Avoiding Legal Pitfalls in Marketing - Robert Freund | ATC #514

Join host Stephen Sargeant in an engaging episode of Around The Coin, featuring Robert Freund, founding attorney at Robert Freund Law, APC. Robert is an experienced advertising attorney and advisor. He focuses his practice on social media marketing and e-commerce issues. Before opening his own firm, Rob honed his legal skills working at Greenberg Traurig, LLP, one of the largest and most respected international law firms. Rob has lectured about advertising law at the University of Southern California and the University of San Diego, and he has been quoted in The Wall Street Journal, The New York Times, Bloomgberg Law, and Vox on those issues.

Host: Stephen Sargeant

Guest: Robert Freund

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Episode Transcript

Stephen: This is your host, Stephen Sargeant, back with another episode of Around The Coin. This is an interesting episode because this affects entrepreneurs, this affects you sharing different posts from your favorite influencer or favorite bands, because this is all talking about the legalities behind copyrights.

IP laws. We cover the full gambit with Robert Freund, who is a lawyer that focuses on e commerce and influencers. This is probably one of the most interesting episodes on this podcast because we go deep down into all the FTC penalties. All your favorite celebrities, including Kim Kardashian, and why they're getting sued.

We talk a little bit about securities, NFTs, advertising, marketing. So if you're an entrepreneur, or you know, you operate a small business, or in the media or content side, this is probably a must listen. And then we talk a little bit about Robert's life, and how he was connected with Andy Frisella, which is the Real AF podcast, and he went down to his actual facility.

In Missouri, and gives us a little bit of sneak peek at the end of what it's like being in the presence of billionaires. Must listen, reach out to me and let me know if you guys are liking some of these Switched Up episodes that we did, because this is a cool one.

Stephen: This is your host of Around The Coin, Stephen Sargeant.

We're here with Robert. Robert, introduce yourself. I'm really excited about this podcast. As I said, pre call, I really have been following you for a long time. I love the style of your content and I have a ton of questions. I know the questions I sent you, there's so many of them.

I really want to get through all of them, but tell us a little bit about yourself and kind of your foray into IP, you know, e commerce, helping out influencers. Talk us through that.

Robert: Yeah. So my, my background is in commercial litigation. So I worked at a big law firm called Greenberg Traurig for the first close to seven years of my career.

And a lot of what I was doing at that firm was defending businesses against class action litigation. And in California, especially a lot of those cases have to do with false advertising. So that was a lot of what I was exposed to in the beginning of my career. And you know, for a number of reasons, as time went on, I, I decided that staying in a big law firm is not what I wanted to do forever.

And so in, in 2019, I decided to leave that firm and open my own practice. And what I wanted to do was more of the work that was similar to what I was doing in my later years at that firm, which was Less litigation and more helping clients avoid those sorts of cases in the first place through reviewing ad copy or some proposed marketing campaign or something like that, and trying to help the client identify what the risks are and avoid them if that's what they wanted to do.

So that's what I do now. I focus on advertising and e commerce compliance and transactional work and, and hopefully helping clients avoid this sort of litigation that I dealt with for so many years. So most of my clients now are consumer brands or marketers or ad agencies or talent agencies, and maybe 10 percent of the client base or so is individual talent and creators.

Stephen: Tell me about class action lawsuits. It seems like in the U. S. I'm in based in Canada. It seems like in the U. S. class actions are a dime a dozen. How hard is it to get a class action started? And I believe it has to be approved by the courts before it goes forward. Maybe you can give us a quick level summary.

Robert: Yeah, the, the, the danger for a defendant facing a class action is the the potential financial exposure. Is usually much more significant than in a case where you just have one person suing one other person in their individual capacity. And so in taking an example, like a false advertising class action, some of the stuff I tweet about is like this bag of chips says it's natural and the plaintiffs say it's not natural and a reasonable response that I'll get to that is, well, so what we're talking about a 3 product.

Why don't they just return the chips? The reason is because even if the damages for that one consumer is the amount they paid for the product, let's say 3, if you, if, if the claims are legitimate and the court allows them to proceed, then you've got 3 times Every person in the country who bought a bag of chips in the last four years, suddenly you're talking about a hell of a lot of money.

So that's, and the lawyers who bring those claims typically can get about a third of whatever the case settles for, or whatever the judgment is. So there's an enormous financial incentive for Plaintiffs lawyers to bring cases styled as class actions. In terms of getting those sorts of cases off the ground, at the outset, there's not that much more that goes into it than any other case.

All you need is one consumer or, or whatever kind of class action it is. One plaintiff that you've identified that has a claim that's essentially representative of that alleged issue that everyone else has faced. So. To start the litigation process, to file a case, you just need one person and a plausible claim.

You're right that there's, there's different stages of litigation as the case proceeds, and at a certain point, if the case doesn't settle or if it's not dismissed before then, you do have to convince the judge as, as the plaintiff that yes, this is the type of case That it's appropriate to use the class action mechanisms for, and there's a series of things you have to establish, but you don't have to do that out of the gate.

All you need to do is find one person and say, Oh, this person's suing on behalf of everyone in California or everyone in the country is the case may be.

Stephen: Right. Is there any class actions that maybe not even that you worked out that you were surprised about that went as far as it did? I know the McDonald's class action made them change, you know, pretty much how many calories, like, or at least disclosure of calories across the board when it comes to restaurants and fast food.

Is there any class actions that stand out to you?

Robert: I mean, there's, there's so many that I, my perspective is probably different than the average person and it continues to evolve. I mean, I'm not surprised by claims that settle for high dollar figures as much as I used to, as much as I used to be. So and I recognize that a lot of the things that seem normal to me don't seem normal or seem totally frivolous.

