In This Issue:

• China’s Influencers Suffer Great Leap Backward
• Plaintiff: Oreo Fudges Ingredients
• Gucci Heirs Hint Retaliation for Alleged Biopic Hit Job
• NAD Drills into Incentivized Dental Product Reviews
• FTC Pays Back Seniors Allegedly Duped by Medical Device Subscriptions
• Check Out Our Latest Blog Posts

China’s Influencers Suffer Great Leap Backward

The party’s central Internet authority aims to curb rampant celebrity “extravagance”

Oversight, or Overlook?

With all the negative attention online culture and social media have been garnering in the past year, one might wonder precisely what robust government oversight of the sector would look like.

After all, in one corner of the sector — the bright, shiny, yet sometimes seedy online influencer arena — watchdogs have been complaining for years about government oversight. Or lack thereof.

If you recall, back in 2019 Truth in Advertising Inc. fired off a missive to the Federal Trade Commission (FTC or Commission) maintaining that influencers “apparently do not feel the need to follow the law when it comes to revealing their connections to brands in sponsored posts — even when those rules have been spelled out for them on multiple occasions by the FTC.”

If 2019 is ancient history for you, a more recent TINA campaign is lifting off regarding the alleged abuses of sponsored athletes (a letter to the Commission is sure to follow).

Great Wall

But if you were wondering what oversight of influencers might look like, the People’s Republic of China is offering an example.

At the end of November, the communist superpower’s Internet authority issued a new “negative list” of content categories that will land celebrities, influencers, their fans and the social media platforms they use in hot water.

The negative list (here’s a rough Google translation) limits content that promotes “bad values ​​such as traffic supremacy, deformed aesthetics, extravagant pleasure, [the showing off of] wealth and worship….”

Sure, the list also prohibits “unauthorized exposure, sale and purchase of celebrity identity information, home address, travel information and other personal [private information],” and the publishing of “false information about celebrities, misinterpretation and slander.”

But the Chinese government hasn’t strayed far from its revolutionary roots with its chilling nod to rehabilitation: Celebrity-related content “must not create momentum for the comeback of illegal and unethical celebrities.” Presumably, the government has other ideas about how and when to bring politically incorrect celebrities back into the fold.

The Takeaway

Several celebrities, officials and business people were “disappeared” in 2021 as part of a broader crackdown, which included the “deletion” of superstar actress Zhao Wei for undisclosed reasons. According to The Atlantic, the country “is in the grip of the most concerted government campaign to assert greater control over society in decades, perhaps since the tumultuous days of Mao Zedong.”

Possibly the most disturbing aspect of this recent crackdown: how digital self-expression makes “disappearing” enemies that much easier for the powers that be.

Influencer culture (and the marketing that depends on it) is dead in the PRC. And while enforcement in the United States may leave some commentators dissatisfied, we can thank our lucky stars that, for now, our government doesn’t possess the same sort of power over our culture.

Plaintiff: Oreo Fudges Ingredients

A familiar firm launches yet another cookie-cutter case

Do You Know What Ralphie Just Said?

Writing about the law almost guarantees that useless but thoroughly interesting facts are going to be thrown in your path.

This is especially true when it comes to writing about advertising law — the cases we review deal with questions regarding representation, truthful and otherwise, for almost anyone selling a product (or selling themselves). The variety is astounding.

In the end, it’s all about impressing people at cocktail parties.

Take Leonard v. Mondelez Global LLC, for instance, a negligent misrepresentation and fraud case brought in the Southern District of New York last month.

The case is all about fudge — and not the euphemism. We’re talking about the actual substance — the delicious candy blend of sugar, butter and milk. Did you know that fudge was first created by Vassar undergrads in the late 19th century? No?

What’s Really in the Middle

Ok, we didn’t think it was that interesting. Frankly, we were trying desperately to mask the uncomfortable fact that Leonard is yet another case brought by the-law-firm-that-shall-not-be-named: a plaintiffs’ shop that specializes in a seemingly endless string of cases brought against various big dogs in the snack food game, including Blue Diamond Growers and Mars Wrigley Confectionery, to name two.

This go-round, the defendant is Mondelēz Global, one of the true giants of global snack foods, with a portfolio that includes famous cookie and cracker brands from Triscuit to Chips Ahoy!. Sandwiched within the portfolio is the iconic Oreo brand, which is the subject of this particular dispute.

The plaintiff, Christopher Leonard, of New York City, is miffed because the Mondelēz global product he purchased (and presumably ate) — fudge-covered Oreo mint crème cookies — doesn’t really contain fudge at all.

