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.

Amazon Sues Over Fake Reviews: FBA News

Picture of fake dollar bill to accompany a blog post about Amazon sues over fake reviews

Amazon Does Not Suffer Fools Fake Reviews

Amazon sues over fake reviews, and actively engages courts to enforce its “zero tolerance” stance. Recently, the company filed yet another lawsuit against several phony feedback facilitators.

Amazon Sues Over Fake Reviews

In the past year alone, the online retailer has already sued hundreds of businesses and individuals who create and deploy fake reviews. (You can read about other instances here, here, and here.)

Why Does Amazon Hate Fake Reviews?

Amazon — (and the Federal Trade Commission, for that matter) — views fake reviews as an act of unfair competition. Or, in legalese, buying fake reviews violates Section 5 of the FTC Act because the practice qualifies as an intentional attempt to mislead consumers.

Amazon explained its position to TechCrunch

“Our goal is to eliminate the incentives for sellers to engage in review abuse and shut down this ecosystem around fraudulent reviews in exchange for compensation. As long as this type of abuse exists, we will continue to take enforcement and legal action against sellers participating in fraudulent reviews.”

Discount-For-Review Programs Are Also Against Amazon Policy

The news comes in the wake of Amazon’s announcement to purge the site of incentivized reviews (exception: books).

What does this mean for e-commerce entrepreneurs? In all probability, traditional advertising will make a triumphant comeback.

Is Amazon Hamstringing Startups?

In addition to investor cynicism, Amazon’s recent crackdowns have sparked a concern flame in the e-commerce industry. Is Amazon, in a way, raising the barrier of entry way too high, by ultimately forcing startups to outlay a larger initial marketing spend?

Fake Reviews v. Discount-For-Reviews: Both Are Now No-Nos on Amazon

What is the difference between fake reviews and discount-for-review programs? The former conspicuously violates Federal marketing regulations; the latter is (perhaps, it’s now more accurate to say, “was”) an enormously helpful startup marketing tool — which also spawned an entire promotional services niche, feedback facilitation.

Or, to put it simply: discount-for-review programs helped grow the online business economy.

Difficult But Necessary?

On account of Amazon’s no-holds-barred approach to exterminating solicited reviews, a big e-commerce question now looms: Do Amazon’s actions fall into the “difficult-but-necessary” category? Did company quants crunch numbers and discover that its third-party selling programs were ballooning at a breakneck — and unsustainable — speed, flooding the platform with potentially problematic digital detritus?

Because here’s the thing: Amazon is currently the top-dog, and as such, greatly exposed. It must be careful. Other online retailers are patiently crouching in the tall weeds, waiting for the perfect opportunity to pounce — and that opportunity could be Amazon’s deteriorating respectability. After all, if the platform becomes synonymous with counterfeit goods and phony reviews, the public will start to look elsewhere.

Adjust To Survive

Now, does all this news spell doom and gloom for FBA sellers? No. Surviving amounts to adjusting. Brands and marketers should consider:

  • Launching products at a low price, along with a well-executed customer satisfaction email campaign, which encourages consumers to leave reviews.
  • Readjusting budgets to include other types of “Off Amazon” marketing efforts.
  • Adding an unexpected packaging surprise. Why? Because people are more likely to leave a review if they’re delighted by an unanticipated treat. This tactic also has the added advantage of acting as a counterfeit deterrent.

Need Advice From An Amazon E-Commerce Attorney?

Our firm helps business owners overcome online review challenges, in addition to other Internet business issues, like account suspensions, counterfeiting, and intellectual property troubles.

Source

Supplement Marketers: Are You Crossing The Language Compliance Line?

picture of apple filled with dietary supplements to accompany blog post about supplement marketersLegal advice for supplement marketers: Be careful wording promotional materials. Strict rules apply. Breaking them could cost you millions.

FDA Takes Notice Of Trade Show Marketing Materials

Picture it (TM Sophia Petrillo). March 2016; the Natural Products Expo West Center [wavy lines transport us to a flashback]…

Health enthusiasts buzzed round the nutraceutical carnival; aromatherapy dominated olfactory senses, and a Washington State supplement brand charmed marketing materials into recycled tote bags.

Several weeks later, the material found its way to the FDA, who in turn issued a stern warning about “non-compliant disease claims.”

What Phrases Should Supplement Marketers Double Check?

