March 11, 2024 • 53 mins
I’m joined by Damon Wright, Head of Advertising & E-Commerce at law firm Gordon Rees to discuss the rising dangers of Class Action lawsuits.
We dig into what they, why they are on the rise, and the most effective ways you can protect your business from individuals who target e-commerce and publishing businesses.
Click here to download The Gordon Rees updated E-Commerce Retailer Legal Guide that covers this and many other legal issues.
FinPub Pro is produced by The Financial Marketing Summit, the #1 networking and marketing conference for financial newsletter publishers, trader educators, and digital financial media.
John Newtson, host and founder of The Financial Marketing Summit can be reached via LinkedIn at John Newtson
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
John Newtson (00:02):
All right, hey everyone, it's John again from
FMS, and today I'm joined againby Damon Wright, and we are
going to talk about somethingthat is not strictly the FTC
cases that we've had recently,since we've talked a lot about
that.
There is a new thing that'sbeen happening in a lot of the
internet marketing communities.
It's called class actionlawsuits.
I'm sure you guys are familiarwith it across all kinds of
(00:23):
things.
It is a threat and it's athreat that's easily, um, from
my understanding, um avoidable,um if you know about it ahead of
time and kind of how to dealwith it, and that's kind of what
we're going to be talking abouthere with damon today.
Um, damon also has, um.
You guys remember we sent out um.
Gordon reese, his law firm, putout this huge kind of of
e-commerce guide on regulatorypractices and things like that,
(00:46):
and they have an updated one.
We're going to send that outbecause it includes a lot of
stuff on this.
So anyway, with that, damon,thanks for being here.
Thank you, john, all right.
So first let's just like divein real fast, because there's a
lot to talk about here.
Let's go through to begin with,just for clarity's sake, when
(01:08):
we say class action lawsuit,what specifically?
Damon Wright (01:10):
does that mean and what is it?
Yeah, so a class action lawsuitis basically a case where there
are hundreds or thousands ortens of thousands of plaintiffs,
and the way it starts is oneperson says I am suing this
company because of falseadvertising or because I got a
text message that I didn'tconsent to it, or whatever it
(01:31):
may be.
I'm one person, I had thisexperience, but I'm suing on
behalf of everyone else who'shad the same experience.
And it just means that in thecomplaint there are some
additional paragraphs thatdescribe how this is widespread.
Lots of people have sufferedthe same situation, same
injuries, and it's more feasible, efficient to do this as a
(01:51):
class.
And so what happens then is, atsome point in the case, if it's
not dismissed or settled, theplaintiff moves for class
certification and says theplaintiff moves for class
(02:12):
certification and says now,judge, I want you to find that
this can be a class actionbecause there are 50, 100, 1,000
people have had a similarsituation.
And of course, the defendantsays no, no, no, this should
just be in one single plaintiffcase, but often or not uncommon
the judge grants classcertification, which now makes
it a big class, which means thedollars that went from one
person, and one person'spurchase maybe was $1,000.
Now are exponentially largerand there's certain elements
(02:33):
that have to be satisfied tobring a case as a class action.
But with internet marketers andfinancial publishers of course
there's serious risk.
We're seeing lots of casesaround the country.
John Newtson (02:46):
Yeah, and I think the one thing that I remember
you telling me that I think isso striking about this
particular type of litigationversus what we are used to
thinking of as like look, therewere complaints that ended up
from customers that basicallywere customer originated Right
Right.
Like, yeah, pissed off customer, they had complaints, they sent
a letter to somebody that theydid something.
It started with one of yourcustomers being unhappy.
You had a pissed off customer,they had complaints, they sent a
(03:07):
letter to somebody, they didsomething.
It started with one of yourcustomers being unhappy, which
is something that we'recomfortable with.
What's weird or different orscary about class actions is
class action lawsuits are abusiness model for some law
firms, correct?
Damon Wright (03:19):
No doubt, no doubt , and for law firms and for some
plaintiffs too.
There are firms that arededicated to nothing but sending
out demand letters and filingcomplaints, almost like an
assembly line basis, dealingwith idea that this website has
(03:41):
communicated information aboutthe consumer to a third party
because the consumer signed upfor meta Facebook years ago and
or it could be again.
The Telephone ConsumerProtection Act, text messages,
email, website accessibility.
