WannaCry Ransomware Alert

This is not a drill.

Companies and law enforcement agencies around the world have been left scrambling after the world’s most prolific ransomware attack hit over 500,000 computers in 150 countries over a span of only 4 days. The ransomware – called WannaCry, WCry, WannaCrypt, or WannaDecryptor – infects vulnerable computers and encrypts all of the data. The owner or user of the computer is then faced with an ominous screen, displaying a countdown timer and demand that a ransom of $300 be paid in bitcoin before the owner can regain access to the encrypted data. The price demanded increases over time until the end of the countdown, when the files are permanently destroyed. To date, the total amount of ransom paid by companies is reported to be less than $60,000, indicating that companies are opting to let their files be destroyed and to rely instead on backups rather than pay the attackers. Nevertheless, the total disruption costs to businesses is expected to range from the hundreds of millions to the billions of dollars. Continue Reading

The Kardashians Can’t Keep up with Copyright Law

Khloe Kardashian is the latest Kardashian to find herself in court over her activities on social media. The youngest Kardashian sister was sued by a photographer for copyright infringement in Xposure Photos UK Ltd v Khloe Kardashian et al, 2:17-CV-3088 (C.D. Cal). Xposure alleges that Ms. Kardashian posted a photo it owned on her Instagram without permission and without the copyright attribution notice included on the original. For brands, celebrities, influencers, and others who use social media, particularly to make money or for promotion, this serves as a good reminder that all rights in any photographs, videos, and other content they post on social media must be cleared. Continue Reading

Brands Beware!!!! FTC Scrutinizing Influencer Posts for Compliance with Endorsement Guides

In response to a petition from a coalition of consumer groups last year complaining about the need for disclosures by social media influencers, the FTC recently announced on April 19, 2017 that it had issued more than ninety letters reminding influencers and brands that “if there is a ‘material connection’ between an endorser and the marketer of a product – in other words, a connection that might affect the weight or credibility that consumers give the endorsement – that connection should be clearly and conspicuously disclosed, unless the connection is already clear from the context of the communication containing the endorsement.” The FTC explained that material connections could “consist of a business or family relationship, monetary payment, or the provision of free products from the endorser.” A copy of the form of the letter, which explains that clear and conspicuous disclosures are required can be found here. Continue Reading

Consumer Review Fairness Act’s Point of “No Return”

On December 14, 2016 the United States Congress passed an act known as the “Consumer Review Fairness Act of 2016” (“CRFA”)[1]. The stated goal of this new legislation is “to prohibit the use of certain clauses in form contracts that restrict the ability of consumers to communicate regarding the goods or services offered in interstate commerce that were the subject of the contract.” The reach of the legislation’s protection of honest consumer reviews and opinions extends beyond content that may be posted on a company’s own website, as the Federal Trade Commission has clarified that the CRFA “protects people’s ability to share their honest opinions about a business’s products, services, or conduct, in any forum, including social media.”[2] Subject to certain exceptions under the CRFA relating to content that a company may be able to remove, edit, or suppress, CRFA generally provides that a provision contained in a form contract is void at inception if the provision: (i) “prohibits or restricts the ability of an individual who is a party to the form contract to engage in a covered communication;” (ii) “imposes a penalty or fee against an individual who is a party to the form contract for engaging in a covered communication; or;” or (iii) “transfers or requires an individual who is a party to the form contract to transfer to any person any intellectual property rights in review or feedback content, with the exception of a non-exclusive license to use the content, that the individual may have in any otherwise lawful covered communication about such person or the goods or services provided by such person.” Sections of the CRFA prohibiting and invalidating covered contract clauses became effective as of March 14, 2017, while sections providing for Federal Trade Commission and State enforcement become effective as of December 14, 2017. Continue Reading

#ShowMeTheMoney: Sofia Vergara’s Settlement of Social Media False Endorsement Lawsuit Highlights Modern Legal Issue

Last month, Sofia Vergara, star of ABC’s Modern Family, reached a settlement in a lawsuit brought by the actress against beauty company Venus Concept for alleged improper use of her likeness on television and in social media, which Vergara alleged created the false impression that she endorsed the Venus Concept brand or its treatment products. In the lawsuit, Vergara claimed $15 million in damages. Continue Reading

Dancing On Their Own: The California Supreme Court’s Decision in McGill v. Citibank, N.A. that Class Action Waivers Do Not Apply to Claims for Public Injunctive Relief under California’s Consumer Protection Laws

On April 6, 2017, the California Supreme Court struck another blow in its contentious battle with the United States Supreme Court on the enforceability of consumer arbitration clauses subject to the Federal Arbitration Act (FAA).  In McGill v. Citibank, N.A., No. S224086, Slip Op. at 1 (Cal. Apr. 6, 2017), the Court held that an arbitration clause in Citibank’s credit card  agreement purporting to waive the plaintiff’s right to seek public injunctive relief under the Consumers Legal Remedies Act (CLRA), the Unfair Competition Law (UCL), or the False Advertising Law (FAL) in any forum was unenforceable as against California public policy.  The Court further held that, notwithstanding the U.S. Supreme Court’s decisions on the subject, including in AT&T Mobility v. Concepcion, 131 S. Ct. 1740, 1747 (2011), the FAA did not preempt California’s policy.  As discussed below, these holdings are troubling and likely inconsistent with federal law. Continue Reading

Don’t Game Your Players with False Advertising

Advertising for new games can present some troublesome legal issues, if due care is not taken. A recently concluded matter in the UK highlights an example of the potential issues. Hello Games was investigated by the Advertising Standards Authority (ASA), based on complaints from customers that advertised features of its game (No Man’s Sky) either did not actually appear in the game or did not appear in the way advertised. The ASA ruled, in this case, that the advertising was not in fact legally misleading. Notwithstanding this ruling, game publishers need to be careful when advertising new games.

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FTC Requires that iSpring’s “Built in USA” Claims Hold Water

On February 1, 2017, the Federal Trade Commission (“FTC”) and iSpring Water Systems, LLC (“iSpring”) reached a settlement regarding its false, misleading, and unsupported claims that its water filtration systems and parts are “Built in USA,” “Built in USA Legendary brand of water filter,” and “Proudly Built in the USA.”

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FTC / DAA Extend Data Privacy Focus to Cross-Device Tracking

Enforcement of the Digital Advertising Alliance “Application of the Principles of Transparency and Control to Data Used Across Devices” (DAA Cross-Device Principles) officially began on February 1, just a week after the FTC issued a staff report discussing the application of the FTC Online Behavioral Advertising Principles in the context of “Cross Device Tracking” and suggesting that the DAA Cross-Device Principles, while commendable, could be stronger. Continue Reading

Using Hashtag #Disclosures in Social Media Advertising

The Federal Trade Commission (“FTC”) has been cracking down on brands for paying Instagram users to endorse their products or to share brand content without disclosing the relationship.  Indeed, the recent settlements entered between the FTC and several media and entertainment companies as well as a specialty retailer make it clear that the FTC is paying close attention to endorsements of all kinds – whether by celebrities, sponsors, or paid “influencers.”

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