After Four Decades, FTC Announces Regulatory Review of The Endorsement Guides: What Does This Portend for Digital Advertisers and Social Media Platforms?

By Ted Max on February 13, 2020 Posted in Advertising, endorsements

On February 12, 2020, the Federal Trade Commission (“FTC”) announced that it had voted 5‑0 to approve a proposed Federal Register Notice, seeking comment on whether to make changes to its Guides Concerning the Use of Endorsements and Testimonials in Advertising (“the Endorsement Guides”), which were enacted in 1980 and amended in 2009, as part of a systematic review of all current FTC rules and practices. The FTC’s Endorsement Guides have evolved over the past forty years from regulating celebrity endorsements and testimonial advertisements to policing social media advertising, including influencer endorsements and native advertising. The Endorsement Guides have steadfastly required transparency in advertising and that, if there is a connection between an endorser and the maker of a product being advertised or promoted which, if disclosed, might affect the weight or credibility of the endorsement, such connection must be disclosed clearly and conspicuously. In the proposed notice, the FTC requested comment on a variety of questions, including the following: Continue Reading

FTC Disclosure Guide Signals More Influencer Scrutiny

By Ted Max on February 5, 2020 Posted in Advertising

*This article originally appeared in Law360 in December 12.

A recent 2018 report disclosed that almost three-quarters of U.S. millennials and their Gen Z successors follow social media influencers, and the majority say they trust influencers more than their favorite celebrities when it comes to advice about products or brands.

Authenticity and genuinely caring about consumer interests are the most important traits when deciding whether to follow an influencer on social media. With the growth of influencers’ ability to reach and persuade significant portions of the population, their role has come under increasing scrutiny by the Federal Trade Commission. Continue Reading

Proposition 65: California Clarifies Responsibilities To Warn Amongst Manufacturers, Distributors and Retailers

By Whitney Jones Roy and Angela Reid on January 29, 2020 Posted in Changes In Law, Government Regulations, Miscellaneous, Prop 65, Retail

The California Office of Environmental Health Hazard Assessment (OEHHA) recently adopted amendments to California Code of Regulations, section 25600.2 – the section titled “Responsibility to Provide Consumer Product Exposure Warnings.” These amendments provide more specific guidance for manufacturers, retailers and other businesses in the chain of commerce on how to satisfy their responsibilities to provide consumer product exposure warnings for chemicals listed under Proposition 65. The amendments become effective on April 1, 2020. Continue Reading

FTC’S New “Disclosures 101” Publication And Video Is A Shout Out To Influencers

By Ted Max on November 7, 2019 Posted in Advertising, corporate, endorsements, Enforcement of Fashion Laws, Fashion Cases, Government Regulations, rights of publicity and privacy, trade dress, trademarks, unfair competition

On November 5, 2019, the United States Federal Trade Commission (“FTC”) issued a guide entitled “Disclosures 101 for Social Media Influencers”[1] and a video “Do you endorse things on social media?” to alert influencers to the laws governing endorsement or recommendation of products or services and provide social media influencers with “tips on when and how to make good disclosures.”[2] The FTC’s written guide states that “[a]s an influencer, it’s your responsibility to make these disclosures, to be familiar with the Endorsement Guides, and to comply with laws against deceptive ads.”[3] The guide explains to influencers that disclosures must be made when an influencer has a “material connection,” that is “any financial, employment, personal, a family relationship with a brand” and that receiving “free or discounted products or other perks” requires a disclosure.[4] In addition, the FTC notes that “tags, likes, pins, and similar ways of showing you like a brand or product are endorsements.”[5] The FTC guide also instructs influencers that “[i]f posting from abroad, U.S. law applies if it’s reasonably foreseeable that the post will affect U.S. consumers. Foreign laws might also apply.”[6] The FTC notes that disclosures must be in simple and clear language that is placed “so it’s hard to miss” and should be placed with the endorsement itself. Disclosures that “appear only on an ABOUT ME or profile page, at the end of posts or videos, or anywhere that requires a person to click MORE” will not be sufficient.[7] The FTC gave the following guidance with regard to endorsement posts in photographs, video and live streaming: Continue Reading

“Good Genes?”: Maybe Not. FTC Takes Action Against Sunday Riley and Sunday Riley Modern Skincare, LLC For Employees False Reviews

By Ted Max on October 31, 2019 Posted in Advertising, Cosmetics

Sunday Riley launched her skincare firm Sunday Riley Modern Skincare, LLC (“SRMS”) in 2009 and its skincare products, including Good Genes, Power Couple, U.F.O., C.E.O., Luna and Tidal, have enjoyed tremendous success, having been featured, promoted, and sold online through Sephora and its website, www. Sephora.com. On October 21, 2019, the Federal Trade Commission (“FTC”) announced a consent order in an action for violation of Section 5 of the FTC Act against Ms. Riley and SRMS for posting false reviews of its Sunday Riley products and falsely representing that the false reviews reflected the opinions of ordinary customers of the products.[1] The FTC’s proposed continuing consent order provides: (1) Riley and SRMS are prohibited from misrepresenting the status of any endorser or person providing a review of a product, including misrepresenting that an endorser or reviewer is an independent or ordinary user of the product; (2) Riley and SRMS are required to clearly disclose any unexpected material connection between SRMS and anyone reviewing a product; (3) Riley and SRMS are required to instruct employees, officers and agents as to their responsibilities for disclosing their connections to SRMS and any Sunday Riley product they endorse and that SRMS obtain signed acknowledgments from any endorser; and (4) Riley and SRMS are required to submit compliance reports to the FTC within one‑year of the order and to create records for twenty years and retain them for five years.[2] Continue Reading

No Future for Fur in the Golden State?