So, with what wording did the FDA take issue? Here’s a list:

  • “…used in herbal medicine to help slow the progression of disorders for the eye…”
  • “…lowers blood pressure in hypertensive individuals…”
  • “…lower cholesterol levels…”
  • “…protects against cardiovascular diseases…”
  • “…slow the progression of diabetic and hypertensive retinopathy…”
  • “…protect against development of cancerous prostate cell lines…”
  • “…clinically effective in treatment of alcoholic cirrhosis…”
  • “Clinically improves cognitive function [for Alzheimer’s, vascular or mixed dementia patients].”

Are the above expressions always out of bounds? No. It’s important to understand that context is key.

Play it safe by having a marketing lawyer review your advertising materials before launching a campaign — everything from your website to trade show pass outs.

Interested in other marketing legal issues? Jump this way.

Are you a supplement marketer in need of a compliance review? Get in touch.

Source

Amazon’s New Review Policy: Big Changes

Picture of two business people on couch to accompany blog post about Amazon’s new review policy
Amazon’s new review policy crashed into Planet-Online-Retail, and now feedback facilitators are working round the clock to adjust business models.

Let’s take 3 minutes to outline the situation — in plain language — and examine how the change will affect Amazon sellers and reviewers.

How Amazon Reviews Used To Work

Before this e-commerce October surprise, Amazon let sellers offer discounts in exchange for product reviews, so long as the reviewer included proper disclosures. The system seemed to work and even spawned review facilitation businesses that helped vendors plan and execute discount-for-review programs.

But Amazon never seemed entirely comfortable with paid reviews, of any ilk. In fact, to combat the trend, platform engineers deployed a “learned algorithm that gives more weight to newer, more helpful reviews” and implemented stricter “verified purchase” badge requirements.

Amazon has even sued a few unlucky pay-for-review services, which you can read about here and here.

Amazon’s New Review Policy Points

So, what was the big change? In short: Sellers can no longer offer free products and discounts in exchange for a review. Here is a handful of specific points:

  • Sellers can’t use third-party services to loophole around the restriction.
  • The policy took effect immediately, but vendors shouldn’t worry about past posts. However, Amazon may remove old reviews “if they are excessive, and don’t comply with prior policy.”
  • Sellers CAN “continue to offer discounts and promotions as long as they are not offered in exchange for reviews.
  • Ignoring Amazon’s new review policy is grounds for account suspension.
  • Review facilitators can no longer require members to leave reviews.

Authors Are Exempt From Amazon’s New Review Rules

Which segment of Amazon World doesn’t have to worry about the new review guidelines? Authors. Giving away advanced copies of a book, in exchange for a review, is a publishing industry solemnity — and the online retail giant doesn’t want to disturb the ancient institution. In Amazon’s exact words, the company will “continue to allow the age-old practice of providing advance review copies of books.”

What’s VINE Got To Do With It?

Discount-for-feedback programs are strictly prohibited “unless […] facilitated through the Amazon Vine program.”

Wait, what?

Yep, Amazon is now the only acceptable channel for early offer arrangements. But even that’s a slight misnomer because Amazon doesn’t “incentivize [Vine members to give] positive star ratings, attempt to influence the content of reviews, or even require a review to be written.”

Is Amazon Sticking It To The Proverbial “Little Guy”?

Amazon’s new review policy press release states that “when done carefully,” incentivized reviews “can be helpful to customers by providing a foundation of reviews for new or less well-known products.”

To put it another way: Amazon admits that “incentivized reviews” help online retail startups, but it’s outlawing the practice regardless? Apparently so.

Now, does this mean it’ll be impossible to start a successful FBA store? Not at all. Most review facilitators have already operationally adjusted to the change.

But beyond that, in the simple terms, people like reviewing products. Stick to an effective marketing plan — which includes follow-up e-mails and superior customer service — and you shouldn’t notice a seismic change in sales.

Online Retail Legal Reminders and Considerations

Before our 3-minutes are up, we wanted to leave you with 3 legally minded thoughts:

  • “Unfair and deceptive marketing” rules do apply. Adhere to them or risk and FTC investigation and fine.
  • In light of Amazon’s new review policy, feedback services should make a Herculean effort to contact their review-writers’ networks. Don’t forget, a review that includes something to the effect of “received at a discount for an honest and unbiased review,” is now non-compliant.
  • Account suspension is reversible in some instances. Talk with an online retail consultant who can help pinpoint the exact problem, and provide the best plan of action to restore your account.

