5-Year Jail Sentence For Fake Review Scammer

ecommerce jailHere’s some e-commerce marketing advice: Don’t buy fake reviews! We get it; it’s tempting — but also against regulations! And in China, it can land you a five-year stint in the pokey.

(A quick a note: Although this cautionary tale unfolds in China, U.S. online sellers should pay attention because similar schemes have found their way stateside. Remember: Businesses are responsible for third-party promotions carried out on their behalves. U.S. e-commerce entrepreneurs probably won’t land in jail for using fake review services; but they could end up in a world of financial hurt, courtesy of crushing FTC fines.)

The Brushing Ballad of Mr. Li

Li was his last name and “brushing” — (e.g., faking e-commerce transactions and falsifying reviews) — was his game. He opened shop in 2013 and mainly worked with sellers on Taobao (think: Amazon.com of China). At the request of brands, Li enlisted people to purchase empty packages and post fake — but glowing — reviews. The process helped sellers climb Alibaba’s “credibility” ladder, giving them prime search real estate. By 2014, Li had pocketed nearly one million yuan.

Eventually, however, authorities caught up with the brusher. During his trial, Li said he knew he was breaking Taobao’s rules but didn’t think he was breaching the law. Ultimately, authorities sentenced Li to five years. He’s also on the hook for 920,000 yuan (US $135,000) for “breaking national regulations, knowingly spreading fake information online through publishing services for profit, and disrupting the market order with serious consequences.”

Brushing Is Big, Risky Business

Fake purchase and review operations — a.k.a., “brushing” services — are big, underground business in China, and increasingly in the United States. In 2014, experts estimate that nearly 700 companies, along with 500 chat groups, facilitated brushing scams on over 600 billion yuan worth of sales. Just recently, over 50 people “were arrested in Heilongjiang on suspicion of cheating Taobao stores out of 2.47 million yuan.”

Alibaba, China’s top e-commerce platform, also expanded its fraud-busting efforts. Over the past year, the online retailer has punished over 20,000 sellers for using false transaction services. During the same period, Alibaba banned an additional 6,000 accounts for egregious acts of consumer deception.

Fake Review Enforcement Actions: Genuine or Fake?

Are fake review companies the only phonies?

Many businesses argue that online retail platforms are also knee-deep in deception. But instead of trading in phony reviews, they exaggerate efforts to combat fraud.

Despite detractors, though, Zheng Junfang, Alibaba Group’s chief platform governance officer, recently explained to a media outlet: “Taobao has always dealt strongly with credibility-distorting behavior. We currently have a number of measures in place to counter this, including a verification system, manual audits, and a reporting system for users.”

Are fake reviews issues affecting your business? We Can Help.

As consultants who regularly work with e-commerce professionals, we’ve seen the damaging effects of phony reviews. More importantly, we’ve developed solutions that help companies bounce back.

If an online review matter is causing you problems, let’s talk. Our team has worked with hundreds of businesses — large and small. To read more about online trade libel, head to the consumer review section of our blog.

If you’re ready to discuss your situation with an experienced attorney who can explain your options, please get in touch.

Article Sources

Tone, S. (2017, June 22). In Judicial First, Man Imprisoned for Fake Taobao Reviews. Retrieved September 18, 2017, from http://www.sixthtone.com/news/1000374/in-judicial-first%2C-man-imprisoned-for-fake-taobao-reviews

The “All Natural” Marketing Conundrum: A Quick Overview

natural marketing

“Natural.” Legally speaking, it’s a deceptively complex word, but the Food and Drug Administration wants to change that.

What Does Natural Mean, Legally Speaking? (The Jury Is Still Out.)

The FDA wants to “establish a meaningful definition for ‘natural’ so that [the] term would have a common consumer understanding, and whether ‘natural’ claims [should be prohibited] entirely on the grounds that they are false or misleading.”

“Natural” food advertising lawsuits have skyrocketed. According to a report by Perkins Coie LLP, 2015 saw 53 class actions involving labels donning the words “natural” or “all natural.” Despite the number of cases, courts and regulatory government agencies have yet to agree on a national standard.