By Ted Max on October 8, 2019 Posted in Enforcement of Fashion Laws

UPDATE: On October 12, 2019, Governor Gavin Newsom signed AB 44 and Governor Newsom stated in social media: “I just signed #AB44 — one of the strongest animal rights laws in US History — making California the first state in the nation to ban new fur sales.” The ban goes into effect in 2023 and fur retailers have more than two years to sell any furs they still have in their inventory. After the law goes into effect, manufacturers and retailers will face fines of $500 to $1,000 for every violation of the law.

Before the 1849 California Gold Rush, American, English and Russian fur hunters were drawn to Spanish (and then Mexican) California in a California Fur Rush, to exploit its enormous fur resources. Before 1825, these Europeans were drawn to the northern and central California coast to harvest southern sea otters and fur seals, and then to the San Francisco Bay Area and Sacramento–San Joaquin River Delta to harvest beaver, river otters, marten, fisher, mink, gray fox, weasels, and harbor seals. It has been said that California’s early fur trade, more than any other single factor, that opened up the West to world trade. Continue Reading

See You Later Alligator? After A While Crocodile? Will Penal Law 653o(b)(1) Take Effect?

By Ted Max on October 7, 2019 Posted in Enforcement of Fashion Laws

Section 653o of the California Penal Code makes it a misdemeanor to import into the state for commercial purposes, to possess with intent to sell, or sell within the dead body or a product thereof, of a variety of animals. Commencing on January 1, 2020, Section 653o(b)(1) shall make it “unlawful to import into this state for commercial purposes, to possess with an intent to sell, or to sell within the state, the dead body, or any part or product thereof, of a crocodile or alligator.” This bans any shipment of alligator or crocodile into, possession of alligator or crocodile with an intent to sell, or to sell within California. A number of bills to either delay the effectiveness of the law or repeal it recently have been killed or tabled by the California Legislature. Continue Reading

Supreme Court Holds that a Copyright Claimant May Commence an Infringement Suit Only After the Copyright Office Registers the Copyright

By Bradley Graveline and Edwin Komen on March 13, 2019 Posted in Copyrights, IP/Brand Protection

On March 4, 2019, the United States Supreme Court held unanimously that “a copyright claimant may commence an infringement suit … when the Copyright Office registers a copyright.” Fourth Estate Public Benefit Corp. v. Wallstreet.com, LLC. (Slip. Op. at p. 1 (syllabus)). The Court also held unanimously that, upon registration of the copyright, “a copyright owner can recover for infringement that occurred both before and after registration.” Id. This decision resolves a long-standing circuit split between the application approach, which allowed a copyright owner to sue for infringement upon submission of a copyright application, and the registration approach, which allows an infringement suit to proceed only after the Copyright Office granted the registration. Continue Reading

FTC Swats Public Relations Firm and Publisher for Misleading Olympic-Themed Mosquito Repellant Product Endorsements and Native Advertisements

By Ted Max on December 6, 2018 Posted in Advertising

On November 20, 2018, the United States Federal Trade Commission (“FTC”) proposed two FTC consent orders against two Georgia-based companies, Creaxion Corporation (“Creaxion”) and Inside Publications, LLC (“Inside”) and their principals[1] concerning the promotion and advertising of Health Pro Brands, Inc.’s new FIT Organic mosquito repellant during the 2016 Zika virus outbreak and allegations that they had misrepresented paid athletes’ endorsements as independent consumer opinions and commercial advertising as independent journalistic content.[2] The proposed FTC consent orders prohibited Creaxion and Inside from making any false representations in the future and required that they ensure all endorsers disclose all material connections going forward and monitor compliance by any endorsers. Continue Reading

New York Federal Court Dismisses Nationwide Class Action Arising Out of Alleged Spying by E-Commerce Retailers

By Kari Rollins and David Poell on September 17, 2018 Posted in Privacy

In a victory for online retailers, a New York federal court recently dismissed three putative class action lawsuits brought on behalf of website visitors whose mouse clicks, keystrokes, and electronic communications were tracked by a third-party marketing company. The cases were filed against three e-commerce retailers—Casper (a mattress manufacturer and retailer), Tyrwhitt (a men’s clothing company), and Moosejaw (an active outdoor retailer)—and against a marketing company named NaviStone. NaviStone offers computer code that allows e-commerce retailers to determine the identities of consumers who visit their websites and track their online behavior. The plaintiff alleged that the code offered by NaviStone, and embedded in the retailers’ websites, functioned as an illegal wiretap enabling the retailers and NaviStone to “spy” on website visitors in real time as they browse. The lawsuits alleged violations under the federal Electronic Communications Privacy Act (ECPA), the federal Stored Communications Act (SCA), and New York General Business law (NYGBL).

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