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

Is It Legal To Post Online Reviews Of My Product?

is it legal to post reviews of your own productsCan I post online reviews of my products? The answer: Only if you prominently disclose your connection to the product. It’s against FTC rules to litter the Internet with phony product reviews that appear impartial but aren’t.

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

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

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

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

The Four Main Rules Of Online Reviews

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

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

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

Connect With An Online Product Marketing Attorney

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

Article Sources

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

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

Amazon Review Loophole & Feedback Blackmail: E-commerce

Amazon review loophole

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

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

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

But instead of throwing in the towel, marketers did what they do best…adjusted. Many started offering “list optimization” and “list maintenance” services.

How did the new system work? Promotions experts enlisted users to up-vote helpful reviews; instead of writing posts, operatives boosted positive reviews.

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

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

Marketing Blackmail: Sabotaging A Listing To Drum Up Business?

A recent New York Post article touched on an Internet law issue, about which we’re also hearing rumblings.

Here’s an excerpt.

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

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

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

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

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

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

Blackmailing businesses, via fake review manipulation, undermines “truth-in-advertising” standards and various Federal Trade Commission “unfair and deceptive” marketing rules. If someone is unfairly attacking your website or product listing, in this manner, we may be able to help. Our team has assisted countless businesses with online review issues of this nature.

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

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.

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

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.

Shopify and Stripe: Account Troubleshooting and Legal Advice

shopify and stripe
Let’s take a few minutes to review the Shopify and Stripe alliance. We’ll:

  1. Go over some background info about both companies;
  2. Examine a few issues, like the prohibited businesses list; and
  3. End with some solutions for commonly reported merchant challenges.

Shopify and Stripe At A Glance

Shopify’s Origin Story

Several years ago, some Canadian snowboarding enthusiasts hopped on the startup train. Their goal? To sell equipment online. But our intrepid entrepreneurs didn’t want a generic online store:

They wanted to stand out; they wanted unique!

To achieve said goal, instead of using a standard payment gateway, the group developed a custom solution.

Quickly, they realized that selling snowboarding stuff was great and all, but releasing their skookum e-commerce platform might be even better.

Thus, with goal in mind, the group regularly convened at a coffee shop. And one day, the phoenix that is Shopify rose from a puff of java-infused, brain fumes.

So, who uses Shopify? People who want a highly customizable solution for their online stores. What do professional critics think of Shopify? CNET described the platform as “clean, simple, and easy-to-use.”

Shopify and Stripe Alliance

Who is Stripe?

HQ’d in Ireland, John and Patrick Collison founded the company in 2010. Simply put, Stripe is payment gateway processor for individuals and businesses without private merchant accounts . It’s similar to PayPal.

Stripe is Shopify’s preferred checkout system.

Common Shopify-Stripe Issues

Here’s the frustrating truth: in the world of online payment processors, chaos is the default setting. Problem-free payment processors fall into the same category as unicorns. A kajillion factors can affect a single transaction; problems are inevitable.

In the world of online payment processors, chaos is the default setting. Problem-free payment processors fall into the same category as unicorns. A kajillion factors can affect a single transaction; problems are inevitable.

Caveats in place — here’s a list of common user complaints about the Shopify and Stripe framework:

