The Fyre Festival Storm Continues: Kendall Jenner Settles Over Social Post

For those following the fallout from the Fyre Festival, the drama continues.  Last week, model and influencer Kendall Jenner settled a bankruptcy lawsuit for $90,000 relating to her promotion of the Festival.

To refresh your memory, Fyre Festival was planned for spring 2017, advertised as a music and culinary paradise held on a private island in the Bahamas.  However, the Festival faced a growing number of logistical and financial hurdles leading up to the start dates, including cancelled talent bookings and incomplete accommodations.  Organizers marketed the Festival as an extremely exclusive event and paid top dollar to some of the world’s most followed social media influencers to promote the Festival, including Jenner, Bella Hadid, and Emily Ratajkowski.  Ticketholders were charged thousands of dollars to attend the Festival, but arrived to FEMA-like tents and prepackaged sandwiches.  In 2018, the Festival’s organizer and CEO of its parent company, Billy McFarland, was sentenced to six years in prison after pleading guilty to charges of wire fraud and bank fraud.

Gregory Messer, the bankruptcy trustee overseeing the liquidation of Fyre Festival LLC, initially sought $275,000 from Jenner for her involvement in the Festival.  According to the Netflix documentary detailing the Festival, Jenner was paid no less than $250,000 to promote the Festival on Instagram and direct consumers to the Festival’s website.

While it is not often that an influencer has to return his or her fee (especially when they satisfy their obligations), bankruptcy law provides trustees with a right to claw back payments made by the company before the company files for bankruptcy.  Jenner’s fee was only part of the $5.3 million paid by Fyre Festival organizers to the world’s top modeling agencies and vendors to hold and promote the Festival – nearly $1.5 million of which was paid to two modeling agencies.

Takeaway:  Influencers should remember that they are not shielded from liability with respect to acts and practices of the brands in which they endorse.  Careful consideration should be paid to what it is the influencer is promoting and the potential risk involved – and, in some cases, whether the whole event sounds too good to be true.


ANA Trust Consortium release “Data Sources for Media: A Buyer’s Guide”

Advertisers spend a tremendous amount of money on third-party data to influence media buying decisions. Third-party data can come from many different sources, and multiple methodologies can be used in its collection, structuring, and marketing. This often makes it difficult for advertisers to understand exactly what they’re buying, leaving advertisers at a disadvantage and at risk of purchasing data that’s unsuitable for their purpose. To address this problem, the ANA’s Trust Consortium, in partnership with Reed Smith, released a new report, “Data Sources for Media: A Buyer’s Guide,” which outlines key criteria for marketers to focus on when evaluating your data. To download the report, click here.

The Trust Consortium was launched by the ANA in 2019 in partnership with Reed Smith, the ANA’s outside legal counsel. The Consortium’s mission is to restore trust in the marketing ecosystem through transparency, integrity, and growth.

LA Sues Seller of “Must-Have” Radish Paste that Falsely Claims to Prevent COVID-19

Last week, the Los Angeles City Attorney’s office filed a civil lawsuit against KNature Co., Inc. d/b/a Insan Healing, Inc. (Insan), a Los Angeles-based herbal remedy retailer, for attempting to pass off an untested radish paste as an immune-boosting, “must-have product for the protection and prevention” of COVID-19.

The product is made from a combination of “white radish harvested during frost,” garlic, ginger, and other herbs and retails for $99.95 a bottle. According to the complaint, the Insan Healing website falsely touted the product as “an immunity boost to your lungs!” as well as “a must-have product to enhance immunity” and “for the protection and prevention of the COVID-19, cold and flu season [sic].” The U.S. Food and Drug Administration (FDA) has repeatedly warned that there are currently no FDA-approved medical countermeasures for COVID-19.

The complaint asserts claims for false and misleading advertising and unfair competition under California law. It alleges that Insan has violated state and federal food and drug laws by advertising that its product can be “used or [is] intended for use in the diagnosis, cure, mitigation, treatment, or prevention” of COVID-19. The complaint also asserts that the company’s advertisements give the false or misleading impression that its product is a drug for sale in California that can protect consumers from COVID-19 and lung and respiratory issues, and that it is an FDA-approved drug or medical countermeasure against COVID-19.

The lawsuit seeks an injunction stopping the sale of the product, fines of up to $2,500 per violation of California’s unfair competition law, and restitution to consumers for money paid for the product.

Takeaway: The LA City Attorney’s lawsuit is the latest example in the plethora of false advertising investigations, enforcement actions, warning letters, and lawsuits that have been initiated to stop the proliferation of consumer scams and frauds by companies touting fake drugs and treatments in an attempt to profit from the COVID-19 public health emergency.

