTC is authorized to fine companies that flout “Made in the USA” marketing standards. So, to avoid censure, ensure compliance.

Comply Before The FTC Finds and Fines You

Do you sell things for a living? Make sure you’re up-to-date on the latest advertising regulations? The “American Made” labeling rule is only one of many. To read about the rest, visit our marketing law resource center. There, you’ll find explanations of federal marketing rules, plus case studies and legal tips.

Connect With A Product Marketing Attorney

If you have questions, feel free to contact us anytime. Someone from our marketing and advertising team will be happy to answer any questions you have. We look forward to speaking with you soon.

E-commerce: Can It Save The Rust Belt?

can e-commerce save the rust beltCan e-commerce help save the “Rust Belt”?

In this post we’ll:

  1. Explore the current state of the E-commerce Union;
  2. Review news items that could affect the vertical; and
  3. Close with further reading links for people thinking of starting an online retail business.

Is E-commerce is the New Investment Banking? Growth Estimates Are Astounding.

Pundits have posited: Brick-and-mortar stores are going the way of the horse-and-buggy; barring a catastrophic event, online retail will be with us forever, in some form or another.

Binny Bansal, co-founder of Flipkart.com, painted the prosperous picture, explaining, “Times have changed. Today, the biggest recruiters in the premier institutions aren’t consultancy or financial firms but the e-commerce companies.”

Sound like an exaggeration? Check out these facts and figures:

  1. Analysts predict that online retail will be a $523-billion-dollar market — in the U.S. alone— by 2020.
  2. In 2016, third-party sellers on Amazon shipped over 2 billion items to 185 countries.
  3. 71% of shoppers believe they will get a better deal online than in a store (which means buyers are flocking to online retail platforms).

Societal and Marketplace Shifts Effecting E-commerce

One Million Jobs?

During the presidential transition, business luminary Jack Ma, Alibaba’s founder, tucked behind Trump’s doors. He emerged pledging to “create 1 million American jobs.”

Media outlets asked: Would Alibaba be hiring a million Americans?

In a statement, Ma clarified:

“We specifically talked about … supporting 1 million small businesses, especially in the Midwest of America. Small businesses on the platform selling products — agriculture products and America services — to China and Asia, because we’re pretty big in Asia.”

In other words, Alibaba isn’t hiring a million U.S. workers in the heartland. Instead, the company wants American businesses to sell directly to Chinese citizens via Alibaba.

Debate: Is that really the same thing as “creating 1 million American jobs”? Furthermore,  will it work?

Arguments stack up on both sides.

China is home to over a billion people (compared to about 320 million in the U.S.), and its e-commerce market is expected to reach $840 billion by 2021 (almost double the estimates for the United States). Moreover, the Chinese middle class is growing — and in the market for American goods; the conditions are ripe for small American businesses looking to expand their markets. Theoretically, there’s enormous growth potential.

Of course, there’s a counter argument.

Several analysts scoffed at Ma’s economic seduction. For starters, China’s laws prevent over-profiting by foreign entities. So, let’s say a small U.S. business takes off in China. At some point, when the profits surpassed a certain threshold (high, no doubt), that small U.S. business would be forced to partner with a Chinese entity — and relinquish a certain amount of control — to keep expanding in the region. (That said, many people think the tradeoff is worth it.)

Automation: The True Job Thief?

President Trump promised to reinvigorate the American heartland by reviving factory jobs lost overseas, and a lot of people voted for that pledge.

But, (politics aside), the pink elephant in the room is braying: U.S. manufacturing output hasn’t rapidly decreased over the past 30 years; the number of U.S. manufacturing jobs has. And that loss isn’t solely the fault of overseas plants (they do play a small roll, but not enough to fix the decline). Over the past two decades, companies invested in technology. Because of automation, a task that once took five people, may now only take two.