Good luck with Amazon’s new review policy. If you have questions, get in touch.

China’s New Online Marketing Law

China online marketing law
Quick question: Do you market or advertise on Chinese websites? Did you know a new Chinese online marketing law went into effect on September 1, 2016?

According to Eugene Low, a partner at the Hong Kong office of Hogan Lovells, the previous regulations were “a bit piecemeal” and not precisely defined. This law changes all that.

A Short List Of China’s Digital Promotion Rules

Here’s a snapshot of China’s online marketing laws (some are old, others new):

  1. Acts of “online marketing” include electronic advertising, promotional emails, paid search results, links, and embedded media “with the purpose of promoting goods or services.”
  2. All paid and native advertising must be conspicuously marked as such.
  3. The Chinese government reserves the right to“guard against false and misleading practices.”
  4. Online ads for prescription medication and tobacco are prohibited.
  5. Sellers need government approval to run digital ads for medical supplies, pesticides, vet meds, and other categories of health products.
  6. All paid advertising must be clearly marked in search results.

Additionally, the Chinese government expects businesses to hire new employees to fulfill online marketing requirements and monitoring.

The Roots Of China’s New Online Marketing Law

Earlier in the year, a man suffering from a rare type of cancer died after participating in a hospital drug study advertised on the search engine Baidu. His death stirred controversy, and many citizens “accused Baidu of taking money to promote less proven treatments.” Even the Communist Party’s main newspaper, People’s Daily, tossed some shade Baidu’s way by publishing an article entitled Commentary: Death of college student raises questions on Baidu’s ethics. Here’s an excerpt:

“Companies that were involved in services that deal with human life should be particularly conscientious of their duties when conducting their businesses. Billions of net users trusted Baidu for their search engine and online forum services, the company is hence responsible for the trust and is obligated to taking up their social responsibilities.”

On account of the incident, search engines operating in China must now make sure SERP ad returns don’t exceed 30% of a page’s content.

Who Will Be Affected By China’s New Online Marketing Rules?

Are China’s new promotional laws going to disrupt the market? Probably not. Will they have AN impact? Sure. But a giant one? Unlikely.

China already enforces strict Internet regulations; this latest statute is simply the cherry-on-top — a finishing detail on the country’s longstanding conservative approach to mass media.
Will the online promotion standards impact profits? Maybe. Maybe not. This WSJ article explained:

[New] policies most likely won’t diminish businesses’ bottom lines because pay-for-click ads often run on a bidding system for a limited amount of space. Other analysts, however, said taxes for businesses may increase because the new rules clearly define paid-search results as advertisements.

Major Chinese Websites That Will Probably Be Affected By The New Online Marketing Laws

Chinese Website Revenue Private or Public Closest U.S. Equivalent (in focus, not valuation)
Baidu $9.9 billion – Dec 2015 Public – BIDU Google
Alibaba $15.1 billion – 2016 Public – BABA Amazon
Sina Weibo $482 million – 2011 (Entire Conglomerate) Public – WB Twitter
58.com $297.8 million – 2nd Quarter 2016 Public – WUBA Craigslist
Sohu $852 million – 2011 Public – SOHU Mix of Google and Twitch
Tencent Weibo $15.4 billion – 2015 (Entire Conglomerate) Public – TCEHY Twitter

Need assistance with a Chinese Internet law issue? Visit our friends at Harris / Moure.

The Legal Lowdown On Pokémon Go Lawsuits & Marketing Tactics

pokemon Go Lawsuits
Here Come The Pokémon Go Lawsuits (& Other Marketing Legalities to Consider)

The micropayment miracle, Pokémon Go (PoGo), currently holds the prize belt for “most popular game of all time,” and in short few months, it’s raked in over $210,000,000. Market experts expect revenues to hit $1.1 billion by year’s end, and savvy brick-and-mortar businesses are PoGo promoting — to huge success.

But, dear reader, don’t be lulled into submission! The Pokémon Go story is NOT all smiles and profits. [DUN, DUN, DUN!]

Oh yes, there’s the dark side of Pokémon Go. The side that’s spawned a PoGo disaster map; the side that’s raised get-off-my-lawn stakes to lawsuit level; the side that has people wondering, “Can I sue Pokémon or Nintendo for injuries sustained in the line of PoGo battling!?”