The FTC Sends Additional Rounds of Warning Letters Over Health and Earnings Claims Related to Coronavirus

The Federal Trade Commission (“FTC”) announced it has issued twenty-one additional warning letters to marketers throughout the United States for making unsubstantiated claims that their products and therapies can treat or prevent coronavirus (COVID-19). Relatedly, the following day, the FTC announced it has issued ten warning letters to multi-level marketing companies (“MLMs”) to remove or address claims they are making about their products’ ability to treat or prevent coronavirus and about the earnings that people who have recently lost income can make.

The marketers included in the batch of twenty-one warning letters include those advertising vitamins, supplements, IV therapy, ozone therapy, and stem cell therapy. The marketers’ coronavirus treatment claims included: “high-dose vitamin C protects against coronavirus”; “build up your immune system against coronavirus”; claiming consumers infected with COVID-19 have been “cured with ozone”; and claims that stem cell therapy has “successfully treated” a COVID-19 patient. Despite the companies’ claims, according to the U.S. Food and Drug Administration (“FDA”), there currently are no products that are scientifically proven to treat or prevent the virus.

In the letters, the FTC reminded the marketers that, under the FTC Act, in order to advertise that a product can prevent, treat, or cure human disease, the marketer must have “competent and reliable scientific evidence, including, when appropriate, well-controlled human clinical studies, substantiating that the claims are true at the time they are made.” The FTC requested the companies respond within forty-eight hours describing the specific steps they have taken to address the FTC’s concerns.

The FTC’s warning letters to the ten MLM companies highlighted such impermissible coronavirus treatment and earnings opportunities claims as: “[A] lot of us are worried about getting the virus and since a vaccine has yet to be developed we’re going to have to rely on our good-old immune system to keep us healthy” and “[t]his is a great stimulus package, because you get to teach somebody how to go earn $1,730 literally in their first 10 days in the business.”

In the warning letters, the FTC reminded the MLM companies that claims about the potential to achieve a wealthy lifestyle, career-level income, or significant income are false or misleading if business opportunity participants generally do not achieve such results. As with the other warning letters, the FTC requested that the companies respond within forty-eight hours describing their actions taken to address the FTC’s concerns.

Takeaway:  This latest round of warning letters illustrates that regulators are continuing to significantly increase their efforts to stop scams and remove bogus treatment – and now earnings claims—from the marketplace during the current health and economic crisis.

April Warning Letter Showers: The FDA Issues Over Twenty Warning Letters to Companies Making Fraudulent Coronavirus Claims

Last month, the U.S. Food and Drug Administration (“FDA”) issued over twenty warning letters to companies located in both the United States and abroad for allegedly selling unapproved products that may violate federal law by making deceptive or scientifically unsupported claims about their ability to treat coronavirus (COVID-19).

The companies subject to the FDA’s warning letters include CBD sellers and companies selling colloidal silver, salt therapy, essential oils, and chlorine dioxide products. The companies’ products, which the FDA described as “unapproved and unauthorized” and “intended to mitigate, prevent, treat, diagnose, or cure COVID-19 in people” were marketed with such claims as: cannabis “speeds recovery” from COVID-19; CBD boosts T-cells with “powerful weapons” that could ward off COVID-19; “Colloidal silver is the key to protecting yourself from the corona virus”; “Saline therapy strengthens the lungs to fight against the novel Coronavirus”; and “…we are confident that the proper mixture of chlorine dioxide (MMS) has every hope of eradicating COVID-19.”

Despite the companies’ claims, according to the FDA, there currently are no products that are scientifically proven to treat or prevent the virus. The FDA’s letters order the companies to “immediately cease making all such claims” and to respond within forty-eight hours describing the specific steps they have taken to correct their violations or risk legal action, including, without limitation, seizure and injunction.

Takeaway:  The onslaught of warning letters issued last month, which show no signs of slowing, illustrates the FDA’s continued effort to aggressively protect consumers from companies making bogus coronavirus treatment claims and from preying upon consumers desperately looking for any potential treatments against the virus, which has already infected over 3.5 million people worldwide.

Webinar: Advertising and Litigation Risks for Food and Dietary Supplement Companies

Join Jason Gordon on Wednesday, May 13, 2020, for a live webinar hosted by the FDLI and titled, “Influencers, Social Media Advertising, and Litigation Risks for Food and Dietary Supplement Companies.

Food and dietary supplement companies are increasingly using influencers and social media to advertise their products. These marketing strategies are even more important during the current Coronavirus-driven lockdown, as consumers spend more time online. Beyond the current pandemic, online advertising is a valuable tool for reaching younger generations of consumers, communicating proven and potential health benefits, and drawing attention to new product releases. However, for companies that are unaware of or ignore the rules and guidance set forth by the FDA and FTC, these strategies can easily lead to both government actions and private litigation.