To the average person. And, and because there's so many of these files, it makes for great Twitter content. So for example, there was a case filed as a class action recently against Reese's, Reese's peanut butter cups because the Halloween ghost shaped Reese's cup. Didn't have the little eyes that were cut out on it in the way that the label shows.

It was just like a solid blob that looks like a ghost and the little carved out ghost eyes weren't there. And of course, a lot of people were like, this is what's wrong with the country, who would be misled by this? But I'm looking at that and I'm thinking, okay, you know, I've seen so many cases that are, that have a similar theory where, all right, I wouldn't have bought this product if I knew the truth about whatever is actually true about it.

That's different from how it's packaged. And, you know, I don't know if that's case is going to survive a motion to dismiss. I don't think it's frivolous. I think, you know, it's possible that that sort of claim could work, but those sorts of things come up all the time where it's like, you could say, well, this is just some nitpicky person who should have just returned the candy or not bought it if they weren't sure or whatever, but potentially very significant liability for brands that, that make those sort of minor mistakes in their packaging.

So those are really common things like. Things that are sort of, have been trending for the last few years and are still pretty common are claims where there's a, a, a word that's not defined by law, but is potentially misleading, like all natural or clean beauty products or environmentally friendly or green or things like that.

Where it's like, the challenge is what, what does a reasonable person interpret that to mean? Well, would it be reasonable to think that natural means absolutely no synthetically derived ingredients at all? Maybe some courts say, yeah, that's reasonable. And then you have cases settling for tens of millions of dollars over a single word like that.

So in the interest of time, I, I'm trying to think of a few that stand out. The Reese's one was especially interesting to me...

Stephen: I think there was one recently on meat, right? Like they were depicting that a sandwich had more meat than it actually does. I think Prime is under a class action lawsuit, I don't know.

FPAs seem like to be the buzzword now kind of replace BPAs now, I think.

But then you get into influencer marketing. Like what made you decide to transition? Was it a particular case where you're like, Oh, this industry really needs help, or at least my help, or is it like, Hey, these people just don't know what they don't know.

And you know, a new influencer, a mom in Arkansas, just, you know, talking about. You know, farming, doesn't know the intricacies of using a certain song when she gets a brand deal because it's her first one. What kind of made you dive into this area or niche area, I would say, when it came to law?

Robert: Yeah, the, the focus on social media really started once I, I left my last firm and started my own and it was a combination of what subject matter is interesting to me and also a little bit of luck.

And, and what I mean by that is. As I was trying to develop business initially. I was thinking, all right, well, how can I do this? How can I build a client base? Well, one of the things I should probably do is write articles that will be published in legal publications so that other practitioners are aware of me.

That was the thought. And so I was watching the documentaries. I've got a couple of questions about the FIRE Festival that came out around the time that I just launched my practice. And those touched on the issues with influencers not disclosing that they were paid by the festival to promote what became such a disaster.

And I thought, well, that's interesting. I wonder, I wonder exactly how all that works because at the time I didn't, I didn't have a reason to look into FTC disclosure requirements. In my practice before that. So I looked into that. I wrote this article about potential risks for those sorts of non disclosure things.

Or non disclosure issues. And as a result of that article, I was invited to speak at a conference that was dedicated to influencer marketing. And from there, I met a bunch of people who were relatively big players in the social media space who promoted my content and people wanted to see more of it.

So I kept putting it out there and it, it sort of organically in that way. grew into a practice area that, that there was demand for. And it is interesting to me. It's, it's among the more interesting topics that I've looked into in depth in, in my 12 years of doing this. So it's nice. I, I'm fortunate that I get to focus on areas of the law that are inherently more interesting to me and also that there's enough interest in and, and demand for from clients.

And to your question about, is it, is it that influencers aren't aware of these regulations? That's true, but it's, it would be unfair to say it's just because. Some influencers are unsophisticated. There, there are people who work at brands and ad agencies at the highest levels that, that don't understand all of how this works and it's, I don't fault them for that.

Like why, why would they in their free time look into the details of how. All these regulations work unless they had a problem on their hands or unless they're, they're being very proactive. So there is a lot of misinformation or, or I guess, lack of information or education around these issues. And I'm hoping that I can sort of bridge that gap between what the regulators know and what the people know.

Stephen: Sounds like you're eating a bologna sandwich in a tent on some island. You're like, man, that Ja Rule and Kylie Jenner. And that's what turned, that's what turned it all around. What the biggest mistakes you mentioned? You know, big brands, small influencer. Give me some of the basic mistakes of people that even like myself that take your content and repurpose it on places like LinkedIn.

What should we be worrying about? What are some of the things that we need to at least consider?

Robert: Yeah, there's, there's a lot, but some that come up over and over again and that people still express surprise to hear are involve what you can and can't do with content that was created by other people.

So a big misconception that still persists is, If, if I'm a brand, like let's say I make shirts and that's what my business does. And I see a celebrity wearing one of my shirts and they post a picture of themselves wearing it on Instagram. For example, a lot of brands will think, okay, because that person is wearing my product, I can, I can repost that picture.

I can take that picture and maybe use it on my website or say, look, who's wearing this shirt. Or just because some, some creator tagged the brand, that means I get to use that content. And that's not true unless you have some agreement with whoever that third party is. So just doing rights clearance on content is, is a persistently misunderstood set of issues, especially on social media.

