The Texas Attorney General is suing an influencer who sold online fitness and nutrition plans.

The lawsuit says she sold the plans “with the promise of personalized nutritional guidance and individualized fitness coaching.”

The price of the plans ranged from $92 for a one-week program, to $300 for a 3-month regimen.

But the AG says “the online nutrition and fitness plans delivered to consumers were not individualized.”

They also alleged she “failed to provide the promised coaching and check-ins, … largely ignored consumer complaints, or offered only partial refunds.”

Instead, customers complained that the check-ins and feedback they received were “generic and non-substantive, e.g., ‘You’re killing it!’”

The lawsuit also alleges that she charged customers a shipping fee, even though the plans were emailed.

The customers joined the influencer’s Facebook group, where they were able to compare plans and, according to the lawsuit, realize that they received the same “individualized” plans despite having different goals and starting metrics.

So why post about this?

It’s an important reminder to pay attention to the claims you make about the products and services you offer.

There’s nothing inherently unlawful about selling off-the-shelf template nutrition or workout plans.

And it may seem obvious that if you call something “personalized,” then you need to tailor it to each person.

But it’s also common for brands and influencers to include a word or two in their ad copy that conveys a certain meaning—intentional or not—that a significant portion of their audience will rely on when making a purchase.

Those one or two words, if they don’t accurately describe the product or service being sold, can make the difference between a successful business and a lawsuit from the government or a class action from customers.

So, it’s a good idea to review all of your ad copy, especially if you are selling a plan or a course, to make sure that you aren’t overpromising or phrasing things in a way that might carry a meaning you didn’t intend.

A music NFT project called Opulous featured Lil Yachty as “collaborating” on their NFT drops.

But he says he never agreed to be part of the project.

So, Yachty is suing Opulous, its music distribution partner, and that partner’s founder individually.

He’s asserting claims in California federal court for trademark infringement, false endorsement, and violations of his publicity rights.

According to the lawsuit, Yachty had intro conversations with the Opulous team who pitched their “music copyright-backed NFTs,” which allow people to buy fractional licenses to various music recordings and earn streaming royalties.

Ultimately, Yachty passed on the invitation.

But Opulous issued a press release and advertising campaign stating it was “kicking things off” with drops “led by world-famous artists including Lil Yachty.”

Opulous also used Yachty’s image in tweets and LinkedIn posts promoting the project.

This is not the first NFT project that I have read about where a musician’s likeness has been used allegedly without the artist’s permission or involvement.

While the context is new—NFTs as we currently know them are still in their relative infancy—the issues presented here are not.

It’s a mistake to think that the NFT or metaverse spaces are “unregulated,” which is something I hear repeated frequently.

IP rights, including publicity rights, exist everywhere.

And Yachty’s allegations present classic, straightforward claims for trademark and publicity rights violations.

While there are many novel legal issues that come with new technologies, it’s important to understand where the risks lie, old and new.

On the heels of a significant enforcement action against an ecommerce retailer over customer reviews, the FTC released two new guidance documents.

You might already know that the FTC has brought lawsuits against brands and marketers for hiding negative reviews, paying for positive reviews, creating fake reviews, failing to disclose incentives, and other deceptive acts.

Here are the bullet points, quoting from the new FTC docs:

For marketers:

• Don’t ask for reviews from people who haven’t used your product or service.

• Don’t ask staff to write reviews of your business unless they disclose that relationship.

• Don’t ask for reviews only from customers you think will leave positive ones.

• Don’t ask family and friends for reviews unless they disclose that relationship.

• If you offer incentives for reviews, don’t condition it on the review being positive.

• If you offer incentives, the incentive needs to be disclosed.

For review platforms and review sites:

• Don’t ask for reviews only from people you think will leave positive ones.

• If you offer incentives for reviews, don’t condition it on the review being positive.

• Don’t discourage or prevent people from leaving negative reviews.

• Have some process in place to verify that reviews are real.

• Don’t edit reviews to make them sound more positive.

• Treat negative and positive reviews equally: publish both; don’t feature some more prominently than others.

• Clearly disclose how you collect and display reviews and determine overall ratings.

When the FTC issues “guidance,” more actions typically follow.