It’s a tough pill to swallow, but those factory jobs probably aren’t coming back — at least not the same way and in the same volume. So the question becomes: What can fill the gap? And right now, e-commerce looks like a profitable bet.

Starting An E-Commerce Business

Starting an e-commerce business may be easier than you think. It doesn’t require a trust fund’s worth of capital, nor copious amounts of official paperwork. Just create an account with an online retail platform that allows third-party sellers (Amazon, eBay, Etsy, Jet, Walmart, et cetera) and start selling.

Of course, you’ll need to procure and promote your wares, which takes times and skill — and yes, a bit of startup capital. Also, to avoid a liability disaster, it’s wise to create a business entity for your e-commerce business. The good news: People regularly accomplish all these things on a $1,500 budget. In fact, one e-commerce legend started his company with $300; today it’s a multi-million dollar operation.

Further reading links

Questions For An E-commerce Business Attorney?

Our firm, Kelly / Warner, regularly works with online sellers and marketers. We assist with everything from account suspension to product counterfeiting to online payment processing issues. Additionally, our team performs marketing compliance audits and handles the business formation process, step-by-step. Whatever your e-commerce legal needs, we’re here to help.

Got A Product Idea? Start An FBA Business and Revive Your Local Economy!

Start an FBA businessWant to be the next Shark Tank millionaire, but unsure how? Four words: Start an FBA business. In this post, we’ll:

  • Outline the Fulfillment by Amazon (FBA) program;
  • Explain why the time is now to start an FBA business and how they’re helping to revive local economies; and
  • Review a few legal points all new FBA sellers should consider.

We’ll also hook you up with a few further reading links.

Comfortable? Ready to start? Great! Let’s do this.

What Is Fulfillment by Amazon (FBA)?

Billed as a “pick, pack, and ship” service, FBA members ship inventories to Amazon warehouses instead of their homes, offices, or private warehouses. What’s the benefit of sending directly to Amazon? You don’t have to worry about inventory and shipping logistics.

When an order comes in, Amazon picks the item from the shelf, packs it, and then ships it. On their end, sellers get notifications, updated inventory reports, and, of course, proceeds from sales (minus FBA fees).

A customer isn’t satisfied? No problem, Amazon also handles the return process.

Why Is It A Great Time To Start An FBA Business?

Amazon has always cared about invention and long-term thinking — and its FBA program embodies these core values. Since its inception, the operation has grown exponentially and stands to become a major — and sustainable — economic niche.

Marketplace sages predict that within a matter of years online retail will be the new investment banking. In other words, e-commerce is where the money is (or, at least, where the money is going).

Check out these stats for 2016:

  • FBA sellers shipped over 2 billion items.
  • Amazon sellers, from over 130 countries, fulfilled orders for customers in 185 countries.
  • The number of FBA sellers that reached $100,000 in sales grew by 30 percent.

People Love Online Shopping

Customers conquered their online shopping fears and Internet retailers are taking over. In the U.S. alone, experts expect the industry to reach $485 billion by 2021 — not to mention overseas opportunities.

So, if you want to be America’s next rags-to-riches story, go where the shoppers are — online.

FBA Growth = Local Growth

Not only are FBA sellers killing it online, but their efforts are spilling offline. According to analysts, over the past few years, Fulfillment by Amazon entrepreneurs have created approximately 600,000 small business jobs in their local communities.

Extra Credit Reading & Help

Are you leaping into the FBA Ocean? If you do give it a whirl, arm yourself with knowledge. To help out, we’ve compiled some links.

Get Answers To Your FBA Business Questions

Got questions about starting an FBA business or other online retail venture? Get in touch. Our team has assisted hundreds — if not thousands — of entrepreneurs and startups with various Internet law and online business matters, from minor governance issues to complex litigation support.

To learn more about Kelly / Warner, head over to our “About Us” section. Interested in reading more about e-commerce case studies and business tips? Digitally ambulate your way over to the e-commerce resource section.

Blacklisting Alibaba: What Does It Mean For Online Sellers?