Stephen: Can I interrupt you there? Do they have to clear that with the celebrity or even the photographer that Took the picture. Cause I think there's a lot of, there's a lot of rights implications there. Right. Here's the photographer, the celebrity, who should they be speaking to and how can they clear it if they did clear it with the celebrity, does that give them, you know, does that still absolve them from any liability from a photographer?

Robert: Right, there's two related issues there, and you're spot on. There's the copyright issue, which has to do with clearing the rights with whoever, if we're talking about a picture, whoever took that photo. By default, that photographer owns the copyright in that piece of content, and you can't repost it unless you have their permission to do so.

And with respect to the person who's depicted in that image, there's the publicity rights issue. So even if you clear even if you get permission from the photographer, let's say to repost that image, if you're putting that picture of that celebrity on your brand's page, that celebrity or whoever it is, it's, everybody has publicity rights.

It's not just celebs. What you're doing in that situation is you are using that person's image for a commercial purpose. You're putting content on a brand page without their permission. And that's like, those are the elements basically of a publicity rights violation. So you would need to clear the rights both from whoever created the content.

And to the extent somebody is recognizable in that content with that person, if you're using it using that content commercially and there have been cases over the years where both of those things are in play. There is a lawsuit against Volkswagen from a few years ago where they had used a photograph.

That showed a model like standing in a wheat field or something. And there's like a Volkswagen car in the background. They didn't, they didn't get the permission from either person and both the photographer and the model sued for copyright infringement and publicity rights violations, respectively. And, and, and that leads into another issue that's often confused is what constitutes advertising?

There's a misconception that, well, if I'm not putting ad spend behind this And I'm just organically posting on a brand page. That's not advertising, right? Well, it is. The law will treat Essentially anything that's put on a brand's social media page as advertising for that brand. So you don't get a free pass to say, well, look, there's no advertising money behind this.

It's not running as an ad, so to speak. And so we don't, we don't need to do rights clearance. That's incorrect. And basically you should assume everything you're posting on behalf of your brand is going to be considered advertising.

Stephen: And this is why you see maybe some people blurring out or taping over some of the logos.

Is that the reason why they're doing is like protecting themselves from having to get any clearance afterwards?

Robert: That can be, if you're blurring out a logo, you're, you're probably trying to account for trademark issues where you don't want some situation where because a brand logo is visible, that brand could say this could imply some connection between us or some.

Endorsement by us and whatever you're doing. Or maybe they would say, we don't like what your brand is about. And you're diluting the value of our mark by including it there. And that sort of thing. And a lot of times that's put into agreements. Like you'll see, especially in influencer contracts with brands that the brand will require the influencer not to feature the clothing of any other brand.

So it might be a situation where rather than reshooting something that might've taken a while to produce, if there's like a Nike logo visible. They'll blur that out just so that they can comply with their contract. But yeah, blurring out logos, generally we're talking about trademark concerns more than copyright or publicity rights ones.

Stephen: But everyone that's listening is going to say, okay, come on, Stephen. Come on, Rob. Everyone's reposting this, sharing this, stealing this meme, adding in their own words. You know, that's the whole point. A lot of celebrities are doing what they're doing is so they can go viral and use memes. How, like, how common is it for a brand or someone, photographer, to go after, you know, your average influencer?

Robert: Yeah. Photographers, especially. It's they're much more litigious and the reason is there are, there are firm, there are law firms where their entire business model is essentially copyright trolling. If you're on the receiving end of these letters and lawsuits, that's probably how you would describe them.

And they know there's, there's money in just, in milling or just running through settlements for every copyright violation they can possibly find on the internet. Against individual influencers, it's, it's somewhat less common than going against the brands or, or pursuing a claim against a brand or some business entity.

And there's a number of reasons for that, but it does happen from time to time. And I've, I've seen it many times over the years where, especially if the influencer is also the brand owner, you'll see them photographers send demand letters or, or just file a lawsuit as the first Opening move for these sorts of copyright issues.

It's true that, that this sort of activity is rampant and there are people who get away with it for years or maybe even forever, but there you're, you're really always rolling the dice if you don't do the rights claims you're supposed to do when you post stuff on social media.

Stephen: And what should influencers do?

Let's just say I'm an influencer. I might make 5, 000 here, 2, 000 there on the brand deal. Should I be looking at your law form and saying, Hey, I, should I be signing agreements with you or have you on retainer? Like how can they protect themselves and still run a small business or, you know, still make money on these brand deals if a lot of the portion is going in to regulations and legal issues?

Robert: Yeah, that's, I'm sensitive to that concern. That's like, well, if each one of my deals is not worth. A, a massive amount of money. I don't really want to eat up a significant amount of it, paying a lawyer to look over everything, and that's fair enough. So in in that situation, what I would recommend is, is becoming familiar with what the law requires of you as an influencer, the FTC, to their credit.

Has a pretty comprehensive series of documents. It's the FAQ to the endorsement guides. Runs through a lot of different hypothetical scenarios about what the FTC thinks is okay and what isn't okay and so forth. That's a good starting point. In terms of understanding what a contract says, I mean, first of all, you should always have something in writing with the brand or, or whatever agency is on the other side of a potential deal.

If there's no contract, that should be a red flag for you. If you, if you're looking over a contract and, and, and you should read everything because I hear a lot from creators who don't realize the rights that they've signed away.

Stephen: Skim and they go right to the amount, they go right to the price section.

Robert: Yeah. And, and it's worth taking the time to slow down and read the thing. And if you, if your gut says, Hmm, I don't know what this means, or this really, I want to be sure that this doesn't mean what I think it might mean or something like that, then having a consultation with an attorney that is not going to be especially expensive if you want to just cover an issue or two.