But enforcement in this area isn’t new—some other examples:

-In 2015, the FTC sued AmeriFreight, a car shipment broker, because it showcased online customer reviews without disclosing that the reviewers were given discounts and entries into giveaways.

-In 2019, the FTC sued UrthBox for its practice of providing free products to customers in exchange for positive reviews and not disclosing the relationship.

-In 2020, the FTC obtained a $23.9M judgment against student loan debt relief operator who failed to disclose customers were paid to leave positive BBB reviews.

Ana De Armas appeared in the trailer for the 2019 film Yesterday, but she isn’t in the movie.

Fans who claim they only paid to rent the movie through Amazon because of her appearance in the trailer are suing Universal for false advertising.

The lawsuit is a proposed class action on behalf of everyone in California and Maryland who paid to see the movie.

The plaintiffs allege that “consumers were promised a movie with Ana De Armas by the trailer” but didn’t receive such a movie, so they “were not provided with any value for their rental or purchase.”

They claim that Universal couldn’t rely on the fame of the actors who actually appear in the movie to promote sales, so they used De Armas despite cutting her from the cast.

This case reminds me of the class action against Sega over the trailers for the videogame Aliens: Colonial Marines.

In that case, the plaintiffs claimed the promo videos for the game showed gameplay elements that weren’t included in the game itself.

Sega settled that case for $1.25M.

It will be interesting to see how Universal handles this one.

In the meantime, this is a good reminder to ensure that your ads don’t include claims about your products or services that might mislead some consumers as to the qualities and features of their purchases.

False advertising litigation more generally is common and expensive to deal with, even if you’re ultimately right.

Limiting risk early, where you can, will save time and money down the road.

Unless you’re the government, running lotteries is illegal in the U.S.

If you run a sweepstakes or giveaway as part of your NFT project (or anywhere else), you don’t want to risk having your promotion look like a lottery.

What’s the difference?

In a sweepstakes, entrants can win a prize for free based on chance alone.

No purchase, payment, or other consideration is needed, and the winner is picked at random.

In a lottery, the entrant has to give something of value (like buying a ticket or an NFT), called consideration.

So to avoid having your promotion be called a lottery, you need a free method of entry that counts the same as any paid methods.

It is a crime in every state to run a lottery.

And in California, you need to let people know, “clearly and conspicuously,” that no payment is necessary to enter.

As NFTs continue to grow in popularity, you can bet they will attract attention from regulators and plaintiffs’ lawyers.

It’s worth the effort to understand the risks you are taking with how you promote your NFT project, so that you can avoid a surprise lawsuit down the road.

If an influencer creates a TikTok promoting a brand, using music that’s not in TikTok’s commercial library, then that influencer risks committing copyright infringement unless they have a license from the rights owner.

And the brand and any ad agency involved in the campaign can be liable for the infringement too.

That might seem surprising—it’s extremely common to see popular songs in the background of influencer content.

But just because everyone is doing it doesn’t mean it’s allowed.

Sony Music’s recent lawsuit against Gymshark is just one example of how this problem can rear its head.

Sony sued Gymshark over hundreds of TikToks and IG videos that “include sound recordings featuring such chart-topping and award-winning artists as Beyoncé, Britney Spears, A$AP Rocky, and Calvin Harris.”

Sony’s complaint lays out how Gymshark pays influencers to create videos wearing and promoting Gymshark products and including popular songs.

Sony points to the IG and TikTok terms of service to support the infringement theory:

IG’s TOS says: “Use of music for commercial or non-personal purposes in particular is prohibited unless you have obtained appropriate licenses.”

TikTok’s says “NO RIGHTS ARE LICENSED WITH RESPECT TO SOUND RECORDINGS AND THE MUSICAL WORKS EMBODIED THEREIN THAT ARE MADE AVAILABLE FROM OR THROUGH THE SERVICE.”

Sony specifically alleges the “third-party influencer who created Gymshark videos have likewise infringed Plaintiffs’ copyrights” and that Gymshark is liable for contributing to that infringement.

So what the lesson from this?

If influencers have the creative freedom to pick sounds for their content, they should clear those sounds with the brand before posting.

