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Paul Zimmerman
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Showing 11 posts by Peter L. Steinman.

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A “Reason to Believe” the FTC Is Quite Unhappy

In a complete turnabout, a Northern District Court in Georgia recently reversed itself and dealt a significant blow to the Federal Trade Commission, limiting its capacity to state claims against defendants for consumer fraud. In FTC vs. Hornbeam Special Situations, LLC, the court held that the Commission could no longer seek to punish bad actors based solely on past behavior. Instead, currently existing or threatened violations of the FTC Act must be alleged for the FTC to bring a successful action against any defendant accused of bilking consumers. (Read more)

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The Key to Native Advertisement in Three Words: Disclose, Disclose, Disclose

There is little doubt that when done right, native advertising works. Digital ads that mimic, in substance or form, news, feature articles, product reviews, social media banter, or entertainment – read, they come across as anything but advertisement – can be extraordinarily effective when it comes to user engagement. But for advertisers, the use of native advertisement is a double-edged sword. Native advertising – equal parts innovative and creative – has the tendency to cross the line from clever to deceptive. Which is why, for years, native advertising has been in the crosshairs of the Federal Trade Commission (“FTC”). Indeed, if there is possible consumer confusion as to whether an advertisement is, in fact, an advertisement (or the affiliation of an endorser is organic), the FTC can and will commence an enforcement action – even where the product claim itself is truthful and accurate. (Read More)

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Direct Response Marketers Beware

A word of caution to the direct response marketing industry: the Federal Trade Commission (FTC) remains on high alert for deceptive sales practices. Exhibit A: a lawsuit initiated late last month against a group of online marketers stemming from purported violations of the Restore Online Shoppers’ Confidence Act (“Confidence Act”). (Read More)

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Marketers of Health Supplement Settle FTC Charges Over Deceptive Advertising

Recent FTC action, and $150 million judgment, is a reminder that advertising rules must be followed and health claims need to be backed by scientific evidence.

The Federal Trade Commission (FTC) recently announced a settlement with Supple, LLC over charges that the manufacturer employed false advertising to promote its liquid, health supplement, “Supple,” including that the product “provided complete relief from chronic and severe joint pain caused by arthritis and fibromyalgia and was scientifically proven to eliminate joint pain.”  The defendant manufacturer sold more than $150 million in supplements between 2011 and 2015, an amount that they are now forfeiting. The action serves as a reminder to marketers, particularly those that utilize infomercials extensively in their campaigns, to avoid making unsubstantiated medical claims when advertising a health product. (Read More)

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CA Appellate Court Rules That Outside Counsel’s Fact Investigation is Privileged

On June 8, 2016, the First Appellate District of the California Court of Appeal, reversed a Sonoma County Superior Court, holding that an outside counsel’s investigative report was protected from discovery by the attorney-client privilege and the work product doctrine despite outside counsel’s agreement not to provide “legal advice” based on her findings.  City of Petaluma v. Superior Court (Cal. App. 1st Dist. June 8, 2016, ordered published June 30, Case No. A145437). The Court also held that the assertion of an avoidable consequences defense did not waive the attorney-client privilege or work product protection because the investigation was initiated after the plaintiff resigned from her position. (Read More)

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Smarter, Stronger, Faster: FTC Cracking Down on Deceptive Health-Related Advertising

In recent years, brands have become bolder in their representations to consumers. Our product is the safest. Our product is totally natural. Our product will make you smarter. However, the FTC is cracking down on instances of deceptive advertising, leaving businesses, marketers and advertisers to either dial back their embellishments or face steep financial punishments. One of the more interesting FTC settlements of 2016 was that involving brain training app, Lumosity. The FTC’s recent action against Lumosity is consistent with its aggressive approach toward enforcing the rules on false or misleading advertising, particularly where it involves claims of improved physical or cognitive health. (Read More)

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Legal Storm Enveloping Trump “University” Highlights Potential Advertising Pitfalls

Among his many business ventures before seeking the republican nomination for President, Donald Trump created “Trump University,” a for-profit “school” that claimed its students would be empowered with the secrets of real estate success and “insider information.”  Among his many claims, Trump represented that he, or one of his “hand-picked professors,” would share this invaluable information with students that paid a fee for the course(s). Trump and his school have become the target of at least three lawsuits, including one filed by New York Attorney General Eric Schneiderman, alleging that the school was nothing more than a get-rich-quick scheme for Trump and that the advertising used to attract students was false and misleading. (Read More)

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Could We See a Major Shake Up in Advertising for DraftKings and FanDuel?

New York’s Attorney General Eric Schneiderman is going after daily fantasy sports’ sites, and he’s going after them hard.  On November 10, 2015, the New York Attorney General declared that daily fantasy sports constitute illegal gambling in New York.  Daily fantasy sports gaming "is nothing more than a rebranding of sports betting," Schneiderman said in legal documents filed in a Manhattan trial court. On November 16, 2015, the trial court denied two of the most popular fantasy sites’ (DraftKings and FanDuel) request for a temporary restraining order that would have prohibited New York from stopping the respective companies’ business operations in New York.  Making matters worse for DraftKings and FanDuel, both the Department of Justice and the FBI announced each is in the preliminary stages of investigating the companies for gambling. (Read more)

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Another DraftKings Class Action: A Primer on California False Advertising Claims

This month, one of the leading daily fantasy sports websites, DraftKings got hit with another lawsuit, this time a class action filed in the Los Angeles County Superior Court, Coleman v. DraftKings, Case No. BC600787. Given DraftKing’s (and its main competitor FanDuel’s) highly publicized meteoric success, seemingly near constant commercials during sporting events, not to mention the New York State Attorney General’s recent “cease and desist” actions, it’s not surprising that the plaintiff’s bar has both companies squarely in their cross-hairs. (Read more)

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Predetermined Outcome or Not, Sweepstakes and Slot Machines are Illegal under California Law

The California Supreme Court recently held that sweepstakes or slot machine “like” games used to promote internet cafes and phone card stores were illegal under the California Penal Code, even if the results are “predetermined.”  In so holding, the High Court rejected claims that where the result or outcome of a game is determined before the player or customer starts playing, the game is not barred by California law. The High Court further held the games were illegal, even if the player or customer could obtain his “result” without actually playing a game, and even if no purchase was required to play, because the outcome of the game was based on chance, rather than the skill.  (Read More)