And, and get that sort of peace of mind because I, I have seen many creators and talent inadvertently or, or sort of unknowingly sign away rights that they absolutely would not have signed away had they known what that language actually said, or they find themselves stuck in some contract. Maybe with an agent that they, they didn't realize it was going to be for five years and they have no way out of it or something like that.

So I would say, you know, if you're comfortable that you understand everything that's in a particular contract, then great. Like that, that's, you don't need an attorney if you don't have any concerns, of course. But if something, if something does seem, you get that sort of sense in your gut that you should get some second set of eyes on it, then I would, I would recommend doing that.

Stephen: I love it. You've talked about a few cases. You've publicly mentioned you don't hate MrBeast, but a lot of the things he's done has raised red flags. You know, I just personally commented on his post to get a free Cybertruck. I'm not sure if you did. I've seen, you know, sometimes he puts terms and conditions.

I saw after the first giveaway.

What are your thoughts about someone doing a giveaway? Sometimes I say, well, I'm giving something for free. I don't need to put any rules. And what, what are some of the horror stories that you've seen for people that aren't taking a little bit more time before they do things like giveaways?

Robert: Yeah, I don't, I don't think, I don't have any negative feelings towards Mr. Beast as a creator or as a person. I don't know him, but I don't object to anything he's doing, but. The reason I made content around some of his more popular pieces of content is because there's a lot to learn from big creators and what they're doing correct and sometimes what they're doing not so correctly.

And the area of sweepstakes and giveaways and contests and lotteries. is one that regulators pay a lot of attention to. And there are traps if you don't understand what those rules are. It's not especially complicated. Like you don't have to be a genius to understand how to structure those things appropriately in a way that doesn't subject you to any risk.

But there, the risks are there and people should know about them. That's the point of me calling out things when I see them that don't, that aren't correct. So in that particular situation pretty much every state in the country requires that if you're going to do a giveaway or a sweepstakes, you need to have a set of official rules that sets out things like who's eligible to enter.

What are the odds of winning? When are we drawing winners? How are you going to be notified? What's the prize? And do I have to give up any rights to claim the prize and so forth? There's also every, in every state in the country, it's a crime to require people to pay in order to enter. A giveaway. If you do that..

Stephen: This is why you see no purchase necessary. Is that why that's the common line? Okay.

Robert: Exactly. If you're giving away a prize that's awarded by chance and you're requiring people to pay, if you have all three of those things, then you have a lottery. So to get out of lottery territory, you have to offer people a chance.

A free alternate method of entry that counts the same as any paid method. So that is why you see no purchase necessary. And there's, there's specific laws that say you have to include that language and clear, clearly and conspicuously and so forth. And I think it was about a year ago, MrBeast was giving away, it might've just been cash.

In that one, I can't remember the particulars, but there were no official rules, there were no abbreviated rules that, that you have to put in the content itself. And there is no like description of when the, the promotion was starting and ending and basically everything that you would need to do appeared not to have been done.

And if the prize is over a certain value, there are a couple of states that you have to register in advance and post bonds and so forth. And so it was a great example of. You know, don't just follow MrBeast because that's, that would seem like a reasonable thing to do. Like, okay, MrBeast is the biggest person on YouTube.

Surely he has a team that's showing him how to do it the right way. Right, that's what I was going to say.

Stephen: He must have a team of robbers, of robbers. But maybe your tweets and your, your contents, like someone poked him and said, Hey, you know what? This guy knows what he's talking about. Maybe, maybe we should review this for next time.

Robert: I think what happened is, so yeah, it's just to, to finish that thought. The reason, the main reason I did that is so that people don't just assume, okay, if the big players are doing it this way, that must mean that they're doing it right, because that's not always the case. In his more recent giveaway, he's got official rules and the terms are set out in a way that you're supposed to.

And I think that's less. My guess is that that's less a function of him being poked or, or sort of being more aware of the rules. And, and more common is he's not like the mastermind behind this giveaway. Someone has approached him to partner with him to either sponsor that or to help set it up and all the backend is handled by whoever the sponsor is or, or whatever team is helping him.

And you'll see that with like David Dobrik's giveaways over the years. You would think that if he's working with the same team every time, the rules would look the same every time he gives away a Tesla or does the same thing, but they're not, and it's because he's working with different sponsors and different teams.

So, you know, it's not really a good use of MrBeast time to help draft official rules or even really think about how to do a giveaway. But yeah, there's the, the, the risk of getting that wrong is potentially criminal liability if you're running a lottery. Or if, if you a common way to run giveaways is to say something like every dollar spent in our store equals X number of entries.

Right. And if, if you have it set up that way, but you're not treating the free entrance the same as the people who pay, you have a problem on your hands and, and regulators pay attention to this. State AGs it's, it's definitely an area that they look at pretty closely.

Stephen: You mentioned regulators and you mentioned influencers not disclosing, so in the Fyre Festival, not disclosing the fact that they were, in fact, given money.

Where's the line? Is it the fact that they have to disclose that they were giving the money? Do they have to put that this is an ad? Do they have to disclose the exact arrangements or just say that they're being paid? And is it enough just to put like hashtag ad? In one of their posts, like where's the kind of lines drawn there?

And what are some of the instances where you advise people?

Robert: Yeah, if we're not talking about promoting securities or some kind of financial instrument, then the FTC's rule is that if there's a material connection is the term they use between an advertiser, like a brand, and an endorser, like an influencer, that is not otherwise obvious to the audience, Then that material connection needs to be disclosed and it needs to be disclosed clearly and conspicuously.