Picture of Alibaba marketing material to accompany blog post about blacklisting Alibaba
The USTR finally got around to blacklisting Alibaba.

That’s right, Alibaba’s Taobao flea-market boomeranged back onto the U.S. Trade Representative’s Notorious Markets List, a Scarlet-A register of websites and marketplaces accused of cozying up to counterfeiters.

Is the news a shock? Not really. Capitol Hill has been grumbling — loudly — about the site’s perceived piracy problems for years. (Actually, this is the second time Alibaba made the list.)

Alibaba: We Do A Lot To Fight Counterfeiting

Predictably, Alibaba isn’t thrilled. A company president admonished:

“We are far more effective and advanced in [intellectual property rights] protection than when the USTR took us off the list four years ago. The decision ignores the real work Alibaba has done to protect IP rights holders and assist law enforcement to bring counterfeiters to justice.”

Last year, Alibaba did expand anti-counterfeit efforts. And as it happens, because of those efforts, people are questioning this latest development (which we’ll get to below). But, according to the USTR, the company hasn’t done enough, explaining:

“While recent steps set positive expectations for the future, current levels of reported counterfeiting and piracy are unacceptably high.”

Will Alibaba’s Spot on the Notorious Markets List Affect Online Sellers?

So, what does “blacklisting Alibaba” mean for FBA and other online sellers? Very little, actually.

Yes, the Notorious Markets List is a government production — and we use the word “production” purposefully, because it’s really just a political theater prop; listed parties don’t suffer sanctions. Essentially, the Notorious Markets List is the USTR’s version of Santa’s naughty list.

That said, it is a reputation blow. If customers grow leery of regional products, it could effect folks who manufacturer products in China, or buy from Alibaba vendors.

Blacklisting Alibaba: Fair or Shortsighted?

Not everyone is praising the USTR’s decision.

On Forbes.com, Michael Zakkour explained why the decision might have been wrong.

He reasons:

While the designation does not carry any official sanction or penalty[,] it does have the effect of muddying the truth about Alibaba’s marketplaces and the important role the company is playing in the evolution of cross-border commerce and the re-imagination of the retail model.

First we must clarify that Alibaba has two major platforms for selling brands to Chinese consumers. Taobao is a platform for individuals and third party companies to sell merchandise on a C2C basis. The company’s B2C marketplace, Tmall, is the platform where global and Chinese brands create flagship stores to sell direct to consumers. Tmall, the more important platform to global retailers and brands, is virtually counterfeit-proof.

Zakkour also outlines his three arguments for why the USTR erred in blacklisting Alibaba.

  1. Online counterfeits are a global scourge that brands from all over the world have to combat on a daily basis.
  2. [Listing Alibaba on the Notorious Markets List is akin to] Cutting off the nose to spite the face.
  3. Alibaba has made a massive and sincere effort to eliminate fakes from Taobao.

Zakkour’s article is worth the read for anybody involved in cross-border e-commerce. For similar news, head to our online retail section.

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Kelly / Warner’s e-commerce law attorneys have assisted hundreds of online businesses — of all sizes — with all manners or Internet retail issues. Get in touch to start solving.

Amazon Counterfeit: Online Retailer Finally Waging War On Knockoffs

Picture of knockoff McDonalds to accompany blog post about Amazon counterfeit plansAmazon has rallied the anti-counterfeit troops! After a whole lot of grumbling — and A-to-Z reporting — the online retailer is finally coordinating a campaign against counterfeiters. That’s right, e-commerce impresarios: Bezo’s behemoth has vowed to make “fighting phonies a major goal for 2017.” (And the crowd cheers, “HUZZAH!”)

The worldwide counterfeit crisis has hulked into a $500 billion epidemic; needless to say, Amazon’s efforts are welcome. But will it work? Can Amazon efficaciously fight product fraud? Moreover, what’s the attack plan? Is beefing up fraud departments — and vowing “zero tolerance for the sale of counterfeit items” — really going to work? Or is Amazon just tossing around PR platitudes to placate?