Is Pokémon Go ushering innocents down a dangerous personal injury path? And if so, can the game’s maker be held liable? Moreover, what legal aspects must be considered when promoting a business through PoGo?

Let’s examine this mobile gaming phenomenon, with legal scalpels.

Pokémon Go Lawsuits

Nintendo aims to “put smiles on people’s faces.” Yet, not every civilian is grinning over Pokémon Go. In fact, two households have definitely NOT caught the PoGo craze; instead…they’re filing Pokémon Go lawsuits — alleging nuisance and unfair enrichment.

Get Of My (St. Claire Shores, Michigan) Lawn

The Place: Wahby Park, St. Claire Shores, MI. A point of pride in a middle class enclave, Wahby is a public recreation area that doubles as a Pokéstop and Poke gym.

The Problem: People who live near Wahby aren’t happy. They claim Poké players are driving on private lawns, parking on public streets, tearing up gardens, and…looking at them! One resident lamented, “I don’t feel safe sitting on my porch!” Another referred to the situation as “a nightmare.” Someone else said she was “afraid to go to sleep,” and a man cursed his lack of prescience, lamenting: “If I knew [Pokémon Go] was coming, I’d have sold my place two months before it got here!”

An online anti-PoGoer warned the game was “ruining the quality of life for many Americans,” and a seemingly committed jingoist, who clearly isn’t a free market proponent, cautioned, “It’s a form of destrictive [sic] society, designed by the Chinese. And it’s a shame [Pokémon Go Players] have the power to vote, because it seems that they are easily brain washed. Which could lead this country to it’s [sic] destruction.”

Local Solutions?: Several residents near Wahby Park did seek redress with the city council — and the council did take steps to remedy the situation, like increasing signage, blocking off private roads, and increasing nightly police patrols. Apparently, however, the measures didn’t satisfy one couple who is moving forward with a Pokémon Go lawsuit.

The Lawsuit: One of the disrupted homeowners is suing Niantic, Inc., The Pokémon Company, and Nintendo Co. Ltd. for “nuisance and unjust enrichment.” Why unjust enrichment? Well, the plaintiffs feel that their lawn, being so close to a public park, has helped PoGo become a financial phenomenon. Plus, the lawsuit “seeks to stop designating GPS coordinates on or near private properties without permission.”

Local Opposition: Some Whaby Park Pokémon players are side-eyeing the plaintiffs. One young father interviewed for a local television station explained his viewpoint:

“For the majority, for the mass populous that comes here to play Pokémon, they’re here to have fun and enjoy the nature and meet cool people. We’re not trying to trespass anybody.”

Likely Outcome: Will the homeowners win? Believe it or not, they have a sliver of a shot. There’s a legal standard known as the “attractive nuisance doctrine,” which says homeowners can be held liable for a child’s death or injury if:

  • The landowner keeps something potentially dangerous on their property (i.e., broken car on lawn, trampoline, pool without fence (in some jurisdictions)).
  • The landowner knows children are around who might trespass.
  • The landowner knows that something on their property may endanger trespassing children.
  • The children are too young to recognize the risk.
  • The landowner can fix the problem at a reasonable cost.
  • The landowner does nothing.

Now, this lawsuit isn’t directly related to children harmed by Pokémon Go, but attorneys could argue that Niantic and Nintendo should have foreseen PoGo’s negative consequences. It’s a stretch, but not an impossibility.

That said, PoGo’s terms of service includes an arbitration clause that, in part, reads:

“[D]isputes between you and Niantic will be resolved by binding individual arbitration, and you are waiving your right to trial by jury or to participate as a plaintiff or class member in any purported class action or representative proceeding.”

Does that mean nobody can ever sue Niantic or Nintendo? Nope. Because also embedded in the ToS is a stipulation allowing customers to opt out of the arbitration clause, via email, within 30 days of downloading.

So, bottom line: who will likely win this Pokémon Go lawsuit? If we’re hypothetically trading Vegas odds, then sure, Niantic and Nintendo probably win this one. But you never know. At this point, we cab only be sure that the Courts and clerks are tackling the issue.

