Alerts

AD-ttorneys@law – February 13, 2019

Alerts / February 13, 2019

In This Issue:

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Influencers Tagged in Fyre Festival Subpoena

Disastrous millennial flameout affects more than just the promoters

A Failure to End All Failures

Unless you have been living several feet under a rock since April 2017, you have heard that the Fyre Festival was a disaster of epic proportions, a Woodstock-gone-wrong for rich millennials. The festival, brought to life by entrepreneur Billy McFarland and rapper Ja Rule, went down like the Titanic wrapped in the Hindenburg with a side order of Holyfield/Tyson II.

Tickets were oversold. Package deals for nonexistent amenities pumped guests for every last dollar. Originally scheduled to be held on the former private island of drug lord Pablo Escobar, the festival was moved at the last minute to an entirely different locale. Supposedly luxurious accommodations turned out to be remaindered hurricane tents, and a last-minute tropical deluge soaked all the beds and furniture. Cheese sandwiches were handed out as meals to high-profile attendees who had laid out up to $12,000 to be there.

Schadenfryde

The new Netflix documentary Fyre: The Greatest Party That Never Happened effectively captures the wounded incredulity of the festival’s attendees, several of whom were influencers who had been comped in exchange for plugging Fyre on social media.

Alyssa Lynch, famed Instagram and YouTube lifestyle maven, found herself on the festival’s unexpectedly subpar 737 jet. She had expected a “branded jet experience.”

“It’s actually worse than like being low, low economy class,” she complained (and here we thought you couldn’t go lower than economy!).

Live reports from ground zero of the festival site went viral. When the sun set on the first day, looting broke out over basic amenities, and the internet got a front row seat to the travails of the young, rich and entitled.

“People were stoked to watch this thing go down,” shared one festival worker.

The Takeaway

Fyre had such a promising start.

A slick promo featuring some of the world’s most recognizable models ‒ Bella Hadid and Emily Ratajkowski among them ‒ introduced the world to Fyre. The models’ support on social media, along with support from other big names (Kendall Jenner weighed in as well), amped up the buzz around the festival.

But now that McFarland has been convicted of wire fraud and is sitting in the federal correctional institution in Otisville, New York, the ripple effect of Fyre’s collapse is catching up with models and influencers.

The bankruptcy trustee in the festival’s liquidation recently won approval for a slate of subpoenas that name several influencers and their management, including Kendall Jenner Inc., IMG Models LLC and DNA Model Management, LLC. The subpoenas will also cover music management companies and a talent agency. “Due to the lack of basic disclosures and books and records, the trustee has been forced to obtain critical financial information related to [Fyre] through third parties,” the trustee noted in his request.

All of this is just another sinkhole in a larger legal morass that is swamping some of the world’s most beautiful people.

Jenner, for instance, reportedly received a whopping $250,000 from McFarland to promote the festival in a single Instagram post. By omission or design, she allegedly forgot to tag the post as an ad, which is a big no-no as far as the Federal Trade Commission is concerned. An earlier suit against the festival brought by an attendee referenced “DOES 1 through 50,” who are “legally responsible in some manner for the events and happenings referred to herein and caused injury and damage proximately thereby ...”

We’ll see if this latest round of subpoenas lifts the lid on the arrangements that were made between a famously ill-fated festival and the celebrities who sold it to the public.

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Gigi Hadid Photo Provokes Copyright Lawsuit

Are paparazzi claiming their just deserts or simply extorting helpless celebs?

Starstuck

When you cover influencers who run afoul of advertising ethics, you get used to certain familiar names and faces: Kanye West, the Kardashian du jour or pick a Jenner ‒ to name the most famous few.

Supermodel Jelena Noura “Gigi” Hadid, veteran of countless gigs for Versace, Chanel, Marc Jacobs, Diane Von Furstenberg and Tommy Hilfiger, has now joined this infamous crew. She’s appeared on the cover of (and inside) pretty much every national flavor of Vogue, as well as Allure, W, Elle, Grazia and Vanity Fair. Her Instagram account has 45 million followers. Her brother Anwar and sister Bella are both successful models as well. Gigi is fashion royalty.

Eternal Recurrence?

