Category Archives: Affiliates

Oh Hey, Want To See A Great Social Media Law Final Answer?

Final-examsThis is the fourth year I’ve taught my Social Media Law class at the University of Texas School of Law and each year I’ve posted the final exam here on the blog.  I’ll be doing the same for this year’s exam later in the week, but I wanted to do something I hadn’t done before: post a model answer.  I presented this answer to the class this year after getting permission from the writer, the top score in the final and class last year.  Worth Carroll wrote the answer so all credit to him.  If you want to re-read the questions he’s answering, here is the final exam from that year.

Would you have answered differently?  When I went over the answer in class there were certainly points that came up that weren’t in this answer, and this answer also had points that the class hadn’t considered as well.  Taking a law school exam is always a difficult task so it’s hard to say what you could do in the three hour situation, but this was a fantastic set of answers to the questions.  Take a read after the break and see if you agree.

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My Awesome Announcement

I hate tooting my own horn but this is one of the proudest moments in my still short social media law career.  Please forgive the somewhat staged presentation but those who know me know that if I’m going to tell a story I need to make it interesting.

I was at the University of Texas Co-op’s law school location last week browsing the Nutshell books.  (Go with me, people.)  For those of you not in the legal profession, congrats on that by the way, know that the Nutshell series is put out by West Academic (one of the biggest names, if not the biggest name, in the legal publishing world) and is a fantastic resource for an overview of legal issues in a particular topic.  They aren’t casebooks–larger books with often edited cases to look at judicial rulings on certain areas.  Nutshells get right to the point and provide essential information on the overall legal topic.  I used more than one when I was in law school and as a practicing attorney.

But I noticed something was missing from the Nutshell section.  Can you spot it?

Can you spot what's missing?

Can you spot what’s missing?

That’s right, there’s no Social Media Law in a Nutshell.

Let’s fix that, shall we?

I’m proud to announce that I will be writing Social Media Law in a Nutshell for West Academic.  My co-author, Thaddeus Hoffmeister, is a professor of law at the University of Dayton School of Law and has previously published a book on social media in the courtroom.  His knowledge of social media litigation, evidence uses, and applicability in criminal cases will combine with my information on the marketing, content, employment and other social media uses to make this a comprehensive review of social media across all legal channels.

Doing this as a Nutshell book feels perfect right now.  There isn’t a wealth of case law on social media issues, but there are certainly cases out there.  In some areas the most fascinating legal issues are taking place outside of a courtroom so a Nutshell allows us to cover those topics in ways a casebook couldn’t.  Plus, when the movie rights get picked up we all agree that Hugh Jackman can play me.  He’s just a more talented and better looking version of me who can also sing and dance and has a better accent.  The resemblance is uncanny.

I’m not sure when the book will be released but it certainly won’t be until 2015 at the earliest.  Rest assured I’ll let you all know as the process unfolds.

Yesterday I published the 100th blog post here on SoMeLaw Thoughts.  When I look back at how much has changed in social media since I started writing about it, not just my own professional involvement, it’s staggering.  I feel incredibly lucky to take this journey and contribute to the field as well as participate in a line of books that I personally value.  To join the ranks of the Nutshell books blows my mind.

Thanks to all of my readers and friends on social media who have pushed/pulled/heckled me along the way.  An even bigger thanks to my family for putting up with my little side projects.

Now, if you’ll excuse me, I’ve got some writing to do.


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Want To Know What A Social Media Law Final Looks Like?

Not that anyone actually writes law school finals with a pen, but you get the point.

Thinking about going to law school or want to revisit those horrifying amazing three years of your life?  If you’re curious about a law school final, or what a final looks like for a social media law class, then you’ve come to the right blog post.

Long time readers may recall when I first announced I’d be teaching a class at the University of Texas School of Law on Law and Social Media.  Last night I finished entering the grades for my students and so the class is officially over.  It was a blast to teach and I hope I get invited back to do it again, although developing the material was a lot more work than I expected.  Yes, I was warned this would be the case but I thought that all the other material I had in training about various social media legal issues would help.  They did–but it still took a lot of time to convert that into a format that was better for students.  That’s a big reason why this blog has been so silent these last few months.