Why Is The Amazon Counterfeit Problem Growing?

Before we analyze Amazon’s counterfeit situation, let’s look at why the platform is morphing into a knockoff bonanza.

  • Easy Signup: Online retail is fertile entrepreneurial soil, in part because the low barrier to entry. You don’t need a round of VC funding to start a private label e-commerce company. All it takes is hard work, a minimal cash outlay, and, in most cases, an Amazon account. (I say “in most cases” because Amazon is the largest online retailer in the country, but other platforms do exist. Amazon just happens to be the most popular.) Consequently, easy signup also attracts ne’er-do-wells. Plus, since fraudsters tend to account hop, catching them can become a frustrating game of whack-a-mole.
  • Where The Shoppers Are: Counterfeiters don’t make money unless people actually buy what they’re hawking. In other words, they need to be where people are shopping. Right now, that’s Amazon.com, Alibaba.com, Jet.com, eBay, Etsy, (and yes, we see you Walmart.com, climbing up the third-party online retail ranks).

Analysis: Will Amazon Be Able To Effectively Tackle Its Counterfeit Problem?

Vowing to war with fraudsters is fine — encouraging, even. But will the talk give way to tangible results? Can Amazon shoo counterfeiters off its platform?

As we mentioned above, Amazon’s platform is both a blessing and a curse. Startup costs are low, which is ideal for honest entrepreneurs — but rakes are also drawn to the platform’s open borders.

Now, does that mean Amazon’s platform is prohibitive when it comes to a counterfeit crackdown? No. If the company appropriately directs resources to account monitoring, inquiry research, user education, and customer service, change is possible. And, according to reports, it appears the online retailer is doing just that. Amazon announced plans to bolster its fraud departments and develop better ways to process counterfeit complaints and inquiries.

The Importance of Educating Consumers

Educating users about counterfeit issues is essential.

Studies have proven it time and again: When people know better, they do better. In other words, if it’s drilled into the public discourse that a) knockoffs weaken the economy and b) counterfeit products are more dangerous, then people will stay away. Educate consumers on the tell-tale signs of knockoff artists (sketchy return policies, rock bottom price, etc.).

Did A Failed Sport Merch Deal Spawn The Knockoff Task Force?

The chat on the street is that failed negotiations between Amazon and a pair of professional sports leagues kicked the online retailer into anti-counterfeit gear. Apparently, knockoff concerns stalled merchandise deals with the NFL and MLB.

Are We In The Midst Of An Amazon Exodus? Not Quite Yet.

Are brands leaving Amazon is droves? No. Not in droves. But the troops are growing restless, and a few brands have jumped ship. To wit: hippie footwear favorite, Birkenstock, recently peaced-out of Amazon, citing counterfeit concerns. Another example? At the end of 2016 — after a well-executed sting operation — Apple sued third-party sellers over branded power supply knockoffs.

Amazon Counterfeit: Tips for Fending Off Thieves

Since catching counterfeiters can prove taxing, are sellers struck by scammers automatically screwed? Not at all. Brands have successfully litigated against — and shut down — fake product purveyors.

But what’s better than winning an Amazon counterfeit lawsuit? Avoiding one altogether.

Certain tactics repel counterfeiters like citronella repels mosquitoes — (in other words, yeah, they mostly work; but a determined fraudster / mosquito will find a way).