There are people who arevisually impaired, hearing
impaired, who you know theAmericans with Disabilities Act
(04:05):
is an important act, but thereare folks who have filed
plaintiffs 500, 1,000 lawsuitswhere they're always the
plaintiff and they always justhappen to be coming across this
website where they wanted to buysome random product, and it
makes you a little skepticalright, so you basically have
(04:25):
like a type of litigation that'soriginated essentially by
professional and semi-pro.
John Newtson (04:33):
Oh yeah, yeah.
Damon Wright (04:35):
And some of our community goes to a trafficking
conversion summit and affiliatesummit and there's a big
business in legal leads.
Those are class action lawyersthat are trying to buy leads to
bring class actions.
It's just another type of leadgeneration.
So there are some folks that Imeet that think that I'm there
(04:56):
to buy leads because I want todo roundup mass tort litigation
or Camp Lejeune litigation orwhatever the other kind of uh
big class actions are, but it's,it's a real thing.
We talked a lot about the fbc,uh, and that's an important
thing, but class actions, the,the cost of defense can be in
the millions of dollars and theconsequence can also, of course,
(05:18):
be in the millions of dollars,because you're talking about
every single consumer that havethis experience, right.
John Newtson (05:23):
so that's that's I mean.
I don't know, it's so weird tome Well here's the thing we have
vendors there selling classaction leads essentially to
lawyers at the biggest marketingconference in the industry.
For marketers, it's such abizarro world at this point.
Damon Wright (05:43):
I don't want us to get depressed, um, because
there's a, there's a solution,is it?
There's a lot that can be donevery easily to fend this off.
And, um, you want to jump into?
John Newtson (05:55):
it?
Yeah, let's go like.
What is it because that'sthat's why I wanted to do this
is like it's like, here's thisbig threat, but it's actually a
relatively simple orstraightforward, I should say,
way to make sure that this isn'ta problem for you.
So that's right, let's go to it.
What is?
Damon Wright (06:08):
it.
Okay, all right, all right.
Okay, all right.
So this is what you weretalking about at the opening.
It's our e-commerce retailerlegal guide, and I want to talk
about a couple sections of this.
The first one obviously one easyway to avoid class actions.
(06:30):
We're going to talk about that.
Then I want to talk aboutsubscription billing.
There are class actions broughtover companies, internet
marketers not complying withsubscription billing law.
Then I want to talk about thetext and telemarketing.
That's the Telephone ConsumerProtection Act.
Then email marketing there's aCalifornia statute called 17-529
(06:54):
.
There are a lot of classactions brought under this
statute, so we're going to talkabout how to avoid litigation
there.
Then, a different kind ofcookie monster there are these
California invasion of privacyact cases and federal wire tap
cases that are really distortingthe statute, but that's a big
deal.
And then website accessibilitysuits and then maybe, if we have
(07:15):
time, I want to talk aboutbusiness insurance.
So these if someone takes thetime to read these sections or
listen to this podcast or, evenbetter, both you're going to be
in a much better spot to nothave to worry about class
actions and you know I linkedthat underneath here.
John Newtson (07:32):
So great for everybody so.
Damon Wright (07:34):
So let me let me jump down to here.
All right, this is one easy wayto avoid class actions.
So let's just uh, step back fora second.
Um.
So, john, with a lot of classactions.
People are walking into a brickand mortar store.
They're buying something offthe shelf, um, with product or
(07:56):
service sold online on yourwebsite.
You have such a great advantagebecause you can easily form a
contract with that consumer.
If someone walks into Target orWalmart or a grocery store LL
Bean, whatever they're notsigning a contract.
They're signing a credit cardreceipt, perhaps, but they're
(08:18):
not signing a contract there atthe store.
But online you can form thatcontract, and that kind of
contract is called a click wrapagreement.
If the consumer has to check abox that says I agree to the
terms of sale, terms of salehyperlinked, the simple, easy
(08:51):
thing to avoid class actionsfrom people who have purchased
from you, that have gone all theway to the end and purchased,
is to have those terms include aclass action waiver and also
often a mandatory arbitrationprovision.
So the case will also not bepublic, it'll be an arbitration.
I can't tell you how easy thatis.
It's such a simple thing to do,but right now there are lots of
businesses selling products andservices online that don't have
(09:13):
that Right.
John Newtson (09:15):
I mean, that seems pretty straightforward.
Damon Wright (09:17):
Oh, it's super basic.
It's so basic.
So we explain here.
Imagine that right now.
