Positive online reviews have become essential for any business marketing goods or services over the internet, especially for trendy services like food delivery and custom health product sales. But the FTC’s newly-announced settlement with startup healthy snack service UrthBox reminds marketers that online praise must be freely given, not bought—even if the compensation offered isn’t monetary.

UrthBox, Inc., a San Francisco company offering direct-to-consumer snack deliveries on a subscription model, drew the FTC’s ire by maintaining an incentive program that offered free snack boxes to consumers who posted positive reviews on the BBB’s website. According to the FTC’s complaint, the plan was simple: when a consumer reached out to UrthBox, customer service representatives would offer to send free products to the consumer in exchange for a screenshot of a positive review. The program began with the customer service department at UrthBox, where representatives were paid bonuses based on the number of consumer complaints they were able to turn into positive online reviews. The impact was significant: where UrthBox’s BBB profile had only nine reviews (all negative) in 2016, by the end of the next year, the company boasted 695 reviews, 88% of them positive.


Continue Reading FTC’s Snack Service Settlement Reminds DTC Companies Not to Incentivize Reviews

Since updating its Endorsement Guides in 2015 to keep pace with the meteoric rise of social media and influencers in marketing, the FTC has placed a significant emphasis on the need to disclose material connections between advertisers and endorsers. Through its Guides, informal business guidance, blog posts, warning letters, and multiple enforcement

The regulatory framework for online gambling recently took a wild turn when the Department of Justice Office of Legal Counsel (“OLC”) announced its view that the Wire Act (18 U.S.C. § 1084) applies to all forms of gambling—not merely sports betting. This marked a 180-degree reversal from the stance the OLC took just seven years earlier. The OLC’s 2011 opinion—which itself departed from public positions the DOJ had previously taken—was the foundation upon which today’s state-regulated online gambling industry is built. Four states—Delaware, Nevada, New Jersey and Pennsylvania—currently allow online gambling, and Michigan came close to legalizing it at the end of last year, although outgoing Governor Snyder vetoed the bipartisan bill in a surprise move. The OLC’s follow-on announcement gives now-unlawful online gambling businesses 90 days to bring their operations into compliance with federal law before Wire Act enforcement will begin under this newly expanded view. Below, we contemplate what enforcement of the industry will look like in light of this recent announcement.

Perhaps we will see a Cole memo-esque enforcement regime, where the feds will exercise discretion not to prosecute well-behaved online gambling businesses operated in accordance with robust state regulatory frameworks. After all, legal online gambling businesses and their service providers are already subject to extensive vetting, and in Delaware, online gambling is state-run. Regardless, we expect the DOJ to publish internal guidelines for how the feds should prosecute cases—this is a model that has been used in other areas, and would presumably outline the specific factors under which proposed enforcement would be reviewed and approved.


Continue Reading DOJ Reverses Course on the Wire Act, Changing the Odds on the State-Regulated Gambling Industry

Astroturf was again in the news last week, but not because the big game whose name we can’t mention was played on synthetic turf. Rather, last week, the office of the NY Attorney General (“AG”) announced it reached a precedent-setting settlement with artificial engagement company Devumi LLC and related companies (“Devumi”) over the selling of

On November 14, the FTC Commissioners, in an opinion authored by Chairman Simons, issued an opinion in an antitrust case involving the online advertising industry that has important implications for online advertisers. Last November, we discussed the initial decision by FTC ALJ Chappell that 1-800 Contacts had violated Section 5 of the FTC Act by coming to agreements with its competitors limiting their abilities—as well as 1-800 Contacts’ ability—to bid on each other’s trademarks and URLs in auctions for placement in search results. In his decision, termed an “Initial Decision” in FTC parlance, Judge Chappell found that those agreements directly harmed competition and consumers in the market for contact lenses sold over the internet, and he rejected the efficiency justifications proposed by 1-800 Contacts.

The full Commission went even further, affirming the ALJ’s decision, albeit on different grounds, and also holding that the agreements also violated the antitrust laws by harming competition in the bidding market for search engine keywords, reducing the prices that search engines like Google received for presenting ads in search results, and reducing the quality of the results delivered to consumers. As a result of the Commission’s decision, 1-800 Contacts is barred from either enforcing the agreements it already has with other online contact lens marketers, or from entering into similar agreements in the future.