92% Natural Is Not The Same As “All Natural”

Is it OK to use the phrase “all natural” or “100% natural” if the majority of a product is derived directly from nature? According to the Federal Trade Commission, no it’s not. Jessica Rich, a former director of FTC’s Bureau of Consumer Protection, once explained:

“‘All natural’ or ‘100 percent natural’ means just that—no artificial ingredients or chemicals.”

The FTC targets brands that market mostly-natural products as “all natural.”

The Problem With The Word “Natural”

An FTC assistant director, Richard Cleland, explained the difficulty with using “natural” on food labels:

“You have different kinds of products that make natural claims, and the consumer understanding of the word natural may depend on what kind of product is being attached to [the term].”

Connect With A Marketing Lawyer

Knowing when to use “natural” is only one of the FTC’s marketing rules. Are you familiar with the others? If not, start with this handy list or promotional dos-and-don’ts.

Are you ready to speak with an attorney who helps businesses with legal marketing issues? If so, please get in touch. Our team is here and ready to help with any and all FTC and business consultation needs.

Article Sources

Long, J. (2017, June 20). FTC Official: Research Needed to Study Consumer Understanding of ‘Natural’. Retrieved September 13, 2017, from https://www.naturalproductsinsider.com/blogs/insider-law/2017/06/ftc-official-research-needed-to-study-consumer-un.aspx

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 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 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

Technology Law News: Common Carrier Loophole Could Benefit Online Business Behemoths

technology law common carrier loopholeThe FTC may score a win, courtesy of the Ninth Circuit. The bench opted to revisit the FTC’s case against AT&T for allegedly throttling customer data. Technology law circles are buzzing about this case because if the judges rule in favor of AT&T, the decision will create an  “oversight loophole.”

FTC v. AT&T: The Telecom Fight Over Governmental Oversight

This case began in 2014 when the FTC sued AT&T, under Section 5 of the FTC Act, over improper disclosures about data throttling practices.  AT&T’s response?  You aren’t the boss of us.

Argument: The FTC Shouldn’t Exercise Oversight of Common Carriers

AT&T argued it was exempt from liability because a portion of the business fell under the status of common carrier. As a result, company lawyers reasoned, the entire organization should be exempt from FTC oversight when it comes to disclosure issues.

The senior vice president of Public Knowledge, Harold Feld said, “[The decision] was huge because it was totally unexpected.  Nobody’s ever ruled that way before.”

Why FTC v. AT&T Is A Big Deal Internet Technology Law Case

Since 1914, the FTC has been “working to protect consumers by preventing anticompetitive, deceptive, and unfair business practices, enhancing informed consumer choice and public understanding of the competitive process, and accomplishing this without unduly burdening legitimate business activity.”

For years, the FTC’s gaze has lingered on Internet-related issues.  But if this case falls in favor of AT&T, the commission could, effectively, lose some proverbial power.  How will larger online companies avoid FTC oversight? They’ll buy a small cellphone company, and voila — regulatory-avoidance mission accomplished.

What The Future Holds If AT&T Wins This Internet Law Case

For the time being, the “common carrier loophole” is plugged while the Ninth Circuit, once again, ponders the case. However, if the court rules in favor of the telecom, it will uncork.

Interestingly, on May 18th, the FTC voted 2-1 to begin eliminating net neutrality rules. The change altered the classification of ISPs as common carriers under the Communications Act.  If officials nix the common carrier classification, AT&T will have to change their defense strategy in its case against the FTC.

Kelly / Warner is a leading Internet law firm that works with tech corporations and Internet Service Providers across the United States, Canada, United Kingdom, Asia, and Europe.

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.

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.

FTC Sued Prevagen Over Representation Of Placebo Results

FTC sued Prevagen

The FTC sued Prevagen’s marketers. Charge: Unsubstantiated marketing. Is the FTC’s claim meritless? Prevagen says yes — and they’re fighting back.

The case serves as a reminder for dietary supplement marketers: Make sure your promotional materials are in line with FTC compliance standards!