Hadid has just been sued by a company called Xclusive-Lee, Inc., for allegedly copying a photo of herself for which the company holds copyright and pasting that photo to her Instagram feed without permission. The kicker? The suit, filed in New York’s Eastern District, claims that she knew she was committing copyright infringement because someone else once sued her for the same thing.

Hadid had been sued for copyright infringement back in September 2017 in Virginia’s Eastern District by one Peter Cepeda, a photographer who claims to specialize “in candid, street photography of celebrities in New York City.”

In any case, Cepeda’s case settled in a matter of months on unspecified terms. But the Xclusive-Lee case abides.

The Takeaway

Even though the photo was removed from Hadid’s Instagram feed, the plaintiff still seeks monetary damages based on the time the photo remained online, as well as an injunction against future use of the photo. In addition to this photo, Xclusive adds another layer to the case by claiming that her “Instagram account includes at least fifty examples of uncredited photographs of Hadid in public, at press events, or on the runway. Most if not all of these photographs were posted by Hadid without license or permission.”

How will Hadid respond? There have been no additional substantive filings in the case so far, but other influencers have argued right of publicity to attempt to seize control of their likeness in similar cases. Check out NFL player Odell Beckham’s lawsuit against a photographer and his agency ‒ Beckham took a more proactive approach and sued first when the agency demanded $40,000 from him for behavior similar to Hadid’s. Beckham’s suit essentially accuses the agency and its shooter of running an extortion campaign; right of publicity charges are his response.

Beckham’s case is still wending its way through the courts, but Xclusive beat Hadid to the punch. We’ll keep you up to date on how both cases develop. In the meantime, keep in mind that right of publicity and copyright are two entirely different rights. The photographer owns the copyright in the pictures she takes, even if they depict other people, and the people in pictures have a right of publicity, which allows them to limit association of their name and likeness with commercial products and services. Editorial publishers may have some First Amendment rights to use without a license, but advertisers have to procure both a copyright license to a photo and a model release of the person depicted.

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Bots and Sockpuppets and Scammers, Oh My!

New York AG Takes Down Alleged Fake Influencer Firm

Minions

When someone mentions “bots,” a sinister chill enters the air. After all, we’re talking about mindless online automatons controlled by a mastermind in the Kremlin, a secret government facility or some out-of-shape sociopath in a suburban basement somewhere. They’ve been used for all sorts of nefarious purposes: to tilt an election, to scrape away sensitive information to take down company communications, etc. Creepy.

Then we start talking about sockpuppets, and the whole atmosphere seems somehow sillier. The slang “sockpuppet” doesn’t invoke mindless implacable destruction; it makes you think about goofy puppets made out of socks, which is kind of fun and not really threatening in the main. Sockpuppets are actually real people posing as someone else online, which is less creepy and more, well, sad.

Popularity Probe

But down amidst the Hadean flames of the internet influence economy, bots and sockpuppets are executors of the same cutthroat mentality: popularity at any cost.

Likes, views, shares, high-star reviews and endorsements, sincere or not ‒ real or not ‒ add up to revenue. So it’s no surprise that a company like Devumi LLC was incorporated ‒ a firm, New York Attorney General Letitia James charged, that sold the energies of bots and sockpuppet accounts to help customers boost their profiles and those of their featured products. The company allegedly pulled in millions between 2015 and 2017, the period covered by a recently concluded probe conducted by James’ office. The Florida attorney general also brought a case against the firm.

The Takeaway

For a few thousand dollars, Devumi clients could gather, on a client’s behalf, an army of half a million Twitter followers and likes to whip up support. The company also sold YouTube followers and influencer endorsements. The content of any of these products could be tailored to the client’s preference.

In the wake of a New York Times article last year that revealed the behavior AGs would go on to investigate, Devumi and all its various subsidiaries folded and ceased operation. Final settlements were inked with New York and Florida at the end of January.

Through the New York settlement, Devumi agreed to refrain from the activity uncovered by the probe, and to fork over $50,000 to pay for it. “With this settlement,” AG James declared in a statement, “We are sending a clear message that anyone profiting off of deception and impersonation is breaking the law and will be held accountable.” Florida also obtained $50,000 and a permanent ban on deceptive activities on social media.