Four Anti-Counterfeit Tactics

So, what’s the trick to shooing scammers? Well, counterfeiters prey on easy targets; so, become unattractive to crooks. How? Some suggestions:

  • Vet the supply chain like your business depends on it, because it does! Find reliable manufacturing, design, and shipping partners. This is one of those times, in life, when paying a little more for a reputable manufacturer, will probably, in the long run, be more cost effective than the cheaper option (which will inevitably devolve into costly headaches).
  • Use Amazon’s brand registry, even if you don’t sell on Amazon. Since it’s the world’s largest retailer, Amazon has its own brand registry program. Businesses can register brands directly with the site, which better allows Amazon to recognize and handle product hijacking issues if they arise. Moreover, brand registry gives sellers considerable control over the product page — another counterfeit deterrent.
  • Customize the product packaging. Not only do people notice and appreciate a special “wrapping” effort, but the differentiation comes in handy for A-to-Z claims and counterfeit lawsuits. Moreover, customized packaging also works as a deterrent. Fraudsters prefer vulnerable targets, and it’s easier to copy something basic and nonspecific. (Hey, counterfeiters consider costs, too!) This is not to say that packaging must be expensive, just unique.
  • Educate buyers. On websites and product pages, list the legitimate re-sellers and extol the dangers of cheap knockoffs. Heck, if you’re so inclined, point out counterfeiter’s slagging effect on the economy. Also, remind buyers that going cheap can be costly in the long run — because knockoffs are more likely to break or not work as advertised — (and try getting a refund from a fraudster).

Our Team Is Here To Help Your Team

The online retail market is exploding, which is fantastic. But with expansion comes new schemes, frauds, and business challenges.

That’s where we come in.

Our team — Aaron, Daniel, Raees, Hansen, and Rachel (a.k.a., Kelly / Warner Law) — help online sellers (both individuals and brands) overcome business impediments. In the past, we’ve successfully helped clients:

  • Establish business entities for e-commerce ventures;
  • Revive suspended merchant accounts;
  • Remove defamatory reviews;
  • Rectify payment processing issues; and
  • Shutdown counterfeiters;

In addition to Amazon counterfeit matters, Kelly / Warner also handle issues related to online marketing, payment processing, intellectual property, and false advertising.

And yes, we’re priced with the online entrepreneur in mind. Give us a call. We may know the exact move to solve your problem quickly.

Tonight: Amazon Esports Tournament Highlights Show

picture of people playing mobile games to acompany a blog post about Amazon esports
Amazon Esports Tournament Highlight Show Airing December 12, 2016

Amazon is embracing esports.

On December 2, the online retailer, along with eSports Productions, hosted a casual gaming competition, which live-streamed on Twitch. The occasion marked Amazon’s inaugural foray as tournament host.

The Champions of Fire Invitational: Amazon Esports Casual Gaming Event

Sixteen game streaming celebrities gathered in Vegas for The Champions of Fire Invitational. With $100,000 up for grabs, participants battled in single elimination rounds of Disney Crossy Road, Pac-Man 256, Bloons TD Battles, 8 Ball Pool, and Fruit Ninja.

At Champions, “casual mobile games” took center stage. Aaron Rubenson, director of Amazon’s Appstore, explained:

“Competitive video gaming has seen huge growth, and we see tremendous customer value in expanding the tournament experience to include the casual mobile games played by millions of people today. The Champions of Fire Invitational will see some of the top gaming pros square off in the same fun games our customers can download and enjoy today from the Amazon Appstore.”

Who won the Amazon esports tournament? Find out on the highlights show, coming to a cable station near you, tonight, December 12th.

Amazon Esports Involvement On The Rise

In 2014, Amazon first signaled serious interest in esports by plunking down nearly $1 billion for the online gaming platform, Twitch.

In August 2016, via Twitch, Amazon acquired Curse, a gaming resource platform.

Breakaway — Amazon Game Studio’s first development venture that includes betting features and “deep Twitch integration” — hit digital shelves In September 2016.

Obvious acquisition is obvious: Amazon is making sure its esports foot hole is secure. Smart.

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Kelly / Warner Law is a boutique law firm that maintains an esports division. Two of our attorneys work with professional gamers on contract negotiations, sponsorship vetting, team disputes and tournament logistics issues.

Click here to read more about the firm; head here for more esports blog posts and legal information.