Federal Trade Commission (FTC) to Quincy Bioscience (Prevagen Marketers): Your Brain Supplement Marketing Is Misleading!

Who is suing who? The Federal Trade Commission, alongside the New York Attorney General’s office, is suing Quincy Bioscience (“Quincy”) — marketers of Prevagen.

Why is the FTC suing Prevagen’s Marketers? The FTC regularly penalizes companies for promoting questionable findings. But this case is a bit different. The Commission objects to how Quincy presented information, not the veracity of the study from which the information came. Specifically, the FTC condemned Quincy’s failure to disclose allegedly near identical results for both placebo and active participants.

How does Prevagen feel about the lawsuit? Often, companies caught in an FTC web lick wounds, cut losses (and a check), and call it a day. But Quincy is swinging back. The supplement marketer feels the FTC overstepped its bounds and is forcing unfair scientific interpretations down the throats of small businesses.

The Curious Case of the Jellyfish Protein

A jellyfish protein — and active ingredient in Prevagen — calcium researches have used apoaequorin since the 1960s. But newer — arguably fringe — research suggests the substance may enhance memory function.

But, like many touted supplements — (omega-3’s come to mind) — the medical community’s jury is still hanging outside the courtroom. To wit, the American Pharmacists Association summarizes its stance thusly: “Human data on apoaequorin are limited to small, company-sponsored trials that do not meet expected scientific standards.”

Marketing and Science: An Uneasy Partnership

The intersection of science and marketing is riddled with potholes. On one hand, dangerous products shouldn’t land on shelves, which requires a certain amount of oversight. On the other hand, mixing scientific studies with promotional materials can be a messy legal recipe. Why? Because science is not a monolith; a singular idea. Scientists don’t always agree. Which raises the question: Should judges be determining the proper way to present scientific findings?

This suit is unique because the FTC and AG aren’t questioning a study’s veracity, which is the norm in “unsubstantiated claim” cases. Instead, commissioners contend that Quincy failed to present the results adequately; (specifically, the purported near identical results for placebo and dosed participants). To put it another way, the FTC doesn’t think Quincy is providing “reliable evidence of a treatment effect.”

The FTC’s Rule About Scientific Support

You may be wondering: “Why can the FTC sue over certain scientific studies but not others?” And that’s the question Quincy wants people to ask. But is it the right question?

Quincy insists the lawsuit is subjectively rooted, and therefore meritless. In a statement the company argued:

“Quincy has amassed a large body of evidence that Prevagen improves memory and supports healthy brain function. This evidence includes preclinical rat studies, canine studies, human clinical studies, and, most importantly, randomized, double-blind, placebo-controlled human clinical testing. This type of testing has long been acknowledged by both the FTC and the FDA to be the ‘gold standard’ for scientific evidence.

“The FTC does not allege that Quincy’s principal clinical study fails to meet the FTC’s and FDA’s own definition of ‘gold standard,’ nor does the FTC allege that the study was poorly designed or inappropriately conducted, or that it failed to rely on scientifically-validated measures.

“The sole dispute rests on the interpretation and analysis of the data, with the regulators attempting to hold the company to a standard that is unreasonable, scientifically debatable, and legally invalid. Their experts simply disagree with ours over how to interpret the study results. The FTC should not be the arbiter in matters of scientific debate. We are proud of the work we have done to support Prevagen’s effects and believe our large body of evidence clearly satisfies the longstanding standard to support such claims.”

This squabble over semantics may prove to be the crux of the case. Quincy could win by convincingly framing the FTC’s argument as scientific interpretation, as opposed to objective oversight. But is an interpretive variance truly the problem?

Scientific method convention stands: If a control group’s results aren’t statistically different than “activated” participants’, then it’s back to the lab to form a new hypothesis. The FTC will undoubtedly argue something to this effect. But, hey, you never know; a sympathetic judge could see it Quincy’s way.

Lame-Duck FTC Means Ruling Should Be Vacated?

Quincy is also upset that only two commissioners voted on the action. In a statement, the company characterized the suit as “another example of government overreach and regulators extinguishing innovation by imposing arbitrary new rules on small businesses like ours.” Quincy also accused the agency of being “short-staffed and lame-duck.”