The use of bots and sockpuppets on social media violates the Federal Trade Commission’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, which of course reflects the prohibition on unfair and deceptive practices in commerce under Section 5 of the FTC Act and in state unfair and deceptive practices acts. While the FTC has been very active in policing social media influencing, it is now clear that state AGs are joining the party.

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California Republicans Unveil New Privacy Plan

Big paws on this puppy, but will it survive gathering federal storm clouds?

Privacy Promises

California Assembly member Jordan Cunningham and four of his fellow Republican colleagues announced a surprisingly robust data privacy bill at the end of January that would strengthen, not weaken, consumer privacy rights expanded last year by the landmark California Consumer Privacy Act (CCPA).

Assembly Bill 288, nicknamed the “Your Data, Your Way” bill, will offer “the strongest consumer privacy protections in the country,” according to its sponsors. And AB288 definitely swings for the fences. There are three companion bills that have not yet been released that are poised to add to the proposed additional protections.

The Takeaway

The bill will force social media companies to delete a user’s data when the user decides to leave the service. Children under 16 will not be allowed to use a social media platform without a parent or guardian’s consent. In the event of a data breach, companies are required to inform users of the breach within three days (i.e., 72 hours).

There are also voice data protections and a call for updates to federal antitrust laws “to protect consumers and level the playing field in the 21st century economy” – suggesting that controlling too much consumer data might be seen as an antitrust violation.

The bill’s got chutzpah, but it barely made a ripple in the media when it was announced, perhaps because it was introduced in the long shadow of the CCPA, which Governor Brown signed back in July. The gargantuan CCPA, which is currently delayed until 2020, is still gathering momentum, picking up amendments and attracting high-profile enemies who’d like to federally pre-empt it all together. Eight other states have joined California in proposing comprehensive consumer privacy legislation. Massachusetts’ bill would provide a broad private right of action for any violations. While most borrow from the CCPA, Washington state instead looks to and copies from the EU’s General Data Protection Regulation. We will be tracking all the various state and federal proposals and updating you on which gain momentum.

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Mass. State Representative Wants to Lock Up Diet Supplements

Violators will be charged with unfair or deceptive practices

Holistic Pugilists

Massachusetts House of Representatives member Kay Khan is stirring up an angry response to her new bill limiting sales of diet supplements.

Her opponent? The Natural Products Association (NPA), which is trying to muster up a grassroots response to the bill.

“Representative Kay Khan is once again trying to destroy the Natural Products Industry by unnecessarily banning and restricting access to dietary supplements and muscle-building products throughout the State of Massachusetts,” the association’s website reads. “And we know that if they pass this, states all over the country will start to follow in their path.”

Debbie Downer

Here are the particulars: Khan’s bill bans sales of “over-the-counter diet pills or dietary supplements” to anyone under 18 years old. The bill also restricts general access to the products in retail outlets by sectioning them off behind managerial lock and key; any purchase of the products must go through “a manager, assistant manager, acting manager or other supervisory personnel” or pharmacy personnel.

Finally, it requires the retailer to post “at each purchase counter” a notice informing consumers that the products “are known to cause gastrointestinal impairment, tachycardia, hypertension, myocardial infarction, stroke, severe liver injury sometimes requiring transplant or leading to death, organ failure, other serious injury, and death.”

The bill will charge violations as unfair competition or unfair or deceptive acts, each carrying a $2,000 fine.

The Takeaway

NPA President Dan Fabricant seems especially upset by a section of the new bill that establishes wide-ranging oversight regarding which supplements will be restricted from sale.

The bill reads, “The Department of Public Health, in consultation with the U.S. Food and Drug Administration and…stakeholders including...the eating disorders community, will determine which over-the-counter diet pills or dietary supplements for weight loss or muscle building shall have limited accessibility.”

“I don’t know why the eating disorder community is weighing in,” Fabricant said in an interview. “The whole thing is just bananas.”

Khan proposed an essentially identical law in last year’s legislative session, but it was defeated, according to the NPA, by the efforts of its membership. The association is gearing up for another legislative battle, stating on its website that Khan’s bill “would set a dangerous precedent that has never been considered in the United States.”

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