Pokémon Go Marketing: Ideas & Legal Considerations

Marketing gurus agree: If you’re a brick-and-mortar business that isn’t using PoGo to lure customers (pun intended), then you’re missing out on…well…money. As one Reddit user urged, “[Using Pokémon Go to promote] is the greatest investment you can make right now.”

So, how are business owners putting PoGo to work?

  • Bars, pubs and restaurants are becoming Poké gyms, then offering discounted drinks for members of the team that holds the gym.
  • Animal shelters are encouraging people to pick up dogs to walk while they’re out for Poké play, which has led to an increase in pet adoptions (Nice!).
  • Creating power stations for “phone refueling.”
  • Following the game and using social media to advertise when a rare Pokémon is in an establishment.

Are the promotions working? Heck yeah! As another Reddit user succinctly said, “[Pokémon promotions brought him] SO. MUCH. FOOT. TRAFFIC.”

“Put down a lure and watch the customers flow in,” advised another.

Tips To Avoid Pokémon Marketing Pitfalls

  • Account Security: Pokémon Go registration means handing over access to your entire Google account. Though Niantic does a wonderful job at keeping secure, the threat of a breach still lurks. Consider creating a new e-mail for your Pokémon Go marketing efforts in case disaster does strike.
  • Malware Concerns: Malware is starting to spread throughout the Pokéverse. Avoid risk by downloading from a reputable source.
  • Play Nice: Don’t try to sabotage a competitor’s PokéMojo. What do we mean? The app includes a Pokéstop and Poké gym removal form. So, let’s say Frank is in direct competition with Mary. They both own and operate ice cream parlors on Main Street. Being a gamer, Mary adopted Pokémon Go early and started using it to promote her business. It didn’t take long for her shop to become both a Pokéstop and a Poke gym. Frank, saw the amount of foot traffic Mary’s Poké-efforts garnered — and he didn’t like it. One day, when feeling particularly spiteful, Frank decided to sabotage Mary’s success by submitting a Pokéstop / Poké Gym removal request for Mary’s business. Frank’s actions could be considered unfair and deceptive marketing, and he could be fined — heavily — by the FTC. (And so can you, if you “pull a Frank.”)

Expect to read a lot about Pokémon Go lawsuits over the next several months. But the question remains: will the PoGo craze outlasts the lawsuits it spawns? Only time has the answer.

Kelly / Warner is a top-rated law firm that focuses on Internet, startup, and eSport law. To learn more about the firm, jump this way.

Internet Law 101: Virus Spoofing Can Cost Millions

virus spoofing
Is virus spoofing against regulations? You bet your spam it is. What are the consequences for getting caught? The FTC could force you to fork over millions, which has the power to extinguish an operation.

What Is Virus Spoofing?

Virus spoofing is the act of tricking someone into thinking their computer is infected. Spoofers typically dispatch pop-up warnings onto machines.

The pop-ups can be convincing and usually direct people to buy anti-virus programs. Sometimes the program is completely worthless; other times it works, but is needless. Whichever the case, it’s considered unfairly manipulative and contravenes marketing regulations.

Who Has The Authority To Sue Over Virus Spoofing?

The Federal Trade Commission (FTC) is the nation’s consumer watchdog. Established in 1914, the agency initiates marketing investigations against businesses and individuals — a privilege outlined in the Federal Trade Commission Act.

Attorneys general can also sue over such scams.

Why Is It An Actionable Offense?

The Federal Trade Commission considers Virus spoofing unfair and deceptive marketing, and therefore actionable under the FTC Act. In a recent case, the FTC explained that the defendant “subjected [consumers] to high-pressure deceptive sales pitches for tech support products and services.”

State of Federal Offense?

Deceptive spoofers can face both federal and state punishments.

Accused Of Virus Spoofing?

Has someone accused you of virus spoofing? Next question: “Did you do it?” If yes, contact a lawyer and explain the situation. (Don’t worry; he or she isn’t going to judge you.)

In the best case scenario, your lawyer will be able to loophole you out of the predicament. If not, he or she may be able to diminish the financial blow. Lawyers in this niche know how to negotiate with the FTC, navigate the investigation, and secure settlements with little fanfare (to reduce negative press).

Ready To Consult With An Internet Law Attorney Who’s Dealt With Virus Spoofing Investigations?

If you’re reading this post, there’s a chance you may be on the FTC’s radar. A word of advice: ignoring the issue won’t make it disappear.

But we can help.