FTC Sued Prevagen And They’re Not Backing Down

The FTC and AG are standing firm in their decision. Jessica Rich, an agency director, chastised, “The marketers of Prevagen preyed on the fears of older consumers experiencing age-related memory loss. But one critical thing these marketers forgot is that their claims need to be backed up by real scientific evidence.”

Warning Letter Dates Back To 2012

Was the suit a shock to Quincy? Maybe not. According to reports, the Commission sent the company a warning letter in 2012. Which just goes to show: Don’t assume you’re in the clear if nothing ever came of that FTC caution from years ago.

The FTC Keeps A Close Eye On Dietary Supplement Marketers

The FTC’s Prevagen censure comes as little surprise. Not only are the ads ubiquitous (in certain regions), but they appeal to senior citizens. The AG remonstrated, “It’s particularly unacceptable that this company has targeted vulnerable citizens like seniors in its advertising for a product that costs more than a week’s groceries, but provides none of the health benefits that it claims.”

Yes, The FTC Wins Dietary Supplement Lawsuits – A Lot

This post isn’t a case-merit analysis. It’s still early stages; both sides have reasonable arguments; the devil will be in the litigatory details.

However, as attorneys who work with dietary supplement marketers and keep up-to-date on industry happenings, we wanted to point out a small curiosity in Quincy’s statement. It reads:

“The FTC has already brought three similar cases against three other companies in which the Commission tried to impose its own rigid interpretation of a company’s scientific evidence to prohibit truthful, non-misleading claims. In each case, the FTC lost.”

How did you interpret that statement? Did you walk away thinking the FTC lost every deceptive marketing case involving a nootropic? Not the case. For example, in 2015, the Commission went head-to-head with the folks behind Procera AVH, a product promising to “restore memory loss and improve brain function.” Originally, the court slapped a $150 million judgment on the supplement distributors, but the FTC agreed to a final payout of $1.4 million to satisfy the censure.

We point this out not to question Quincy, but to warn dietary supplement marketers: The FTC does prevail…often. Don’t be complacent when it comes to advertising compliance.

Connect With An FTC Attorney

Being investigated by the FTC? Have questions about advertising and marketing compliance? We’re here to help.

Homeopathic Marketing Guidelines: FTC Issues New Rules

old fashion medicine bottles picture to accompany a post about homeopathic marketingThe FTC has zero time for homeopathic hyperbole. Called the “Enforcement Policy Statement on Marketing Claims for Over-the-Counter (OTC) Homeopathic Drugs,” the FTC’s latest guidelines address the dos-and-don’ts of homeopathic marketing materials.

After analyzing concerns, the nation’s consumer watchdog averred:

[T]he FTC will hold efficacy and safety claims for OTC homeopathic drugs to the same standard as other products making similar claims. That is, companies must have competent and reliable scientific evidence for health-related claims, including claims that a product can treat specific conditions. The statement describes the type of scientific evidence that the Commission requires of companies making such claims for their products.

Homeopathy Marketing Guidelines: Long History, Little Science

Homeopathy sits at the crossroad of belief and science. A healing methodology dating back to the 18th century, the practice involves micro-doses of symptom-inducing ingredients. Over the past two decades, new age devotees have revived the methodology.

Yet, fringe popularity doesn’t guarantee efficacy; as far as the medical community is concerned, homeopathy falls under the anti-scientific umbrella.

The 18th-century factoid is pivotal in the FTC’s stance on homeopathic marketing.  According to the guidelines, commissioners understand that “claims may include additional explanatory information to prevent the claims from being misleading.” In other words, so long as the packaging conveys that “[this claim is] based only on theories of homeopathy from the 1700s that are not accepted by most modern medical experts,” then it’s fine. (Sorry. Slapping a Dr. Quinn doppelganger on your label probably won’t cut legal muster.)

Don’t Skirt Homeopathic Marketing Guidelines with Tricky Language

The FTC’s announcement also condemns undercutting “a disclosure with additional positive statements or consumer endorsements reinforcing a product’s efficacy.”