The Takeaway

It’s a familiar move by Leonard’s counsel, which has launched countless lawsuits along similar or identical lines. Fudge, the main ingredient mentioned on the product packaging, is traditionally made with milkfat, according to the complaint. Because the ingredient label allegedly mentions only nonfat milk and vegetable oils as components of the cookie’s coating, Mondelēz is charging a premium for fudge when there ain’t any to be had. Leonard is suing for the difference. Notably, the complaint makes some effort to establish a generally accepted definition of “fudge,” citing to news articles and various recipes. Unlike for chocolate, there is no FDA standard of identity for fudge. In similar cases, plaintiffs’ attorneys have relied on a standard of identity to show a certain ingredient, such as chocolate, unequivocally isn’t in the product. The issue then is whether consumers understand “chocolate” to be a flavor description or an ingredient. Absent additional language or imagery to imply the latter, courts have started to take the position that consumers understand chocolate, vanilla and similar terms to be descriptions. In this case, there is an argument that “fudge covered” goes beyond a mere flavor description, but a decision would also have to determine what consumers expect “fudge” to be.

Leaving aside the merits of the case — and the Eastern District chucked out a similar Oreo case argued by the same firm last year — we wonder how many of these cases it will take before there is a concerted industry push for reform to protect from specious food troll cases. Remember, some of them have been settled — Blue Diamond forked over $2 million to close the case mentioned above, precisely the type of result that ensures these cases continue to be brought.

Gucci Heirs Hint Retaliation for Alleged Biopic Hit Job

They’ve got fabulous footwear, sure, but do they have any ground to stand on?

Game of Loafers

We’re not the type of people who wish litigation on anyone, but we must admit that our interest has been piqued by the furor inspired by the recently released House of Gucci, a two-and-a-half-hour epic biopic about the histrionic family that once ran the eponymous fashion house.

We’re putting the cart before the horse with the next pop culture reference — the Gucci brand was founded in 1921 — but the family’s history has a distinct House of Lannister appeal, centered on the strife that erupted between the sons of pater magnificus Aldo Gucci in the 1980s. There are family backstabbings, jail sentences and even a matricide. Juicy stuff.

Clutching at Pearls

Unsurprisingly, the remnants of the Gucci dynasty are objecting to their portrayal in the film and ominously hinting at legal action. “The production of the film did not bother to consult the heirs before describing Aldo Gucci — president of the company for 30 years — and the members of the Gucci family as thugs, ignorant and insensitive to the world around them,” the statement said, according to Vanity Fair. “[The family] reserves every right to protect the name, image and the dignity of their loved ones.”

We can only imagine how the film’s stars — including Lady Gaga, Al Pacino and Adam Driver — feel about these veiled threats; after all, the central relationship of the movie ends in murder for hire. But when it comes to actual legal danger, there may be little for the film’s producers to fear.

The Takeaway

As far as the business identity of the fashion house is concerned, the family has little or no leverage, since they were pushed out of any sort of ownership in the early 1990s.

The Guccis might have a stronger case to make on right-to-publicity grounds, but several of the main characters in the biopic are deceased — and there’s certainly enough well-documented drama to undercut the heirs’ indignation. But such an approach is not without precedent, as The Fashion Law notes in a summary of similar cases against Netflix and Paramount.

Stay tuned — if you love drama, a new lawsuit brought by the Guccis and potentially involving Gaga is certain to be revealing.

NAD Drills into Incentivized Dental Product Reviews

SmileDirectClub, once the subject of inquiry, brings Byte to the chair

Twilight of the Waiting Room

“What does not kill me makes me stronger”: It’s not often that we get to quote Nietzsche (not to mention Kelly Clarkson), but we think that Smile Direct Club’s recent swipe at competitor Straight Smile, owner of Byte brand dental aligners, demonstrates the truth of the maxim and the anthem.

Smile Direct Club has seen its share of action before the National Advertising Division — three conflicts that we covered since August 2020, brought by a competitor and an industry group seeking to clip SDC’s wings. SDC emerged bloodied but unbowed.

By way of background, the company is part of the burgeoning “teledentistry” movement. Teledentistry companies create custom dental aligners based on impressions mailed in by the patients. By evaluating cases at a distance, the company keeps office visits to a minimum, saving consumers money.

It’s not alone in the sector, however. And as the competition heats up, SDC is learning from the beatings it took over the past year-and-change.

Student Becomes Master

Taking a page from its adversaries’ handbooks, SDC took Byte — a competitor that provides similar services — to task before NAD. Things didn’t go well for Byte.

At the heart of the dispute were paid consumer reviews and hidden incentive arrangements that Byte allegedly made with a review site called bestcompany.com. These included consumer reviews posted to  Byte’s own site, which were covered by a blanket disclosure reading: “We’ve asked our reviewers to share the good, the bad, and the ugly with us. These reviews may include ones where known purchasers were given free product in exchange for their honest opinions.”

Not enough, NAD ruled — how could such a general disclosure help consumers determine which of the many reviewers listed on the site had received incentives?

The Takeaway

NAD also focused on SDC’s complaints about Byte’s reviews on bestcompany.com, which itself took shrapnel. “NAD found that incentivized reviews that appear on BestCompany.com were solicited as part of Best Company’s relationship with Byte and thus are part of the advertising relationship between Byte and Best Company.” This is not a great look for both companies, and puts Byte in a bind; NAD requested that it provide disclosures for each paid individual review as well as on its company page on the site.

