AD-ttorneys@law – July 21, 2021

Alerts / July 21, 2021

In This Issue:

‘Blessing Loom’ Club Just a Pyramid in Drag?

FTC says BINT was fleecing participants while demanding vows of silence

Migraines in No Time

There are all sorts of new-agey trappings that accompany the “Blessing Loom” known as “Blessings In No Time,” or “BINT.” And while we normally enjoy reveling in the weirdness that we research every week, in this case, we’re just exhausted from trying to figure it all out.

Blessing Looms are informal community savings clubs; BINT appears to be an especially labyrinthine version of the same (also known as “circle games” and “money boards”).

BINT features a system of “levels” that participants buy into, with positions that correspond to classical elemental theory (earth, fire, water, wind). The boards split in two when they’re filled by payees and then split again as the scheme develops, and so on and so forth. There’s even a chart embedded in the joint Arkansas/Federal Trade Commission (FTC) complaint against LaShonda and Marlon Moore, the leaders of BINT, that purports to clear it all up.

But it just made our heads hurt. Can we borrow $5 for some ibuprofen?

Annuit Corruptis?

The FTC argues that while informal savings clubs have a long and celebrated history, many are nothing more than pyramid schemes, which are, fortunately, easy to describe. “BINT has solicited money from consumers and promised them investment returns as high as 800 percent,” the commission claims. “These promises are false. The supposed investment returns Defendants have promised members they would receive have been, in reality, merely funds other members paid to participate in the scheme.” New participants could join the loom with as little as $1,400, but since many were told they would earn more with higher contributions, some contributed upwards of $60,000.

Significant investments, no returns, promises of high payouts and a ravenous need for new members to prime the pump; these are classic symptoms of pyramid scheming.

According to the complaint, which was lodged in the Eastern District of Arkansas in mid-June, the Moores (we assume they’re a couple) launched BINT last summer at the height of COVID-19-related stress and misery. The company combined religious uplift (participants were “blessed out” when they received their payouts) with a modern veneer, including pretentious cant (“linkfunding”), tons of merch and downloadable self-help e-books.

The Takeaway

The FTC claims that BINT stirred in unsupported promises of financial security, including a guaranteed $11,000 payout, for the initial entry fee of $1,400. Moreover, the company claimed that there were government officials who were involved in the BINT loom. In one video presentation, LaShonda Moore reported that IRS, FBI and Pentagon employees took part. “So anytime you all think we’re doing something wrong,” she allegedly said, “know that we aren’t.”

Marketing tactic of the year. Respect.

The most interesting wrinkle in this tale: The FTC claims that BINT forbade participants from “using certain payment apps to send their payments due to those processors having previously flagged BINT transactions” and demanded that members refrain from “POSTING ANYTHING BINT RELATED ON SOCIAL MEDIA REGARDLESS TO [sic] IF YOU SAY 'BINT' OR NOT.”

The commission, along with the state of Arkansas, alleges deceptive practices under the FTC Act, the Consumer Review Fairness Act and Arkansas consumer protection law.

Will Watchdog Group Put a Kink in Our New York Groove?

Excelsior Pass vaccination app, once lionized, may lose points on privacy

“It's Been a Year Since We Was Here”

The New York state Excelsior Pass, like nearly any effort made by the Empire State’s powers that be, is kicking up its share of tsouris *and* agita. Aside from budgetary concerns – its cost has ballooned from $2.5 million to $17 million in a matter of months – privacy issues are beginning to surface as the state considers expanding the scope of the original pass.

If you’re not a New Yorker, here’s the history. Conceived to help the state reopen safely in the wake of the COVID-19 disaster, the pass is a dual-app system and the first digital vaccine passport issued in the U.S. A “wallet app” is downloaded by citizens, who load it with their vaccination information. The “scanner app” is used by businesses, venues and other organizations to scan a QR code that is generated on the wallet app screen. The organization then uses analog information to verify the ID of the citizen. Sounds good, right?

Absolutely, said the International Digital Accountability Council when it reviewed the privacy aspects of the app back in May. “Our results found there were no inappropriate data transmissions, and no personal information or unexpected permissions transmitted.” The report also sang the praises of the pass for its minimal use of software development kits and its clear privacy policy.

And then a classic case of New York overreach kicked in.

The Takeaway

The aforementioned budget bloat accompanied a “second phase” of the app’s development, which would involve the collection of driver’s license information and health data, according to the New York Times. This caused the IDAC to take a second glance at the Excelsior, and they weren’t pleased.

“The state has offered no clear purpose for this sweeping expansion of the Excelsior Pass,” the council wrote in its most recent report. “Before the state moves forward with a centralized database of New York residents’ sensitive personal information, it must provide a compelling reason for creating what amounts to an all-purpose government ID, precisely what privacy advocates warned against when the idea of vaccine passports was first raised.”

Noting that there’s about to be a glut of vaccine passports nationwide, the council expressed its concerns about their effect on post-COVID-19 privacy. “Vaccine Apps are entering the marketplace without any agreed-upon standards or guidance, and it is not clear if and when any federal guidance will be forthcoming,” the IDAC maintains. “These apps can play an important role in helping us stay safe as we reopen the economy and begin to travel. But developers have to put privacy first.”

We’ll let you know how they score future vaccine passport offerings.

Fair Use Fails Fashion House in Photo Fracas

SDNY: Instagram post was promo pitch, not invitation for dialogue

All’s Fair Use …

What defines fair use? In a world drowning in endless iterations of media, it’s a crucial legal question.

In our coverage of paparazzi disputes with celebs and fashion houses, it’s raised quite a bit – most notably as an argument fielded by supermodels and entertainers trying to seize control of their own representation from photographers. There’s Emily Ratajkowski’s case, and Cardi B’s and the grand mommy of them all, Gigi Hadid’s flamethrower of a defense argument.

Prêt à Critiquer

The case under consideration involves fashion house Hesperios Inc., which was sued by paparazzo Jawad Elatab in October 2019. Unsurprisingly, there’s a Hadid involved – Gigi’s kid sister, Bella – but she’s the subject, not an active participant.

Elatab claims that Hesperios snatched one of his shots of Bella and posted it on their Instagram feed. He maintains that the fashion company used it to promote their brand – Hadid was wearing Hesperios gear when the shot was taken – and he sued the house under the Copyright Act.

Hesperios assumed an interesting fair-use defense posture, claiming, among other things, that “it’s [sic] use of the picture was transformative as Defendant created the clothes that the model was wearing, and Defendant’s purpose in posting the image was to invite its Instagram followers to provide commentary on the photograph.”

The Takeaway

The Southern District of New York, where the case was filed, wasn’t having it.

The caption to the post read “@Bellahadid in our Lou tank and Lou Bel skirt knit set in fawn brown. Coming soon for Fall, although available now in summer colours” – the second sentence of which especially didn’t read like a conversation starter.

“Nowhere in Defendant’s posting of the image does Defendant invite its Instagram followers to provide commentary,” the court wrote in its order denying Hesperion’s motion to dismiss. “Nor does Defendant provide its own critique of the image. While commentary and critique have been considered fair use, the Court cannot credit Defendant’s assertion that its posting of the photo alters the original message of the photograph.”

Elatab prevailed on all the other factors of the fair-use test, and while the court found that he failed to allege willfulness, it allowed him the chance to amend his complaint.

This case got legs.

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