Get in touch today; and together, we’ll start solving problems, instead of letting them fester. Let’s talk.

A Crash Course In Dietary Supplement Law For Online Marketers

dietary supplement law

The dietary supplement business is booming. Thanks to plug-n-play e-commerce engines like Amazon, folks are flocking to establish foot holes in the niche. But the industry is not without its headaches. Let’s take three minutes to review some legal issues germane to the space.

Dietary Supplement Law Tip #1: Mind The DSHEA

In 1994, after several failed attempts, U.S. politicians passed the Dietary Supplement Health and Education Act. Its purpose? DSHEA legally defines “dietary supplements” and delineates labeling and logistical parameters for the industry.

Why Some People Hate DSHEA

A notoriously controversial law, opponents say it favors dietary supplement manufacturers and allows for dangerous products to hit shelves without sufficient testing.

Important Takeaways from the DSHEA

  • Dietary supplement is legally defined as “a product taken by mouth that contains a ‘dietary ingredient’ intended to supplement” one’s nutritional intake. Dietary ingredients may include: vitamins, minerals, herbs or other botanicals, amino acids, and substances such as enzymes, organ tissues, glandulars, and metabolites. Dietary supplements can also be extracts or concentrates, and may be packaged as tablets, capsules, softgels, gelcaps, liquids, or powders.
  • DESHEA exempts tobacco as a dietary supplement.
  • Dietary supplements are categorized as food, except for the purposes of drug definition.
  • The following items must be included on dietary supplements:
    1. Ingredients (w/ amounts);
    2. Intended Use (all intended use claims must be based on accepted scientific evidence);
    3. Safety Information (including contraindications, side effects, possible reactions and interactions);
    4. Use Instructions (proper dosage and other ingestion guidance);
    5. Company Information (manufacturer, production source and batch info)
  • Different rules apply for ingredients and supplements released before 1994 and those released after, though the variants are too nuanced for this article. If you think your dietary supplement product may have a release-date-related issue, explain your exact situation to an attorney who can point you in the right direction.
  • A whole lot of people despise DSHEA because they feel it gives dietary supplement companies carte blanche to endanger the public. On the topics, a famous naysayer famously opined: “The deal that DSHEA and NCCAM made with the public was this: Let the supplement industry have free reign to market untested products with unsupported claims, and then we’ll fund reliable studies to arm the public with scientific information so they can make good decisions for themselves. This “experiment” (really just a gift to the supplement industry) has been a dismal failure. The result has been an explosion of the supplement industry flooding the marketplace with useless products and false claims.” – Steven Paul Novella, prominent skeptic and clinical neurologist

Dietary Supplement Law Tip #2: Vet Suppliers Like Your Financial Security Depends On It (Because It May)

The first step to dietary supplement millions is vetting. A whole lot of it. Especially when dealing with overseas manufacturers. Remember, a factory in China (or most places outside of the U.S.) is under no obligation to observe U.S. standards.

And here’s the truly tricky part: some foreign suppliers will feign compliance to get a job. When it happens, cost-effective legal resources are few and far between. Bottom line: don’t trust a supplier’s word. Vet, vet, vet!

And here’s the truly tricky part: some foreign suppliers will feign compliance to get a job. When it happens, cost-effective legal resources are few and far between. Bottom line: don’t trust a supplier’s word. Vet, vet, vet!

So, how do you dodge shady manufacturers? If possible, hook up with an inspector in the manufacturing country. Have him or her do on-site visits; boots-on-the-ground due diligence. Moreover, it’s a plus to have a “translator” on your side. After all, as they say, a lot is lost in translation — both linguistically and sometimes culturally.

Dietary Supplement Law Tip #3: Comply With FTC Marketing Regulations

Think of the Federal Trade Commission as America’s consumer watchdog. If you market to U.S. residents, you’re beholden to FTC regulations and guidelines.

And though the dietary supplement industry is semi-self-regulatory, brands can’t ignore industry standards. To that end, marketers have developed various dietary supplement disclosures to protect against FDA and FTC actions, the most popular being:

“This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.”

Dietary Supplement Law Tip #4: Comply With FDA Standards

Dietary supplements are ingestibles, which means sellers must keep up-to-date on Food and Drug Administration rulings and decrees. Maintaining can be difficult because the list of banned substances is ever-changing.

To avoid an FDA action, keep up-to-date with the latest standards. How?