As I mentioned in the original post, my class was about the many different legal topics that social media impacts.  There’s a lot of attention around social marketing and for good reason–that’s a highly regulated area and one that’s ripe with consumer protection issues.  But that is just one area I wanted to cover–employment, free speech, privacy, and several other topics were worth exploring.  I wanted my final to touch upon several topics while giving the students a bit of a taste of practicing in this emerging field.

Just to put this in context, the students had three hours to complete this exam (including reading time).  They could use any notes they created or assisted in creating and all three questions were weighted equally.  The final is shown below.  No, I’m not going to give you my model answers but feel free to ask questions in the comments about any issues you see.

Question One

Congratulations!  After four rounds of interviews and a grueling series of one-on-one discussions with the Board of Directors, you have been appointed General Counsel to BCB — the only social network dedicated to Bacon, Cats, and Babies.  With over four million users and an average of one million new pieces of content daily, BCB is one of the hottest social networks in the world.  It’s basic functionality allows users to upload a photo that features either Bacon, Cats, or Babies (or combination thereof).  These photos can be Liked and Shared and the picture can also be linked to some other online location–users browsing the site can click on the photo to be taken to the link provided by the original content creator.  Unfortunately, the site has yet to make any revenue and its initial funding is being consumed by the massive servers BCB must use.

BCB’s VP of Making Money has decided to make money through affiliate programs.  He would like every piece of content to be linked to an item that can be purchased from a web site.  Each link would contain a code that gives credit for the sale to BCB and the sites have agreed to pay BCB 3% of all sales.  For pieces of content that are posted without a link, BCB’s software will automatically select the optimal commercial item to link to the content and embed BCB’s affiliate code.  If the piece of content posted by the user already has a link then one of two things will happen:

1. If the link is to a non-commercial page, that link will be moved to a special button under the photo and the photo itself will then be linked to a commercial item similar to photos without links.

2. If the link is to a commercial page then the BCB affiliate code will be embedded in the URL.  If the link already has an affiliate code, that original affiliate code will be stripped out and replaced by the BCB affiliate code.

BCB’s Terms of Use section that deals with content says the following:

You can only post content you have permission to post.  Anything you post may be used by BCB as part of normal site functionality or in our efforts to make money.

Draft an email to the VP of Making Money describing the risks of his proposed plan and the changes to the Terms of Use you would propose to address those risks.

Question Two

The VP of Marketing for BCB has come to you with a plan for a new contest and would like your advice on how to proceed.  The contest would run for the month of May and invite all site users to submit their best BCB content that includes pictures of Google, Owen Wilson, or Vince Vaughn (in addition to the obligatory Bacon, Cat, or Baby).  He is hoping to capitalize on the popularity of the upcoming movie The Internship in which Wilson and Vaughn play unpaid interns at Google and is also hoping the contest has side benefits of making BCB show up in more Google searches.  He would like to give away $15,000 to the best content in terms of ten $500 prizes, one $2,500 prize, and one $7,500 prize.  Winners will be determined by the number of Likes clicked on each picture.  He would like the contest to be open to anyone in the world age 13 and up.

Draft an email to send to the VP of Marketing to discuss what changes, if any, he would need to make to his contest prior to running it, or highlight any issues/concerns you may have.

Question Three

You receive the following email from your VP of Human Resources:

Hi new General Counsel (sorry, I should know your name but I’m really busy)!

I’ve got a bit of a situation I’m hoping you can advise me on.  We hired Pat as our head of Online Community about a year ago.  I conducted the interview of Pat myself and I was really excited to do so because I had checked out all of Pat’s social media accounts prior to the office visit.  I was especially interested because it turns out Pat and I go to the same church and I didn’t even know that before!  

Anyway, I wanted to make sure Pat was a thorough professional in all their social media interactions so during the interview I had Pat log into all the major platforms and I browsed through the accounts, just to make sure there wasn’t anything tasteless that might go viral and embarrass us.  It was all good so Pat came on board and did a great job for many months.

But in the last few months, Pat has gotten weird.  Mostly on personal posts, but if you read those then you can see how it spills over to our corporate accounts.  Our users have started to notice too and Pat got into a nasty debate last week over whether a picture of Canadian Bacon was eligible for the site.

We may need to let Pat go soon.  Anything I need to be concerned about?