So a material connection is, is one that affects the weight or the credibility that a viewer would give to whatever that endorsement is. So if I'm getting paid to promote something, or if I got an item for free, and now I'm telling you how great it is, the audience would probably want to know that I was paid or that I was given the product when they're evaluating how much to trust my endorsement. That's the idea. So if in a sort of basic example, if I pay an influencer to create a post about my product, they don't need to disclose the fact that they were paid necessarily, they don't need to disclose how much they were paid if, if, if they were paid in money, they just need to make clear that this is advertising.

So one of the ways to do that with like, in the case of just a static image post or something, is to use something like hashtag ad. It's not, you don't have to use the hashtag. You don't have to say the word ad. There's, there's some examples the FTC gives of what's, what they would bless or, or find insufficient.

So ad, sponsored, the brand name, and then partner. You can be pretty sure that that's going to be, that's going to cover it. Things like gifted or spawn, they don't like because that's kind of ambiguous, but you can also use more like natural language, depending on what the situation is. Like I could say, thanks Monster Energy for giving me a sending me a free case of the drink that I love so much.

Boom. I've disclosed that I got it for free when I'm endorsing it. I don't also then need that.

To say, you know, this is sponsored by Monster, if I've made it clear. So there's some leeway to make that and how you make the disclosure in terms of the language you use. But yeah, if you're paid or if you're given something for free.

Or if you're talking about a brand that's your employer, or if you have a family relationship with whoever, with whatever you're talking about, like. If, if my parents worked at Monster and I'm on here talking about how great it is, that would be the kind of connection that needs to be disclosed. So, there's a variety of relationships.

Stephen: And do you have to disclose it every single time? If you're like, hey, you know, Rob, you know, I got this from Monster, so cool. And then two days from now, you're posting, you're drinking a Monster thing, oh, I still love this stuff. Do you have to disclose it every single time you're making a post?

Robert: Generally, yes. Every, every piece of content where I am making an endorsement, where I have that connection, I need to disclose it. The FTC gives examples of where that, that might not be the case forever. So like if I'm, if I have a YouTube channel or something. And I'm given a 30 product for free for one time. Three years from now, if I'm still a drinking monster, do I have to say that every time?

Probably not. Probably my audience doesn't care that I was given a soft drink for free once. But you know, if, if I run a tech channel or if I have a tech focused YouTube channel and I'm talking about HP laptops and every time I, I talk about how great it is and they send me one for free every year, I'm Every time I talk about HP laptops, I should disclose that I have that relationship.

Stephen: That's awesome.

Now you mentioned securities. Now, Kim Kardashian, a lot of people know, she was penalized by the SEC, which is a securities commission for her promotion of, whether it was a cryptocurrency or NFT token. What are the stipulations there? Cause I know you're big into the NFT space as well.

And we'll dive a little bit more deeper. But what would she had to have disclosed at that point to keep her safe? Or does it matter when, if the SEC determines that's an unlicensed security in the first place, is she in trouble either way?

Robert: Yeah, my, my involvement with FT, with NFT projects where, where I come in to help is, is usually limited to the sorts of issues that we've been talking about, like running sweepstakes promotions or working with influencers and things like that.

And I, I'm not well versed in SEC regulations or, or securities issues, but the, the situation involving Kim Kardashian had to do with her promotion of Ethereum Max. And in that, in that case, even though she disclosed in the Instagram story at issue, that I think she even used hashtag ad, like to disclose that it was sponsored.

The problem was that she did not disclose the amount that she was paid to post that Instagram story, which I think was like a quarter million dollars or something silly like that. But there, there are different, there are additional. Disclosure requirements if you're promoting a security or, or I think there are other types of financial instruments that would fall under that.

But that's what she did wrong. She didn't disclose the amount that she was paid to promote Ethereum X when she promoted it.

Stephen: So that's where the amounts would come in that you have to discuss and disclose.

Now, you know, I'm on Instagram every day. I'm sure you are too. The FTC is also really heavy handed on coaches.

I don't know if you've seen your feed lately, but every coach made 80 million in the last 30 days, and they're going to show me and Robert exactly how we can do the same thing too, if we pay 79. 99 for their course. I'm asking myself as a compliance person, like, shouldn't FTC be verifying that? Is the IRS verifying information?

It seems like all these coaches are getting away with what could be, you know, very misleading statements. And definitely not, you know, I know there's something in there about providing customer reviews or customer satisfaction. Can you kind of dive into that and what coaches or anyone else online should be very careful of?

Robert: Yeah, I have a number of clients that are coaches or that sell educational products like that whether it's business coaching or something else. And it is an area that the FTC in particular has paid even more attention to than previously in the last few years. And the, the focus of what, what's being looked at is those earnings or performance claims.

So if you're saying, you know, my, this student made six figures in six months, or they were able to quit their nine to five and escape the wage life or like whatever coaches like to say, the, the requirement or what, what you have to do if you're making those sorts of performance claims. Or especially earnings claims is if you're going to showcase a, an exceptional result or, or any individual result from one of your clients or students, then that result that you're showcasing needs to reflect the typical expected result of your client base.

And you need to have documentation on hand. To substantiate the fact that this is what the typical expected result is. And if it's not what the typical expected result is, it's not enough to just say results may vary or to include some kind of disclaimer at the very bottom of a funnel page or something like that.

Instead, you have to disclose again, clearly and conspicuously what the typical expected result is. And be able to support that or substantiate that with evidence that you have on hand. In addition to making sure that that exceptional result that you're showcasing is actually true. And that person did achieve that result.