Furthermore, NAD took Byte to task for its high rankings on bestcompany.com, which it alleged were also part of the cloudy relationship between Byte and Best Company. NAD wrote, “Best Company rankings for the ‘Invisible Braces’ category are influenced by the material connection between Best Company and the company ranked,” and asked that Byte either jettison the rankings or disclose that they were paid advertising. The latter option can’t be good for bestcompany’s business model.

The takeaway? Think carefully about what disclosures are required before incentivizing reviews, whether that incentive is cash or the seemingly more benign free product or service.

General disclosures like the ones used by Byte and bestcompany.com raise more questions than they answer. Ominously, competitors are not the only ones watching — incentivized reviews are considered endorsements, which have been a hot topic at the FTC and may beget penalties for companies in the future for Endorsement Guide violations.

FTC Pays Back Seniors Allegedly Duped by Medical Device Subscriptions

“Free” devices were offered, triggering monthly charges

Unsolved Mysteries

Is LifeWatch Inc. still doing business? It’s hard to tell when the company doesn’t have a working website and the only 800 number we can track down for it is being answered by a company with a different name. The company’s advertisements are still posted on YouTube, but they’re now a decade old, taking on a distinct whiff of nostalgia.

Was the company’s apparent demise related to the $1.8 million in refunds issued by the Federal Trade Commission this month to LifeWatch customers? Who knows.

What we do know is that LifeWatch, at some point, decided that selling its medical alert devices was less lucrative than hooking customers on monthly service charges. And if the Commission’s complaint is to be believed, they secured those charges in a particularly devious way.

Order Now!

Toward the end of 2014, a telemarketing firm called Worldwide Info Services settled with the Commission for “fraudulently [pitching] medical alert devices to seniors.” The devices belonged to LifeWatch.

Their method was as tawdry as it was common: Call millions of seniors, many of whom were already vulnerable for health and financial reasons, and claim that they are the recipient of free medical alert devices. The rationale for the giveaway varied; sometimes the telemarketer claimed that a relative had purchased the device for the senior, or that they had earned the device because of a referral.

To deliver the device, the telemarketer required credit card or bank account information for the payment of somewhere between $30 and $40 for monthly subscriptions to the service. These charges, once agreed to, became difficult to cancel. If the senior hesitated on the call, or asked to take some time to consider the offer, the telemarketer would claim that the free device was available only on that day.

The Takeaway

In 2015 the Commission announced that LifeWatch was fully aware of and responsible for at least a billion such calls placed by Worldwide Info Service, and so the worm turned for the company. A joint complaint filed with the Florida Attorney General followed, charging violations of the Telemarketing Sales Rule, deceptive telemarketing and violation of the Do Not Call Registry. The $1.8 million in refunds represents the final act of this scheme.

Taking advantage of the elderly is one of the time-honored traditions of shady telemarketing, and we’re sure that no one who takes the trouble of reading our blog is likely to engage in such behavior.

But this case highlights the need for companies to strictly monitor the activities of their telemarketing vendors. The consequences for shady marketing going on in the name of your company can be severe — even life-threatening.

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Ambiguities in the FTC’s New Made in USA Rule, Part 1

The FTC (the Commission) has given us plenty to write about these days, particularly as it looks for ways to beef up its ability to obtain monetary relief in light of the Supreme Court’s unanimous AMG decision. We have written a lot recently about the FTC’s Notice of Penalty letters, but we would be remiss if we did not take time to also comment more extensively on the FTC’s adoption of a new rule regarding misleading Made in USA claims on product labeling and in mail-order catalogs and mail-order promotional materials. The latter, by the way, includes electronic mail, and caused a bit of a partisan spat among the FTC commissioners as to whether Congress intended for the Commission’s Made in USA rulemaking authority to extend that far.

And Just Like That: We Might Not Need Ad Lawyers at All

Spoiler alerts: If you have not yet started the “Sex and the City” update “And Just Like That,” you may want to bypass this blog. As for most women starting their careers in the ’90s or early 2000s, Sunday night was must-see TV for us as we watched Carrie, Miranda and Charlotte (Samantha didn’t return) navigate jobs, romance and friendships, all with impossibly chic wardrobes. So catching up with the was something many of us had been looking forward to (after all, “Succession” just ended and “Tiger King 2” just felt, well, a bit like jumping the shark).

A Stumble out of the Section 19 FTC Gate

As many of our readers know, the U.S. Supreme Court decision in AMG dramatically changed things with respect to the ability of the Federal Trade Commission (FTC) to obtain certain monetary remedies. A lot has been written and theorized about the FTC’s post-AMG strategies, but certainly Section 19 of the FTC Act was lined up and ready for its Norma Desmond close-up.

Dawn of the FTC Zombie Votes

Kudos to Commissioner Noah Phillips and Commissioner Christine Wilson for creating and/or popularizing the catchiest Federal Trade Commission (FTC or Commission) phrase of 2021 – zombie votes. But what are these zombie votes that are the latest FTC bone of contention, and do they relate to the traditional lumbering George Romero zombies or to the more modern, fast-moving creatures of “28 Days Later”?