Draft a response to the VP of Human Resources.


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What’s Enough Under The FTC Endorsement Guidelines?

It’s the hot new game show that’s sweeping the conference I attended last week!

In my last post I wrote about what I did as co-chair of the ACI Social Media, Sweepstakes, and Promotions conference last week.  But in addition to being co-chair I was also on a panel during the second day.  Our panel had the provocative title “You Better Disclose That: Ensuring that Your Company is Closely Adhering to the FTC’s Endorsement and Testimonial Guidelines.”  I know, great title, right?  Anything that has “Closely Adhering” is a winner in my book.

I have one rule for conference presentations: they cannot be boring.  So I always look for some way to structure the talk or panel to be more than just a bunch of talking heads who take turns at the microphone.  Last year at the conference I turned my panel into a game show called “Are You Smarter Than A Social Media Lawyer?” where three other lawyers were asked questions by me (I didn’t tell them the questions in advance because I’m mean like that) and then they had 30 seconds to answer.  If the audience wanted more they could yell out “More!”.  It was a blast.  First, because limiting attorneys to 30 seconds of talking is funny (we’re horrible at that).  Second, because it was awesome to hear the audience yelling out “More!” when they really wanted to here more.  We covered a lot of ground.

But we couldn’t do that again, so my co-panelists Jim Dudukovich from Coke and Paul Garrity from Sheppard Mullin Richter & Hampton agreed to go along with another game show idea I had.  This one was called #enuf or #notenuf.  We handed out double sided cards to everyone in the audience; one side read #enuf and the other read #notenuf.  Then Paul, as our game announcer, read a hypothetical scenario and asked the audience if the company/person/whatever had done enough under the FTC Endorsement Guidelines.  After the audience voted, then Jim and I voted and discussed the answers.

I think the format worked and we had some great discussions.  While I won’t give away the answers here unless people are really interested, it was apparent that there isn’t a clear consensus on many issues.  Some items were easy to decide (hypothetical 2 is based on the case that defined astroturfing, after all).  But others are in the gray area and you needed more information.  This area of law is still evolving quickly so it will also be interesting to see if our answers change over time.

For those of you still interested, here are the 20 hypotheticals that we discussed.  What do you think on these?  Was it #enuf or #notenuf?  If you’re curious, comment away and I’m happy to discuss.  Maybe we can even get Jim to pitch in.

Scenario #1: Lofty Bloggers

•A fashion store holds a preview even for bloggers only.  After bloggers attend they are encouraged to write about the event and fashions.  If they send a link to their blog post back to the store they will be entered to win a gift card that could be worth $10 to $500.  There is no requirement for the bloggers to mention the special event or the gift card drawing in their blog post.

•Did the fashion store do enough to follow the Guidelines?