And, and that is where. That like difference between what's shown as being normal or, or what's being advertised is, you know, this person did X and so can you, the difference between that and what the reality often is, has been the focus of all these enforcement actions against business coaches in the last few years.

Stephen: And what's the penalties? Do they force them? Is there injunctions? I'm assuming not to shut down the business. Is it just monetary penalties? Is it like close supervision on future posts or, you know, content that they make? What, what are the extent of these penalties?

Robert: Yeah, it can vary a lot. And it, it depends on the harm to consumers and the willingness of the people being investigated to play ball with the FTC.

So it can range from. Really significant civil penalties in terms of like money. You have to give back all of the money that consumers gave to you under these false pretenses. Almost always there's some injunction, whether it's being banned from offering educational products altogether or some, something more narrow than that.

There's pretty much always reporting requirements. Usually it's like for the next 10 years, every year, you need to show us all the ads that you've run, if you're going to continue to operate in this space, things like that. So it's, it's, it's, even if you see a headline that says, okay, well, I wonder if they made more money than they had to give back over these years.

That's really not the whole picture because. There, there could be some injunction that means you have to figure out a second career because you're not allowed to do this anymore. Or I mean, and there's reporting requirements that can be expensive to comply with and are pain. And then there's all the legal fees associated with even responding to an FTC inquiry in the first place.

Stephen: And that's just for most of these business gurus. Is that when they turn to like, Oh, I just want to become a minimalist. I don't need the Lambo anymore. I don't need the fancy house anymore. I feel like, you know, I'm just trying to be humble now. Is that when they kind of reverse their stories? Are they attractive of the FTC being involved?

I mean, that would make

Robert: sense. I think it's also a lot of the people that you see popping up on social media that seem to have pivoted what they're selling every few years or so. I think they're just trying to pay attention to what other people are saying and what gets more engagement and what's popular.

Is it minimalism now? Is it, you know, is it quit your nine to five still and drive the hurricane? I think a lot of it is just sort of trend chasing and mimicking each other and whatever resonates with people at the time.

Some of those people will say I just to close that thought, I also wanted to mention that it's not just the FTC and, and attorneys general that you need to be concerned about if they're, if it, if the situation is that somebody is just either making up results or, or misrepresenting what someone can expect to make the students or the clients.

Have claims for potentially fraud or a breach of contract or any number of claims like that, that could potentially also be brought as, as class action. So it's not just like, well, if I, if I, if the FTC misses me, then I'm in the clear. That's the, it would not be the right way to look at that.

Stephen: And is there a clear portal for that?

Would they come to you since you have class action experience? Like, I think why a lot of people don't come forward, they promote, they, you know, maybe post their grievances, but it doesn't seem like there's a clear portal for them and others to kind of report this and take legal action. Do you see that clear avenue to do so?

Robert: It depends on what the person who's upset, what result they want. If they want, if you, if anybody just wants to report a business to a regulator, pretty much every state attorney general website has a portal to do that. There's forms that you submit. The FTC has a dedicated portal for, for scam reporting.

If that, if they don't want to go that far leaving negative reviews on a place like Trustpilot might seem kind of frivolous, but a lot of FTC enforcement actions get started because a business is racking up a lot of complaints about the same issue that goes unaddressed. And, and if that's happening, the likelihood that a regulator is going to take a look at whatever's going on is significantly increased.

If the person wants to take more direct action than just reporting and, and, you know, maybe they've lost a significant amount of money and they'd like to try to recover some of that using the courts, then I, even though it's not something that I focus on, on the plaintiff's side, pursuing those sorts of cases, I do pretty often hear from people who feel like they've been scammed or wronged through some social media grift and are looking for help with that.

And usually in those cases, I'll, I'll refer it to. Attorneys I trust who do that kind of work. But yeah, I mean, depending on what the desired outcome is, you can report to your local regulator, like your attorney general or district attorney or the FTC, or if you don't want to be that extreme, leaving negative reviews can have significant impact if, if there's a widespread enough problem.

Stephen: And what about flat out lying? Like we saw with the Liver King issue, had a bunch of people eating camel balls to live more of a Caveman life, and then it comes that he's on, you know, he's spending a mortgage, he's spending a house on steroids. I think there's a class action started there, but like, like, we've seen cases like that across the board.

What are your thoughts on cases like that and how careful should people be when they're just flat out lying?

Robert: Yeah, I mean, if, if, if you recognize that you were flat out lying, then you should not do that. You're just teeing up liability. Like it's one thing to have a situation where you're potentially liable for some implied claim that you, you didn't mean to make.

That somebody is interpreting what you're saying in a way that you didn't intend. That can still expose you to liability for false advertising, but if, if there's just no basis for it at all, then it's even easier to make to make a claim. And, and yeah, there was a class action filed against the Liver King that has settled for an undisclosed amount.

And the issue in that case was the Liver King was going on the record, so to speak. I don't know if it was in podcasts or TV spots or what. But he was saying, I have never used steroids. I'm not an enhanced athlete. My results are from the, whatever he called it, the warrior lifestyle or whatever it was.

And that was not true. Like it came to light that he absolutely has used steroids. Certainly looks like he continues to, if he doesn't continue to, to this day. And that's, yeah, it's an outright lie. And you're telling people, look, buy my line of liver King supplements and you can achieve this. And I achieved this without steroids.

That is a, an express claim that was false. And so he was probably smart to settle that one pretty

Stephen: early. Would there be action if he wasn't selling anything? Like there's, you know, there's people that go around to the gyms and say, Hey, Natty or not, Natty or not. And people are like, no, I'm not I'm natural.