“The bottom line, when it comes to FTC marketing compliance,” explained marketing and advertising lawyer Dan Warner, “is to avoid deception; and definitely don’t make unsubstantiated claims.” When asked about the new OTC homeopathic marketing guidelines, Warner explained, “To be fair, the FTC’s latest announcement isn’t necessarily a brand new stance, but a reminder that questionable science shouldn’t be used in promotional materials. Do so, and you risk a fine.”

Get Help From A Dietary Supplement Marketing Lawyer

If, after reading the FTC’s new homeopathic marketing guidelines, you still have questions, get in touch with Kelly / Warner Law. We regularly perform advertising audits to help clients avoid FTC fines.

More FTC compliance standards this way.

Social Media Marketing Maven: Chrissy Teigen

picture of social media icons on phone to accompany post about Chrissy Teigen's social media marketing prowessWhen she’s not lip sync battling, Chrissy Teigen apparently ponders social media marketing mysteries! Recently, the brand influencer Twitter-shared some musings about FTC advertising compliance.

We learned:

  • Chrissy Teigen is serious about her online marketing work and keeps up-to-date with FTC regulations. We say, “Good on her!” Every influencer should familiarize themselves with Federal Trade Commission compliance standards.
  • Chrissy collaborates with brands to draft promotional tweets.
  • Teigen, (like many marketers), doesn’t quite understand why some tea and smoothie social media influencers seem allergic to #ad or #spon promotional hashtags, which are, technically, required.

The FTC’s social media marketing rules

  • Promotional Hashtags: Influencers, marketers, and brands are expected to use #ad, #spon, #sponsor, or #paid in promotional tweets, ‘grams, and other social media posts.
  • Disclose Material Relationships: Read the Dot Com Disclosures to determine the necessary promotional declarations for your product. Don’t want to wade through an FTC regulatory document? Click here for the most important points.
  • Be Mindful of Promotional Language: Don’t lie about product benefits; don’t fib about ingredients; don’t rely on questionable scientific studies to support claims. The FTC has — and will continue to — sue over these types of infractions.

Twitter, Facebook, and Instagram promotions are ubiquitous, but online marketing regulations are still nascent. Please don’t misunderstand the assertion. Regulations DO exist; brands risk sizable fines for shirking guidelines. And even though the FTC has earned a reputation for, shall we say, mutable justice… consistency has, over the past year, quietly snuck its way into the investigation equation.

Want to evade the FTC’s prying eyes?  Clean up your marketing compliance house.

Click here to read about other digital promotional legalities. Head this way to speak with someone who can help solve your social media marketing challenges.

Native Advertising Rules Are Now In Effect (And The FTC Is On The Hunt)!

native advertising law

Don’t Let The FTC Decimate Your Profits

A quick reminder.

Native advertising rules are now in effect!

At the end of 2015, the Federal Trade Commission published native advertising (promotional content designed to mimic editorial content) guidelines.

Before the release, websites profited from native advertising blocks that fell under headlines like “Promoted Content” — basically, headers that disguised links as internal links. Or, to put it another way, click bait.

However, despite the regulation’s release, Adweek recently reported that about 70% of websites using native advertising are flouting FTC guidelines.

So, what happens if officials catch you snubbing online marketing rules and regulations? Well, they can sue you, fine you and make you pay.

Native Advertising Startup Opportunity Alert!

Another interesting tidbit to pop out of Adweek’s piece? Experts estimate that portions of the native advertising niche will generate as much as $53.4 billion by 2020.

Put Me In Touch With An Online Marketing Lawyer, Pronto!

Unaware of the new native advertising guidelines? Click here for a summary. For those in a rush, the gist is this: Make sure native advertising is distinguishable as advertising.

Are you sure you’re 100% FTC compliant? If not, get in touch. We may be able to help you avoid an FTC investigation — and subsequent fines.