  1. No Phone Number: Stripe famously doesn’t have a telephone support number (confirmed at the time of writing) — which is a sore point for many people. In defense, Stripe says e-mail support systems are way better than call centers — and, to be fair, many of their customers agree, citing Stripe’s ticketing system as superior to most.
  2. Chargeback Issues: Is Stripe a chargeback circus? Some people think so. Online response representatives for the company disagree, arguing that chargebacks are an unfortunate part of today’s marketplace, but promising to work closely with vendors to resolve chargeback disputes.
  3. Uncaptured Transactions: Some businesses reported an increase in “uncaptured” or failed transactions that coincided with a move to Stripe. Remedying this problem, however, often just involves a few setting adjustments (see tips section below for possible solutions).
  4. Money Transfer / Frozen Payment Issues: Like any payment gateway, the STRIPE-to-bank-account transfer process can take a tad longer than one would like. Again, this is true for nearly every available option. Hiccups, unfortunately, occur.
  5. Credit Card Blacklist: Stripe takes the “credit card blacklist” seriously. If you inadvertently land on the dreaded directory, Stripe may suspend your account till it’s sorted. Don’t think you belong on the list? Enlist a professional fixer to clean up the matter on your behalf.
  6. Blame Game: Some users accuse Stripe and Shopify of playing blame-hot-potato when it comes to various “authorize only” malfunctions.

Prohibited Business Issues

Products sometimes land on the “prohibited businesses list.” In this section, we’ll review some legal basics and discuss potential solutions.

What Is The Prohibited Business List?

The Prohibited businesses list is exactly what it sounds like — a list of businesses that either Shopify or Stripe bans from being sold through their respective platforms. Foodstuffs, supplements, make-up, formulas, cookware and potential weapons are routinely added to the blacklist.

So, what happens if your product lands on the list? In extreme cases, your online store may simply stop working. At that point, enlist a lawyer to negotiate a reinstatement. An attorney can best explain the necessary steps — based on the specifics of your situation — to get the product compliant — and off the list — ASAP.

The Product Blacklist Constantly Changes

The trickiest thing about the Prohibited Businesses List is its instability; it changes, without notice, on the whims of credit card companies.

Products Most Likely To Land On The Prohibited Businesses List

  • Vitamins
  • Herbs
  • Supplements
  • Weapons and Potential Weapons (including knives and certain fishing gear)

Please don’t read this wrong, not every supplement is doomed to a blacklisted retirement. Just be aware that supplement sales come with an additional set of regulations and considerations.

Please don’t read this wrong, not every supplement is doomed to a blacklisted retirement. Just be aware that supplement sales come with an additional set of regulations and considerations.

Increased Number of Chargebacks After Switching To Stripe

A number of people report an increase in charbacks after switching to Stripe.

Is the criticism fair?

Well, it’s a gray area.

With Stripe, the default privacy setting is “wide open;” users must activate protections. A lot of folks don’t notice the default setting, launch their stores with unsecured payment accounts, and ultimately get burned with fraudulent charges.

With Stripe, the default privacy setting is “wide open;” users must activate protections. A lot of folks don’t notice the default setting, launch their stores with unsecured payment accounts, and ultimately get burned with fraudulent charges.

The takeaway: Manually set security preferences when prepping your Stripe account to avoid a flood of chargebacks.

Clicking “I Agree” Means Absolving Shopify Of Fraud Responsibility

Here’s an excerpt Stripe’s Shopify user agreement:

“You are responsible for verifying the identity of users and of the eligibility of a presented payment card used to purchase your products and services, and Shopify does not guarantee or assume liability for transactions authorize and completed which may later be reversed or charged back. You are solely responsible for all reversed or charged back transactions, regardless of the reversal or chargeback. Shopify may add or remove one or more types of cards as a supported payment card at any time without prior notice to you.”

The agreement also states:

“You acknowledge that you provide this personal information regarding you and yours customers at your own risk.”

So, what DOES all this legal mumbo jumbo mean? In a phrase: Shopify isn’t responsible for bad transactions, nor any personal data problems (hacks) that may arise. Sound sketchy? Perhaps. But nearly all — if not all — payment processors protect themselves in this manner because it’s the right business decision.

Connect With An Online Sales Lawyer

Kelly Warner helps online entrepreneurs. An Internet law firm, we partner with startups, established companies and individuals on issues related to online reputation, e-commerce, marketing, privacy and intellectual property. We’ also assist people with issues related to Shopify and Stripe. To learn more about our practice, head here. Ready to talk? Get in touch today.