Scenario #2: iReview Games
•A marketing company is hired by a video game developer to help increase sales of its awesome iPhone game, Poke The Lawyer.  The marketing company has several dozen paid interns create new accounts on iTunes for the sole purpose of posting a five-star review of Poke The Lawyer.  (“Realistic poking action!” “Caveat this!” “I poked him in tenths of an hour increments, is that wrong?”)  None of the reviews disclose that they are reviewing a client’s application.
•Did the marketing company do enough to follow the Guidelines?
Scenario #3: Affiliate Dis-Chord
•A mail order company sells DVDs (remember those?) that teach you how to play guitar.  Customers can also become affiliates where they post links to purchase the DVDs after posting a review about their experiences.  (“Simple directions!” “This DVD was so easy I can play every Whitesnake song after one week!” “I’m now the lead guitar player for Journey!”)  None of the reviews disclose that the affiliate makes money off of subsequent purchases, nor does mail order company require the affiliates to disclose that arrangement.
•Did the affiliates do enough to follow the Guidelines?
Scenario #4: I Like Free Stuff And I Cannot Lie
•A mail order glasses company creates an offer on its Facebook page that is only visible to its fans, so it requires Liking the page.  The offer is marketed as Free Glasses For Fans, but only after Liking the page would customers discover that there are limited options for those free glasses.  Most customers who clicked Like as a result of this ad order and receive their free glasses.
•Did the glasses company do enough to follow the Guidelines?
Scenario #5: You Other Glasses Sites Can’t Deny
•Follow up to the previous scenario, the mail order glasses company takes advantage of all the new customers it has acquired on its Facebook page.  Before the Free Glasses campaign the page had 80,000 Likes but now it has 260,000.  The company then proudly announce it has over 250,000 fans.  This becomes a second marketing campaign
•Did the glasses company do enough to follow the Guidelines?
Scenario #6: Lose The Weight By Cutting Testimonials!
•A weight loss company starts a Pinterest board with photographs of customers and descriptions that tell how much weight that customer lost.  Neither the board description nor the photo captions contains the usual disclaimer about these weight loss results not being typical or that actual results could vary.
•Did the weight loss company do enough to follow the Guidelines?
Scenario #7: Drive For Results
•A car company hires an ad agency to help spark social media content surrounding its Super Bowl commercials.  Unbeknownst to the car company, the agency provided gift certificates to popular bloggers in return for writing favorable blog posts about the commercials.  The agency did not require or even ask the bloggers to disclose the gift certificates.
•Did the car company do enough to follow the Guidelines?
Scenario #8: Disclosures Really Satisfy You
•A candy company hires several celebrities to send a series of tweets.  The first few tweets have the celebrity talking about something completely out of character.  An athlete talks about his passion for knitting.  A model dives into macro-economic policies.  After a few tweets the celebrity tweets out a photo of them eating the candy and suggesting that when they’re hungry they just aren’t themselves.  Only this final tweet discloses that the series was a paid advertising campaign.
•Did the candy company do enough to follow the Guidelines?
Scenario #9: #Obvious
•An athlete sends out tweets paid for by a sneaker company.  The tweets do not disclose that they were paid for, but they do include URLs to the sneaker’s most recent campaign and the #hashtag that accompanies that campaign.  The particular athlete is well known for being sponsored by that particular sneaker company.
•Did the athlete do enough to follow the Guidelines?
Scenario #10: Hypothetical Katie, pt. 1
•A paint company gives Katie, an avid blogger on home repair projects, two gallons of their paint.  In the middle of a blog post about her latest painting project, Katie writes “PaintWorld sent me two gallons to try out, and this paint is amazing.”
•Did Katie do enough to follow the Guidelines?
Scenario #11: Hypothetical Katie, pt. 2
•A paint company gives Katie, an avid blogger on home repair projects, two gallons of their paint.  In the middle of a blog post about her latest painting project, Katie includes a link to “PaintWorld’s Just One Coat paint.”  At the end of the blog post, Katie writes “By the way, PaintWorld gave me the paint just to try it out, but this paint is so terrific, I’ll buy it myself next time.”
•Did Katie do enough to follow the Guidelines?
Scenario #12: Hypothetical Katie, pt. 3
•A paint company gives Katie, an avid blogger on home repair projects, two gallons of their paint.  Katie does not mention that PaintWorld gave her the paint anywhere in the blog post.  In the sidebar of the blog there is a link to “Disclosures & Disclaimers.” Clicking that link goes to a page that mentions how PaintWorld gave her the paint.
•Did Katie do enough to follow the Guidelines?
Scenario #13: Live Or Die-t By The Guidelines, pt. 1
•Did @JuliStarz do enough to follow the Guidelines?
Scenario #14: Live Or Die-t By The Guidelines, pt. 2
•Did @JuliStarz do enough to follow the Guidelines?
Scenario #15: Live Or Die-t By The Guidelines, pt. 3
•Did @JuliStarz do enough to follow the Guidelines?
Scenario #16: Live Or Die-t By The Guidelines, pt. 4
•Did @JuliStarz do enough to follow the Guidelines?
Scenario #17: Live Or Die-t By The Guidelines, pt. 5
•Did @JuliStarz do enough to follow the Guidelines?
Scenario #18: That’s Nina My Business
•A well known fashion editor and reality TV competition judge signs a deal to consult with a major department store chain.  The chain is known for mainstream fashions but would like to be a bit more cutting edge and is testing new store designs and inventory.  The editor visits one of these test designs then tweets “Thanks for the walkthrough of the prototype.  Get ready to shop!  It’s going to be a game changer!”  The department store’s stock immediately jumped 5%.
•Did the fashion editor do enough to follow the Guidelines?
Scenario #19: Pin It, Pin It Good
•A well known shopping website encourages customers to create a Pinterest board and Pin items from the site they would like to win, up to $1,000.  The only requirement is to browse the website and click the Pin button above the items they want—no need to apply a #hashtag or description to the item.
•Did the website do enough to follow the Guidelines?
Scenario #20: The Pin Is Mightier Than The Referral Fee
•A well known shopping website encourages customers to create a Pinterest board and Pin items from the site.  If another Pinterest user clicks on the Pin and purchases the item, the Pinterest board owner will receive $15.  There is no requirement to have any description or disclosure on the pinned item.
•Did the website do enough to follow the Guidelines?