  • Set up Google alerts for ingredients contained in your dietary supplements; spend a half hour a day reading through them. If something pops up, take action ASAP.
  • Partner with a dietary supplement lawyer. He or she can be your regulatory watchdog and alert you of upcoming changes. Moreover, attorneys may be able to help tweak your business model to increase your profit potential (and asset protection).
  • Take 2 minutes a day to check out the FDA’s website. Whenever the agency takes action, a notice is posted online.

Dietary Supplement Law Tip #5: Consult Professionals About Structure-Function Claims

The FTC and Attorneys General — a.k.a., the people who can sue for “unfair and deceptive marketing” — are super sensitive about structure-function claims. So, what’s a structure-function claim, you ask? Basically, it’s any statement that addresses how a product affects the body. Classic structure-function claims include:

  1. “Calcium builds strong bones.”
  2. “PRODUCT X helps reduce cancer.”
  3. “St. John’s Wort minimizes anxiety.”
  4. “WEIGHT LOSS PRODUCT will naturally reduce your appetite.”

Marketing campaigns that include structure-function claims should always be audited by an attorney before launch. Why? Because if you cross the compliance line, you may be saddled with a huge fine.

Who Can I Call With My Dietary Supplement Business Questions?

Kelly Warner helps clients overcome e-commerce issues. We’re a team of top-rated attorneys, techs and marketing aficionados who’ve assisted scores of online sellers with everything from FTC compliance to listing hijackings. Head here to the online marketing / e-commerce law section of our website. If you’re ready to speak with a dietary supplement law fixer, get in touch today.

Dietary Supplement Law: Court Says Re-seller Is Counterfeiter

dietary supplement law
A recent dietary supplement law conflict will likely affect similar cases in the future.

Dietary supplement counterfeit claim news: A judge awarded 5-Hour Energy — an over-the-counter drink sold at Walgreens or CVS — over $20 million dollars after third-party distributors took liberties with the brand’s labeling.

Anyone involved in the sale or marketing of supplements should take 3 minutes to read about this case. It’s serves as a reminder that hyper-aggressive sales tactics can decimate profits.

Dietary Supplement Law: Counterfeit Dispute

5-Hour Energy usually reaches store shelves through re-sellers and third-party marketers. The lawsuit we’re about to discuss involved one such deal that went awry.

In 2009, Living Essentials granted a small California business the exclusive distribution rights for Mexico. New packaging and labels tailored to Spanish-speaking consumers — plus discounted stock options — were all part of the deal.

What went wrong?

Well, according to Living Essentials, the pair initiated a scam that involved:

  • Selling the Spanish-labeled products at higher prices than the English-labeled products, in the United States instead of Mexico;
  • Selling its supply to U.S. distributors who replaced the 5-Hour Energy label with their own brands’ labels.

Did The Distributor Break A Contract By Reselling Products?

Living Essentials (LE) felt their Mexico distribution partners were violating parts of the Lanham Act. As far as LE saw it, the defendants knowingly produced fake goods at Living Essentials’ expense.  The defendants, conversely, insisted that they operated within the contract’s bounds.

And it’s with those viewpoints that the two parties embarked down Lawsuit Lane.

Now, as far as dietary supplements go, 5-Hour Energy is a huge player, so the legal battle fell into the “high-profile” category. And we all know what high profile lawsuits look like: protracted, nuanced and teeming with motions. This particular case lasted four years and involved fastidious vendor investigations, counterfeit-related court orders, and jurisdictional changes; plus, the defendants clawed deep during appeals, involving over 70 different entities.

Court Makes Dietary Supplement Law Ruling: Distributor Didn’t Have Resell Rights

Ultimately, the plaintiffs, Living Essentials, won this dietary supplement counterfeit case. In a 94-page opinion, the court explained how the defendants violated the Lanham Act by running a private label side business that contravened the original distribution contract. Interestingly, the Court also laid blame at the feet of a convenience store that sold the re-branded products and ordered it to pay part of the damages.

Dealing With Dietary Supplement Law Issues?

Our firm helps private label sellers and marketers with dietary supplement law issues. We answer questions, write contracts, help clients defend themselves against FTC investigations, represent counterfeit victims, and sort out listing hijackings.

To put it simply: We resolve issues that plague online marketers and sellers.

To learn more about our firm, head here. Ready to consult? Head here.