And it's like, does that make a difference if they're not really selling? Or if they have, maybe they're working with supplement companies as affiliates. Like where does the line tow on issues like that?

Robert: If you're not selling any product, then it would be hard for a customer to, Have standing to have a claim.

Cause it's like, well, what's the harm? Did I spend money I wouldn't have spent? Did I, did I do something else that hurt me in reliance on what you're saying that turned out to be false? It's less clear that anybody would have a claim versus directly saying like, I use this product to achieve this and nothing else.

And that being false. But you could have a similar situation if instead of his own supplement line, He was doing affiliate or influencer marketing for some other supplement brand and said similar things like, you know, I use this brand of pre workout or, or, or whatever it is. And I attribute, you know, I, or I put on 50 pounds of muscle using this and nothing else.

If you say that that sort of false claim as an affiliate or an influencer, then you're subjecting yourself to that sort of false advertising liability, but you're also exposing the brand to risk because the law will treat claims made by influencers and affiliates as though those claims are being made by that brand directly.

So I'll tell brands, like if you have affiliates talking about their experience with their product and you have an opportunity to review whatever they're saying before it goes live, which ideally you do, then consider, like, could we print this on our website next to the description of the product?

Because we can substantiate what this is saying. The answer is no, then we shouldn't be saying it through affiliates or influencers either.

Stephen: How about people buying followers? Like if you're on Instagram and you have a following, and is there an issue there if you're referencing how many followers you have?

And that's why people should use your services. Or if, hey, I'm a media agency myself, if I'm buying likes and saying, Hey, look how great my content is doing to my clients. Look at how many likes I get. Where's, where do you toe the line there? Cause we've seen people buy followers on Instagram. I've even seen it on places like LinkedIn, which is strange.

It's just pretty strange itself. What are your thoughts on that?

Robert: Yeah. I mean, I, I'll, I don't even need to give my thoughts. I'll just say what the FTC says, which is, which has been for years explicitly that buying and selling fake followers is illegal. And especially if you then reference, if you're using those fake indicators.

of social media authority in a way that are for a commercial advantage. And you've bought or sold followers or inflated your likes or whatever, whatever this sort of deceptive tactics are to make yourself look more authoritative or popular than you are, then you are violating the FTC act. And you potentially have a false advertising situation in addition to that.

So it's always been a bad idea to buy. Followers or, or engagement, like legal stuff aside, people who know, know, like it, it, it can destroy your account. It can ruin your engagement. And people now are smart to it. Like if you're hiding your like count and you have 2 million followers and I've never heard of you, probably those are fake followers because you're getting like two likes on your, on your post or whatever it is.

So it's pretty obvious to somebody who's even a little bit savvy, but yes, it's expressly illegal to buy and sell fake followers and you just shouldn't do it.

Stephen: What are your thoughts on AI? Cause I'm assuming a lot of your customers coming to you about advertising, promotion, e commerce what are your thoughts about telling them?

Should they be using? AI generated pictures images. What are your thoughts on AI from both a legal perspective and maybe you can say where you use it in your practice?

Robert: Yeah, there, there are so many issues that are presented by Gen AI and so many different use cases already. The, the advice really.

It has to depend on what the specific situation is. Some, some scenarios I'll, I'll say, yeah, it's much better to use AI here than, than to not, and the example I'm thinking of is, I've tweeted a lot over the last two years about all of the lawsuits brought by FJerry that owns the which owns the rights to the Dude With Sign memes.

And that guy's, the dude himself, has publicity rights. And they sue, it seems like one brand every single week that's just taken the Dude With Sign meme and put their own text on the sign and run that as an ad. So you've got a copyright and a publicity rights problem like what we talked about at the top.

Stephen: How successful are they? I don't want to cut you off there, but I'm curious. Are they extremely successful? Is it more of a deterrent than anything else? Or do they have a legal team that's like a revenue stream for them almost?

Robert: It's, it's that. Everyone that's been filed that I've been tracking, which is over a dozen of them, either they're, they're pending and the court hasn't had an opportunity to decide anything or they've settled.

I expect that all of them will settle. And that's probably a nice like 10 a pop for FJerry every time they identify somebody. Who does that? And I'm putting that number out there because that's kind of typical for like a single image copyright scenario. And, and the, the lawyers that bring those cases know that if you had to hire a lawyer just to get through a motion to dismiss a copyright case, it's going to cost you more than that.

So unless you really want to take up that battle and probably lose anyway, you're, because it's cheaper for you to just pay somewhere between 10 and 20 grand, you're probably going to do that rather than try to fight it. And that's how those copyright trolls work. So in that scenario, I've asked, Ben asked the question, well, what if I just, you know, tell AI to make a guy holding a sign and I put the message on there?

That's fine. That's a great idea. That's a great workaround. Because then you're not going to be infringing the copyright of FJerry in the photo. And you're certainly not using the dude's likeness if it's just some character. But there, there are other scenarios where you might not want to, or you might want to be really careful about how you're using AI, like what if I use like the Drake voice to have Drake read an ad spot or whatever for my brand?

Well, then you get into a publicity rights problem for. Whoever's voice you're using or and other issues like that. So it's,

Stephen: I'm hype about that, but you're a U. S. people are like, no, I use Kendrick. Use Rick Ross, use Future. Your American friends are not too happy with that, that reference, probably, especially you're on the West coast, right?

