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Social Media Marketing Maven: Chrissy Teigen
Originally Posted: Monday, November 28th, 2016
When 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.
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.
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.
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.
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.”
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:
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
Originally Posted: Tuesday, September 6th, 2016
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):
Acts of “online marketing” include electronic advertising, promotional emails, paid search results, links, and embedded media “with the purpose of promoting goods or services.”
All paid and native advertising must be conspicuously marked as such.
The Chinese government reserves the right to“guard against false and misleading practices.”
Online ads for prescription medication and tobacco are prohibited.
Sellers need government approval to run digital ads for medical supplies, pesticides, vet meds, and other categories of health products.
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
Private or Public
Closest U.S. Equivalent (in focus, not valuation)
$9.9 billion – Dec 2015
Public – BIDU
$15.1 billion – 2016
Public – BABA
$482 million – 2011 (Entire Conglomerate)
Public – WB
$297.8 million – 2nd Quarter 2016
Public – WUBA
$852 million – 2011
Public – SOHU
Mix of Google and Twitch
$15.4 billion – 2015 (Entire Conglomerate)
Public – TCEHY
Need assistance with a Chinese Internet law issue? Visit our friends at Harris / Moure.
The Legal Lowdown On Pokémon Go Lawsuits & Marketing Tactics
Originally Posted: Tuesday, August 30th, 2016
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.
Internet Law 101: Virus Spoofing Can Cost Millions
Originally Posted: Wednesday, August 24th, 2016
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
Originally Posted: Friday, July 29th, 2016
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:
Ingredients (w/ amounts);
Intended Use (all intended use claims must be based on accepted scientific evidence);
Safety Information (including contraindications, side effects, possible reactions and interactions);
Use Instructions (proper dosage and other ingestion guidance);
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:
“Calcium builds strong bones.”
“PRODUCT X helps reduce cancer.”
“St. John’s Wort minimizes anxiety.”
“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
Originally Posted: Sunday, July 24th, 2016
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.
Thinking of starting a Fulfillment by Amazon business? Smart idea. In 2015 alone, FBA sellers shipped over a billion items to more than 185 countries, and experts predict it’ll be a multi-billion-dollar industry by 2020.
What Is an FBA Business?
FBA stands for Fulfillment by Amazon. How does it work? Here’s an (admittedly oversimplified) explanation.
Step One: Third party sellers (i.e., work-from-home entrepreneurs) either find or create a product. Typically, people source items from Chinese manufacturers because it’s infinitely cheaper than stateside options. Yes, most folks would prefer to use American manufacturers (understandably); but the price point is almost always too high for startups.
Step Two: Once the inventory is ready, the seller has it shipped directly to an Amazon warehouse.
Step Three: Sellers advertise their products on Amazon and elsewhere online.
Step Four: When a customer places an order through Amazon.com, Amazon handles the shipping and inventory logistics.
At first, it may sound logistically complicated, but, typically, after reading a few websites (and books) on the subject, most people are up and running.
The Benefits of Running an FBA Business
Starting an FBA business is a great decision. Not only is the profit potential high, but e-commerce ventures can, theoretically, improve your happiness quotient.
How? Let’s break it down.
Of course, no business is without its stressors. But by letting Amazon handle quotidian administrative duties — returns, inventory management, shipping — many typical headaches associated with running a retail business are removed.
In many ways, an FBA business is the ideal residual income opportunity because (depending on the product) it falls into the “set it and forget it” model. Now, of course, the more you market, the better your products will sell.
Again, since Amazon assumes responsibility for shipping, returns, and warehousing administration, sellers have fewer logistical elements to administer. Plus, the e-commerce model is super scalable; you can start a business for as little as $400; plus, you don’t have to bother with fixed assets. In a statement, a company spokesperson explained:
“With FBA, we take care of the order fulfillment, customer service and product returns, so that sellers can focus on growing their businesses and sourcing products that delight customers. In 2015, sellers worldwide adopting the FBA service grew more than 50 percent year-over-year. We are getting a tremendous response from sellers and we will continue to listen to their feedback to make the FBA service even better.”
Less stress, more money, and fewer responsibilities is pretty much the recipe for happiness. So, there you have it, starting an FBA business CAN lead to a more comfortable, stable life.
To read more about laws and news that affect the private label e-commerce space, head here.
Yes, Amazon Sues Fake Reviewers
Originally Posted: Wednesday, June 8th, 2016
Online Marketing Legal Reminder: Avoid using and writing paid reviews for Amazon.com. Why? You could be sued or banned!
Amazon is cracking down on phony feedback. Not only is it suing fake review services, but also suspending complicit seller accounts. In fact, just the other day, Amazon announced a lawsuit against a group of third-party sellers who used “sock puppet accounts” to post phony, positive reviews on their product pages.
“We will continue to pursue legal action against the root cause of reviews abuse — the sellers and manufacturers who create the demand for fraudulent reviews, as well as the ecosystem of individuals and organizations who supply fraudulent reviews.”
Ongoing Dragnet Against Fake Review Services
Amazon is obsessed with review integrity because customer posts fuel the e-commerce engine. To that end, last year, the company litigiously targeted parties that allegedly contributed to review corruption. Since then, the online retail giant has targeted about one-thousand phony feedback operations and forced many offline.
Is Amazon’s Review Integrity Initiative Working?
Are Amazon’s attempts to stomp out phony feedback working? Depends on how you assess the situation. Sure, more people now know about the company’s anti-fake review stance, prompting some marketers to stop using them. But, due to the pop-up-shop nature of review services, attempts at extermination have ultimately proven to be whack-a-mole level frustrating.
Need Help With An Amazon Review Problem?
User reviews are essential to the e-commerce success formula. For sellers, the quality and quantity of customer feedback can mean the difference between success and failure.
And unfortunately, unscrupulous marketers use disparaging reviews as a negative SEO tactic.
If you’ve been hit, and you’re ready to right a wrong, get in touch immediately. Our team of attorneys and techs has helped tons of people and businesses overcome various review issues. We can help you, too.
Don’t wait. The longer phony reviews fester, the more damage they can do.
Get in touch immediately to get back on a profitable path, free of fake review problems.
Native Advertising Rules Are Now In Effect (And The FTC Is On The Hunt)!
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.