The obligation to clear sound choice before posting is something that can and should be addressed by the brand/agency in the influencer agreement.

And if you’re the agency or the brand, claiming you didn’t know about the music or that you needed to clear rights won’t help you much from a legal perspective.

Gymshark has until January 25 to respond to the lawsuit, and it has told the court it plans to move to dismiss.

I’ll provide updates here as the case progresses.

A lot of people are afraid of contracts.

That’s because they are approaching the concept from the wrong perspective.

I often hear from people who are worried that a formal contract with scare off someone they’re looking to work with, because forcing someone to sign a document shows you don’t trust them.

It’s a mistake to allow those worries to convince you that you don’t really need to get whatever it is in writing.

True, not everything needs a 20-page agreement filled with legalese.

But every agreement that matters needs to be documented.

Think about it like this: contracts aren’t really about trust at all.

You build trust through your reputation and your work; not through your documents.

My friend Andy Frisella summed up this issue nicely in a recent episode of his podcast (I’m paraphrasing):

That fear of sending contracts isn’t an issue of trust but communication.

When you present that agreement to the other party, it should be with the intent that it will never need to be looked at again, unless an issue cannot be resolved through a conversation.

And if you get to that point, the contract is like an insurance policy—it’s there to help everyone navigate the impasse and get through it.

Of course, you should always make sure that you understand and are comfortable (or at least willing to live with) everything in a contract presented to you before you sign it.

If something seems unfair, or even if you just aren’t completely sure, have it reviewed by someone with experience who will look out for you.

But don’t be afraid of written contracts—use them to help protect your business so that you have an easier time building that trust.

On Monday, Meta sued a company called SocialData, which provides account metrics and other social media analytics data to its users.

Specifically, SocialData provided information about Instagram accounts, including username, follower and like count, post count, verification status, and demographic analysis of the account’s audience.

Meta alleges SocialData used thousands of automated bot IG accounts to collect and aggregate (i.e., scrape) the data and sold that data in the form of “Audience Data” reports.

What’s the problem?

For one thing, everyone who creates an IG account agrees to the Instagram Terms of Use, which prohibit “collecting information in an automated way.”

So, one of the claims against SocialData is for breach of contract—violating the Terms of Use.

Meta also asserts a claim for violation of California’s Comprehensive Computer Data Access and Fraud Act (the CDAFA), which is California’s version of the federal Computer Fraud and Abuse Act.

The relevant part of the CDAFA makes it unlawful to “knowingly access and without permission … make use of any data from a … computer system.”

Here, Meta says it sent SocialData a cease and desist letter explaining the violations and demanding that Social Data stop.

But SocialData responded saying it believed scraping data was “a fundamental right” and continued the alleged operations.

So, Meta says, SocialData knew it was accessing the IG computer system without permission, in violation of the CDAFA.

You might be wondering, “what about that LinkedIn decision that said scraping data is legal?”

SocialData said the same thing in response to the cease and desist letter.

It’s true that in hiQ Labs v. LinkedIn, the Ninth Circuit ruled that automated scraping of publicly accessible data probably does not violate the federal version of CDAFA.

But the U.S. Supreme Court “vacated” that ruling (meaning it has no effect) earlier this year, so it’s back before the Ninth Circuit for further review.

Meta’s pending lawsuits against SocialData and other analytics services (like BrandTotal) likely explain why services like IGBlade vanished in recent months.

There are rules about offering a “money-back guarantee” that brands and their customers should know.

The FTC’s rule is that a seller can use the terms “satisfaction guarantee,” “money back guarantee,” or similar language only if it “refunds the full purchase price of the advertised product at the purchaser’s request.”

The rule also requires that any “limitations or conditions that apply” need to be presented “with such clarity and prominence as will be noticed and understood” by customers.

In other words, if the guarantee doesn’t mean a complete, no-questions-asked refund, then the conditions need to be explained clearly enough that no one could miss it.

So, if you advertise a “60-day money back guarantee,” but the customer has to pay shipping, submit some kind of proof about using the product, or other condition, that needs to be set out clearly at the same time as the guarantee offer is presented.

A real-life example:

Last year, the FTC reached a $22M settlement with a manufacturer of a pain relief device.