Article Sources

Swant, M. (2016, April 8). Publishers Are Largely Not Following the FTC’s Native Ad Guidelines. Retrieved May 31, 2016, from http://www.adweek.com/news/technology/publishers-are-largely-not-following-ftcs-native-ad-guidelines-170705

Dietary Supplement Law: FTC Targets 120 Marketers and Manufacturers

dietary supplement law
The FTC led a massive crackdown against supplement marketers using questionable promotional tactics. Are you positive you’re marketing on the right side of the law?

Dietary Supplement Law: Summary of The FTC’s Marketing Crackdown

The Federal Trade Commission (FTC), in conjunction with several government offices and agencies, executed a dietary supplement law crackdown. The targets? Manufacturers and marketers suspected of flouting guidelines. Regulators investigated about 120 parties, resulting in 89 lawsuits, in 18 states.

A spokesperson explained:

“This joint agency effort is a testament to our commitment to protecting consumers from potentially unsafe dietary supplements and products falsely marketed as dietary supplements. The criminal charges […] should serve as notice to the industry that if products are a threat to public health, the FDA will exercise its full authority under the law to bring justice.”

The crackdown serves as a warning to dietary supplement manufacturers and marketers.

Do you want to be on the FTC’s radar?

If you’re involved in the promotion of weight loss or health supplements, spend some time learning about marketing compliance. Either read up on the latest rules and regulations or you own, or, enlist a marketing attorney to conduct a review.

If you’re involved in the promotion of weight loss or health supplements, now is the time to invest in a marketing review.

Dietary Supplement Law: Details About The FTC’s Marketing Crackdown

What federal, state, and quasi-governmental agencies participated in the dietary supplement law crackdown?

  • The Federal Trade Commission
  • The Food and Drug Administration
  • The Internal Revenue Service
  • Various criminal investigation units
  • The Department of Defense
  • The United States Postal Inspection Service
  • United States Anti-Doping Agency

What charges were brought against the dietary supplement manufacturers and marketers?

  • Improper Labeling: Some of the products supposedly contained ingredients that weren’t listed on the packaging.
  • Improper Benefit Claims: Several of the marketing materials allegedly included unsubstantiated and scientifically unsupported claims. Some of the cases involved promotional language promising to help cure cancer, arthritis, herpes, opiate addiction, and Alzheimer’s. Government officials also targeted marketers for publishing outrageous weight loss claims like *shed five pounds in four days with one pill, or up to 20 pounds in 16 days with four pills.*
  • Improper Financial Practices: Some of the targeted parties were brought up on “obstruction of an FDA proceeding” and “conspiracy to commit money laundering” charges.
  • Improper Disclosures: Several of the indicted parties allegedly knew about studies that linked their products to liver toxicity, but failed to include disclaimers.
  • Improper Manufacturing: A few of the businesses and marketers caught in the sting supposedly used false certificates of analysis and questionable labeling; plus, a few parties allegedly lied about ingredients, claiming the products used natural plant extracts…but “natural” turned out to be a synthetic invention, courtesy of a Chinese factory.
  • Improper Testing: Several of the pursued businesses allegedly sold and marketed dietary supplements without first determining the safety of their products.
  • Recidivism: At least one of the targeted parties was allegedly given fair warning to stop sales on one of their products. But according to reports, instead of complying, the company executives purportedly engaged in a “surreptitious, all-hands-on-deck effort to sell as much” of the product “as quickly as possible.”
Government officials also targeted marketers for using weight loss claims like *shed five pounds in four days with one pill, or up to 20 pounds in 16 days with four pills.*

What Consequences Did the “Busted” Parties Face?

  • Asset Seizures: Not only did some of the affected parties lose dozens of investment accounts, but they also lost real estate, luxury goods, and sports cars.
  • Bans and Promises: Presumably, the guilty parties will – if they haven’t already –be made to sign promissory agreements pledging to rebuke “unfair and deceptive marketing” in the future.

Additional Resources

If you’re in the business of manufacturing or marketing dietary supplements, check out the resources below.

Speak To A Dietary Supplement Marketing Attorney

Kelly Warner is an Internet law firm that regularly works with entrepreneurs in the supplement marketing space. We’ve helped businesses and FBA sellers escape tight jams. Our attorneys frequently conduct compliance reviews for marketers and e-commerce retailers.