Continue Reading The FTC, Contact Lenses, and the Future of Retail?

My kids watch a lot of YouTube videos, ranging in topics from taking an alligator to the vet to the world’s longest walk on Legos. They have their favorites – YouTubers under the names LoserFruit and Dude Perfect come to mind. I have caught my daughter practicing for her own channel about making slime.

Those aspirations had me thinking about the career path of being an “influencer.” Indeed, trickshot stars and video game aficionados have been hired as brand ambassadors for everything from sports equipment and toys to automobiles and insurance. By some accounts, YouTubers are making five-to-seven figures as brand partners.

While brand ambassadors can influence the purchasing choices of their audience, there are rules in the U.S. about influencer marketing that influencers must follow and brand marketers must monitor. This post outlines the basics in three golden rules.


Continue Reading Influencer Marketing – Three Golden Rules

Venable clients that engage in selling goods and/or services over the internet should evaluate whether the recent Supreme Court decision in South Dakota v. Wayfair will now require them to begin collecting sales and use taxes in states where they have not previously done so. In the Wayfair Case the Court held that a state can require a remote vendor to collect its sales/use tax based merely on “economic nexus” with the state. The prior law standard requiring a remote vendor to have physical presence in a state has been overturned. Under the South Dakota law at issue in Wayfair, an internet retailer is required to collect South Dakota sales tax if it has more than $100,000 of sales into the state or more than 200 sales transactions in the state over the course of a year.

Our chart below lists the states that currently have authorized an economic nexus standard similar to that approved in Wayfair and lists the threshold requirements for each state. This list can be expected to grow as states without economic nexus laws for sales tax purposes rush to alter their existing standards to take advantage of Wayfair’s liberalization of the sales tax nexus rules.


Continue Reading Internet Vendors Need to Pay Attention to these States After U.S. Supreme Court Alters Sales Tax Collection Standard

The Federal Election Commission recently held a public hearing to discuss its March 2018 proposed rule aimed at providing voters with more information about who pays for or sponsors online political advertisements. The private sector has adopted a solution to the issue.

On May 22, 2018, the Digital Advertising Alliance (DAA) took the first step to alter the status quo by unveiling a new, industry-wide PoliticalAds transparency initiative designed to bring greater transparency and accountability to the realm of political advertising.

Similar to the DAA’s YourAdChoice program, which provides consumers with easily accessible information via the familiar blue triangle that accompanies interest-based ads, the PoliticalAds initiative will require certain political advertisements to supply information and a comparable purple icon.

Political Ad Icon


Continue Reading Transparency Coming to a Campaign Ad Near You!

Any organization with a publicly-facing website—in other words, virtually any organization—should be aware that the World Wide Web Consortium (W3C) recently published its most recent update to the Web Content Accessibility Guidelines (WCAG) 2.0, titled WCAG 2.1. The W3C is a private organization that develops website accessibility standards.

As you may now know, in recent years, the WCAG 2.0 has become the widely accepted industry standard of technical requirements for making websites, mobile apps, and other digital content accessible to persons with disabilities. Although the Department of Justice (DOJ) has yet to adopt the WCAG 2.0 as the applicable standard for the private sector, governmental and private plaintiffs increasingly urge adopting WCAG 2.0 AA as the standard by which to measure a website’s accessibility—and more and more courts and agencies do so.


Continue Reading New Website Accessibility Guidelines: W3C Publishes WCAG 2.1

hashtagWhat if the influencer you had been following on Instagram—an influencer whose style choices you admired, and who supported social causes that you believed in—turned out to be…a robot?

This is what happened to followers of Lil Miquela, a 19-year old model from California who launched an Instagram account in 2016.  For the past two years, she’s been posting photos of herself in designer clothing, eating at trendy restaurants, and pitching beauty products.  Along the way, she managed to amass over a million followers.  Then, in mid-April, after getting hacked by a fellow influencer named Bermuda who refused to return her account unless she “[told] the world the truth”— Miquela revealed that she wasn’t human.  She is a CGI creation.  And so is Bermuda.
Continue Reading The Rise of CGI Influencers