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There’s a Fine Pin Between Brilliant and Creepy

Thanks to Susan Beebe for inspiring this post.

Pinterest is the latest social media flavor of the month/quarter/whatever. It has a slick interface, familiar functions, and celebrates things that users love which keeps people coming back. The user base is exploding and word of mouth is positive.

So is the news that Pinterest is secretly modifying user pins to capture unclaimed affiliate revenue going to bring the party to an end?

Diverted traffic sign.

This is not the final destination you were looking for.

According to this blog post, when Pinterest users post a link to a product on a site that has an affiliate program (such as Amazon) the Pinterest utilizes a third party to modify the link. The newly modified link will now contain a referral code that gives the affiliate credit to some other entity, presumably Pinterest.

Let’s give Pinterest the benefit of the doubt and say that they aren’t removing affiliate links that users might be building in. Because that would be a whole different category of analysis. Instead, let’s assume that Pinterest is only adding these referrals to links that don’t have an affiliate code.

First, let’s be honest–that’s a brilliant revenue generation scheme. It’s frictionless to the ultimate user, painless to the content creators, and provides money to a platform people like using.

Second, let’s be honest again–it’s creepy. Mostly because it isn’t disclosed. It goes beyond the social media norm where we expect platforms to use our browsing and usage data to make money somehow. This isn’t making money off our activity, this is making money off our content. That feels different, even if it may be treated the same.

The site that Pinterest appears to use for this affiliate linking is skimlinks, whose terms recommend their partners to disclose the linking activity based on the FTC endorsement guidelines. The fact that Pinterest may now have an increased financial interest in some pins without disclosing the connection could have legal implications. Perhaps not now if Pinterest treats the pins the same as all others, but it could be an issue to users who provided links specifically without referral codes and the expectation that the links would be plain links to a site.

And such activity might also be in violation of Pinterest’s terms. Pinterest’s terms gives Cold Brew Labs (Pinterest’s creators) the right to “use, copy, adapt, modify, distribute, license, sell, transfer, publicly display, publicly perform, transmit, stream, broadcast, access, view, and otherwise exploit such Member Content…” That’s a broad list that probably includes modifying a non-affiliated link into an affiliated link.

However, in the Privacy policy section on Links to Other Sites, Pinterest states “The fact that we link to a website or present a banner ad or other type of advertisement is not an endorsement, authorization or representation of our affiliation with that third party…” Read one way, that could be true–if there’s a link to the Kindle version of Ready Player One with a user’s affiliate code then Pinterest has made no representation. But the same link and image could also be through the skimlink/Pinterest affiliate, and in that case there is an affiliation.

Technical analysis aside (although that’s a big one), the bigger factor is just that Pinterest missed an opportunity to tell its users what it was doing. Most people would be fine with it, would embrace the innovative way of funding a site they like. But doing so without telling users could lead to more questions.

If Pinterest is modifying our content now without telling us, what else will they do? Will users with numerous vanilla links that Pinterest can capture be preferred as one of the random boards new members automatically follow? Will the pins be preferred in searches? Can I opt out?

In some ways it feels like LinkedIn’s failed attempt to capture user’s profile information and make it automatically opt into social marketing. After that backlash, LinkedIn rolled back those plans. Will Pinterest come clean about their activities and will the users care?

Pinterest has a great opportunity to build on the relationship with their users by talking about their practice, clarifying their terms and privacy policy to account for these practices, and giving users the ability to opt out. The vast majority will be happy to have it continue and they will be reassured that their content is not being secretly modified for financial gain.

And by disclosing the practice they can capitalize on the brilliance while minimizing the creepy.


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