Among other problems, the lawsuit alleged that the seller offered a “risk-free” and “money-back” guarantee, but that shipping and handling was not refundable.

The seller only disclosed that limitation in separate links on their website and at the bottom of invoices.

They also sometimes required “burdensome tasks” to obtain a refund, including proof of completing a treatment regimen—also only disclosed in separate links and on invoices.

Paying attention to your guarantee language up front can save a lot of trouble later.

Black Friday tip: make sure your subscription offers comply with the Restore Online Shoppers’ Confidence Act (ROSCA).

The FTC recently issued a statement warning the ecommerce industry that it plans to “ramp up” enforcement related to subscription programs that automatically renew.

The statement focused on three issues: consent, disclosure, and cancellation.

Consent:

The FTC says that marketers need “affirmative, informed consent” before charging customers for an automatic renewal or “negative option” program.

Affirmative informed consent means accepting the terms of a subscription “separately from any other portion of the entire transaction,” and the FTC specifically reiterated that pre-checked boxes don’t cut it.

Disclosure:

All of the terms of a subscription offer (e.g., initial payment, recurring costs, deadline to cancel, how to cancel) need to be “clearly and conspicuously disclosed” in simple language.

That means no hiding terms behind links or requiring customers to hover their mouses over anything on a site to see the terms.

Cancellation:

You need to give customers a simple mechanism to cancel through the method they used to sign up (e.g., signing up through an app means cancellation option through the app).

The FTC said marketers should not attempt to stop the cancellation by forcing customers to click through new offers or other barriers.

We are going to see more enforcement from this new FTC regime—they have explicitly promised it.

Now’s a great time to check over your practices to make sure you’re limiting risk.

Last week, the FTC sent more than 700 warning letters, each called a “Notice of Penalty Offense,” to brands and agencies around the country.

The letters list a series of marketing practices that the FTC has determined to be deceptive, including:

-Falsely claiming an endorsement (e.g., “used by Clint Eastwood” if that’s not true)

-Misrepresenting an endorser recently (or ever) used the product

-Using an endorsement to make deceptive performance claims (e.g., “I lost 150lb in a week”)

-Misrepresenting that a review or endorsement represents the actual experience or opinion of a user (e.g., giving reviewers a script that doesn’t match their honest belief)

-Misrepresenting that a review or endorsement reflects the typical user experience, and

-Failing to disclose a material connection with an endorser.

That last one is most relevant to influencer marketing.

The FTC requires disclosure of “material connections” between someone endorsing a product or service (like an influencer) and the business itself.

The idea is that a consumer might give less weight to a product review if they knew the brand was compensating the reviewer, so it’s a deceptive practice to hide the relationship from people making purchasing decisions based in part on the reviews.

This is why we have things like “# ad,” though that’s not the only way to disclose the connection.

While these FTC letters don’t accuse the brands and agencies of wrongdoing, they have the effect of giving notice that violations can result in penalties of up to $43,792 PER VIOLATION.

It’s been about a year and a half since we saw an FTC enforcement action targeting influencer disclosure issues.

These 700+ letters, and the FTC’s 5-0 vote to authorize them, show that these issues are back in the spotlight.

Now is a great time to take a look at your campaign compliance.

Earlier this year, U.S. Sen. Richard Burr, R-N.C., introduced Senate Bill 203, titled the Recognizing the Protection of Motorsports Act of 2017. The RPM Act would amend the Clean Air Act to clarify that it is legal to modify a road-going automobile into a racecar used exclusively on racetracks regardless of whether the car thereafter complies with the CAA’s emission standard. The RPM Act would also confirm that it is legal to manufacture, distribute, sell and install racing parts used to convert these vehicles for exclusive track use.

Read more about the possibility of EPA action in our Daily Journal article by clicking here.

On Jan. 13, 2015, the United States Supreme Court issued its long-awaited ruling in Jesinoski v. Countrywide Home Loans, Inc., No. 13-684, 2015 WL 144681 (U.S. Jan. 13, 2015) resolving a circuit split over the notice requirements that must be complied with under the Truth In Lending Act (TILA), 15 U.S.C. § 1601 et seq., for rescission of a home mortgage loan.

View full article on The National Law Review.