When you’re ready, get in touch. We look forward to working with you soon.

ATTN BUSINESS OWNERS: THE FTC NOW FINES FOR BEING HACKED!

FTC can fine for being hacked
Yep. The FTC can fine for being hacked. Not the hackers, but the businesses that are breached.

Is your online security house in order? If not, stop what you’re doing and contact a digital security guru, pronto – especially if you collect and store customers’ personal and financial information. Why? A U.S. court recently ruled that the Federal Trade Commission can pursue companies that fail to sufficiently protect consumer data.

In other words: If someone hacks into your business, YOU could be held responsible and fined into submission. Yes, the FTC can now fine for being hacked!

Wyndham Hotel Hack

The Appeals Court ruling was a result of Wyndham Hotels and Resorts’ data breach from a few years back. The high-profile hack exposed approximately 619,000 records and allegedly resulted in $10.6 million in “fraudulent charges.”

FTC’s Argument In Hacking Case: Company Did Not Do Enough To Protect Consumer Data

When pursuing the case, FTC staffers identified four points of protest. According to available reports, Wyndham allegedly:

  • Wasn’t using an appropriate firewall at the time of the breach;
  • Didn’t encrypt customers’ credit card information;
  • “Failed to address known vulnerabilities”;
  • Maintained a poorly managed network – so much so that staffers weren’t aware which computers were connected to it.

The FTC Can Now Fine For Being Hacked

Though the FTC has been granted new leeway in regards to punishing companies that are hacked, the agency is still murky on what constitutes the “reasonable steps” a company should follow to prevent a security breach.

It’s wise to work with an attorney who handles online privacy and security issues. The mere act of working with a firm looks good in the eyes of the law.

“But, Wait! It’s Not The Company’s Fault!” The FTC Doesn’t Care

In its defense, Wyndham argued that the company “does not treat its customers in an ‘unfair’ manner when the business itself is victimized by criminals.” But the court disagreed, reasoning:

“A company does not act equitably when it publishes a privacy policy to attract customers who are concerned about data privacy, fails to make good on that promise by investing inadequate resources in cybersecurity, exposes its unsuspecting customers to substantial financial injury, and retains the profits of their business.”

The court determined that lack of a privacy policy doesn’t preclude lax security. FTC chairperson, Edith Ramirez further explained:

“It is not only appropriate, but critical, that the FTC has the ability to take action on behalf of consumers when companies fail to take reasonable steps to secure sensitive consumer information.”

Get An Online Privacy Lawyer, Who Deals With Hacking Incidents, On Speed Dial

Some business owners may be peeved about the FTC’s new authority regarding hacks. Understandably. But as they say: there’s no use crying over spilled milk the long arm of the Federal Trade Commission. Instead, it’s best to get your digital security house in order and have a hacking lawyer on speed dial, in the event of a breach.

Contact Kelly Warner’s Internet Law Aficionados

Lawyers Daniel Warner, Aaron Kelly and Raees Mohamed are partners at Kelly Warner Law. A firm that focuses on 21st-century legal issues, Kelly Warner has grown to become one of the preeminent Internet law practices in the country, helping clients with issues related to online privacy and hacking.

To learn more about the firm, please click here. To read more about Kelly Warner’s lawyers, head here. If you’re interested in further reading regarding FTC legalities, please peruse the Federal Trade Commission section of our blog.

If you’re ready to speak with an attorney well versed in online privacy and hacking law, please get in touch. We look forward to sorting out any legal challenges you may be facing.

And remember, the FTC can now fine for being hacked, so make sure you have an online privacy lawyer on speed dial.

Article Sources

Bloomberg, J. (2015, August 25). Company Breached By Hackers? You’re Being Deceptive, According to FTC And The Court. Retrieved October 19, 2015, from http://www.forbes.com/sites/jasonbloomberg/2015/08/25/company-breached-by-hackers-youre-being-deceptive-according-to-ftc-and-the-court/