In this webinar, panelists will discuss both general and industry-specific issues, such as the recently released FTC guidelines for social media influencers, recent FTC activity and areas of focus, trends in online marketing, and litigation risks for touting nutritional and health benefits for both foods and dietary supplements.

May 13, 2020, 2:00 – 3:30 p.m. EDT

For registration details, please click here.

Fash-Shunned: Selena Gomez Sues Fashion App for $10 Million for Allegedly Using Her Name and Likeness Without Permission

This month, actress and singer Selena Gomez filed a lawsuit in California state court against the makers of a fashion smartphone game for allegedly using her name and likeness without permission.

According to the complaint, Gomez claims that the makers of the “Clothes Forever – Styling Game” app, which lets players dress celebrity avatars, “blatantly rips off” a popular image of Gomez taken for a fashion publication, as seen below:

The complaint further states that while Gomez’s reputation, public image and influence would make her “ideal” to endorse mobile games, she has never made any such endorsements and would never have consented to allowing her publicity rights to be used in such an “unsavory” game, which allegedly lures its users to make large in-game purchases.

The complaint alleges that Gomez has suffered and will continue to suffer actual damages of no less than $10 million. The complaint further describes the defendants’ unauthorized use of Gomez’s publicity rights in its “bug-riddled” mobile game as having “injured” and “harms” Gomez’s right to market her own fashion-focused games.

The complaint seeks damages (including punitive damages), restitution and/or all profits derived from the defendants’ conduct, as well as requesting that the defendants be preliminarily and permanently enjoined from continuing the alleged unlawful activity.

Takeaway: Advertisers should be aware that a use of a look-alike may still give rise to a right of publicity claim. Accordingly, the use of a celebrity’s persona for a commercial purpose, without permission, may give rise to a lawsuit.

FTC Sends More Warning Letters to Companies Selling Fraudulent Products that Claim to Treat or Prevent the Coronavirus

The Federal Trade Commission (“FTC”) announced it has issued ten additional warning letters to companies located in both the United States and abroad for allegedly selling unapproved products that may violate federal law by making deceptive or scientifically unsupported claims about their ability to treat coronavirus (COVID-19).

The companies advertise products including a bundle of supplements called an “ANTI-VIRUS KIT” to “Sonic Silicone Face Brushes” and even intravenous (IV) “therapies” with high doses of Vitamin C to “fight off Coronavirus.” Despite the companies’ claims, according to the U.S. Food and Drug Administration (“FDA”), there currently are no products that are scientifically proven to treat or prevent the virus.

The letters indicate that one or more of the efficacy claims made by the marketers are unsubstantiated because they are not supported by scientific evidence, and therefore, violate the FTC Act. Accordingly, the FTC’s letters order the companies to “immediately cease making all such claims.”

The FTC requested the companies respond within forty-eight hours describing the specific steps they have taken to address the FTC’s concerns.

Takeaway:  This is the latest round of warning letters issued by the FTC alleging unapproved and/or unsupported claims that products can treat or prevent coronavirus. As we wrote about here, the FTC, in conjunction with the FDA, previously issued several warning letters to companies making similar coronavirus efficacy claims. The warnings represent the continued effort by regulators to stop scams and remove from the marketplace bogus treatments and cures to purportedly combat COVID-19.

Keeping Up with Copyright: Kendall Jenner Sued for Infringement over Instagram Video

Last month, Kendall Jenner was sued for copyright infringement by a woman who claims Jenner posted her copyrighted video on Instagram without permission.

The video shows Jenner walking out of a New York City building – waving and smiling at the camera and a group of fans and paparazzi gathered nearby. According to the complaint, the video is the copyrighted property of plaintiff Angela Ma, and she claims that Jenner did not license the video or have her permission or consent to publish the video on Instagram.

The complaint, which alleges Jenner’s acts of infringement were “willful, intentional, and purposeful, in disregard of and indifference [sic] to Plaintiff’s rights” seeks unspecified damages and Jenner’s profits from the video, or alternatively, statutory damages of up to $150,000 per work infringed.

Takeaway: This suit is the latest in a stream of “celebrity infringer of the week” lawsuits, whereby various individuals are alleging celebrities are infringing their copyrighted work in photos or videos of themselves on their own social media handle.  As we previously wrote about, Gigi Hadid was sued for copyright infringement for allegedly similar conduct.

John Feldman and Jason Gordon discuss COVID-19 Charity Marketing and Compliance Challenges for brands in Law360 Article

John Feldman and Jason Gordon published an article in Law360 this week titled, “Compliance Challenges In Cos.’ COVID-19 Charity Marketing.” A copy of the article is available here. You may also view a PDF copy of the article here.