Robert: Yeah, I mean, that would probably be a bad idea for a number of reasons, I guess. Um, Personally though, I, I have not found that many or any that I can really think of, of uses for generative AI in my, in my practice, I know like it's decent at summarizing large volumes of information that can, it's not that helpful for like helping me write content.

Maybe it's just because I should just get out of my own way. But I feel like if I don't have control over the tone or if it doesn't sound like me, then I'm not going to want to post it. So I don't really use it for that because it. It's still at the point where it feels like AI most of the time. Or I can, I can read a post on LinkedIn and think like, okay, this is GPT.

It's not quite there at like replicating somebody's tone yet.

Stephen: I thought process, if it has more than 10 letters, more than once in a sentence, that's definitely chat GPT. Nobody uses those kinds of significant language without chat GPT.

Robert: Yeah. And there's like a cadence to it and like how, where it puts the adverbs.

Stephen: They use the same words over and over again. Delve, Identifying, Discuss, they use, they have four words that they use for everything.

Robert: Yeah, I always say in conclusion before the conclusion.

Stephen: Last five minutes, you know, you're a lawyer, you're, you're ripped, you have a sports car, and we'll talk a little bit about that.

You're dating a model. I think everybody on this show wants to know, give us some life lessons, Robert. Where are we going wrong? Where are you going right? What are some of your beliefs in life that, you know, maybe have led you to what I believe you would consider success?

Robert: Yeah I, I'm really lucky.

That's like the vast majority of it. I mean, honestly, like so much depends on lucky circumstances that put you in a position to have like the time and the, the capacity to achieve whatever it is that you want to achieve. So I think it's really a combination of Like obviously starting out with some luck helps, but then just being consistent is probably the most important thing.

Like I was somebody who was bullied in high school for being out of shape. And so when I decided like, I'm not, I can't tolerate that anymore. I'm going to consistently show up to the gym, however long that takes until I get until that, I stopped feeling the pain of in my psyche, like that, that issue. And so it was just, Being consistent and going to the gym multiple times a week for like, I guess the last 18 years or so.

If you just keep showing up, like you're, it would be surprising if that goal you have in mind doesn't happen. Like, it would be really weird if I went to the gym for that long and I didn't see results. Like, it's going to happen and you don't need like...

Stephen: It would take more work not to get those results. It would take more work to try and find out things to do at the gym.

How about like, do you have a rigorous morning routine? I'm always curious, like a busy lawyer, you know, obligations, you know, washing your car, like, are you waking up extremely early? Are you 5:30 in it?

Robert: I, I sort of ebb and flow with that. Sometimes I'll be on like the 5 a. m. train. Sometimes it's more like 6:30, but yeah, I, I forced myself to become a morning person in law school, which helped a lot working at a big firm after that. And like, yeah, it sucks if you're not a morning person for the first three months or something. And then it just feels normal. And that's true about a lot of things that are, that are difficult at first.

Like you push through the few months of it feeling uncomfortable and then you get adjusted to it. You can get it, you can get comfortable with a lot of things, bad and good. So, I mean, it really is like showing up to do the thing that you want to do is probably 95% of the battle in whatever it is that you're aiming at doing.

Stephen: Last two minutes, you, you know, one of the reasons I know about you and Reinforced was Andy Frisilla owner and CEO of FirstForm as well as a period of other businesses, hosts one of the top podcasts in business, someone I've been listening to since the real MFCEO project, which I'm hoping he eventually comes back with.

Tell us about, I think the biggest compliment to creating content like yours is when someone like him says he follows you, he loves the content you're putting out there. Talk about maybe, and I saw you on the Real AF podcast last minute. Give us that whole experience.

Robert: Yeah, it was, that was an awesome opportunity.

And Andy, we became friends on Instagram, just talking about cars primarily. And he invited me out to do the show and, and my impression, I was, that was the most impressed I've been by any business operation ever. And and especially with Andy. And the thing about it is, Andy is in an area on social media where there's not consistent authenticity, you could say.

There's a lot of people who talk about being business owners and, you know, what it takes, and they're like kind of over the top with their approach. And maybe not all of it is true. And then, you know, maybe you think, Oh, is this kind of legit or is it not? I spent the entire day there at the facility. I got to know Andy really well.

That's cool. And if he's the, the name of the show says it all, he's real, real AF. Like I was so impressed by the touring the facility and just seeing the people who worked there and, and how much people bought into the mission of that brand and what he's about and all, all that he's about is like personal responsibility and showing up and doing what you say you do and doing what you say you're going to do.

And, you know, I could, I could probably spend half an hour explaining all the little details that reflect that in the way that place is run and the community, like the legitimate community is built with the people who work there. But the, the point that I want to get across is that, that, that guy does everything he says he does.

And no, no BS detected. And I, I'm somebody who detects BS for a living. So super impressed by what he's got going on over there.

Stephen: And that's awesome. And especially cause he's in the influencer space. So he knows what, if you're talking, what you're talking, he knows whether that's BS or not too. So it's great to see those synergies.

And it's funny that you connected on the cars versus the kind of influencer content, which is awesome. Yeah.

Robert, it's been an absolute pleasure. I've been waiting to do a podcast or just talk to you in general. I'm glad I had an excuse with the podcast to get you on an hour and talk all about this.

Where can people find you? Where's the best places? Instagram, where you respond the most? Twitter, LinkedIn? Yeah.

Robert: Instagram and Twitter. I am on LinkedIn. I, you know, I like most people, I'm addicted to all of these platforms, . So if you DM me on one or two of them, I'll probably see it.

Stephen: Awesome. Thank you so much for joining us on the podcast.

Robert: Yeah. Thanks for having me. This is fun.