Now a litigious, opportunisticconsumer is diligently searching
the Internet.
He goes from one e-commercewebsite to the next.
At each, he doesn't stop tostudy the product images or
features.
He doesn't care about theproduct the product claims are
the testimonials but he knowswhat he wants to find.
(09:37):
He keeps moving his mouse,clicking the hyperlinks,
visiting the checkout page andscrolling down the website terms
.
So this is a guy who's a pro seplaintiff, looking in the
middle of the night to find atarget.
He's hunting on the internetHalfway through the terms, he
frowns, but he clicks away, goesto the next website and keeps
searching.
He knows what he wants to find.
(09:58):
He knows he'll find what hewants soon enough and finally he
gets paid.
Or he's found an e-commercewebsite that does not have a
click grab contract, a mandatoryarbitration provision or a
class action waiver provision.
He buys the most expensiveproduct on the site, then takes
a lunch break.
He's going to start working onhis class action lawsuit in the
afternoon.
But that's based on a verycommon fact pattern.
(10:21):
So what we describe here isabout again, I agree to the
website terms of sale and I'vehad clients that have told me oh
, I think it might hurtconversion to have a checkbox,
an unchecked checkbox.
It needs to be unchecked, I'vesaid.
I've had clients, countlessclients, have told me it doesn't
hurt conversion, to wit, thatpeople are filling out their
name and their address and theircredit card number and they're
(10:45):
not suddenly going to go whoa,whoa, whoa.
What's this box?
What does it mean?
Website terms?
That's just not reality.
It's not as ironclad.
But if someone is really notexcited about the unchecked
checkbox, an alternative is tohave language above the button
that says by clicking buy below.
(11:05):
I agree to the website terms.
There are some outlier casesthat say that's not enough.
You basically need the checkbox to approximate the signature
of someone to a contract.
That's the affirmative actionthey're taking to agree.
This can really insulate abusiness from again people
(11:30):
who've actually bought theproduct.
There could be class actionsfrom others who haven't, who've
just visited the site.
John Newtson (11:41):
That's really the threat, right there is that
there are people who are outthere going through websites, um
, looking for whether or notthey they know what they're
looking for, right Cause they'renot gonna waste their time.
So they're looking at it,they're looking at the terms and
is there a class action waiver,is there the other thing?
And if not, then they're goingafter and doing things.
And so the reason I think thisis important, right, is you know
, we I went back and looked wewere about two and two years
(12:04):
ahead of the ftc kind of stuffcoming into the space, when we
had brought some stuff to thefms about, like, hey, this is
kind of a threat, um, and youcan tell there's threats because
they're happening in largerinternet marketing communities,
like class actions are happeningnow, um, and with the issue of
of financial informationproducts going more mainstream
than we've been talking aboutfor the last two years, I think
(12:26):
that this is an area thateventually, maybe in the very
near future, we're going tostart to see some kind of
actions, and so it's alwayseasier to deal with it by fixing
it now, before somebody attacksor goes after you, than it is
fixing or dealing with the caseafterwards.
Oh, it's so much cheaper.
That's why we thought this wasimportant to do right now and
(12:48):
why it's like hey, pay attentionto this.
This is a simple thing that canprevent a hell of a lot of
headaches and a hell of a lot offines and a hell of a lot of
problems later.
That's exactly right.
Damon Wright (12:57):
Now, a couple thoughts.
The Shopify template doesn'thave the unchecked checkbox
language.
You have to work to add it.
It should be there.
At FMS there was a fellow whodid a great presentation on
split testing and put up acheckout page, and I didn't want
(13:21):
to be that obnoxious guy, but Ireally wanted to point out that
there was one thing missingfrom that checkout page.
You're talking about trying totweak conversion with split
testing ever so slightly, butyou also want to make sure
you're able to keep the moneyyou've made.
Very important, very important.
Yeah, all right, so let me gonow to an area where there are a
(13:42):
lot of class actions.
Go now to an area where thereare a lot of class actions.
Now, if you have the click wrap, you should be able to avoid
this type of class action, butnevertheless, it's important to
be aware of this, and that'sespecially for this, our
community.
This has to do with subscriptionbilling.
This hypothetical here talksabout Cigar of the month
(14:05):
subscription business and peopleare getting the same product
month after month.
But you could just as easilysay it's the financial finpub
company blitz alert trade alertservice.
It's being sold on asubscription and and I think
most of the folks in the FMScommunity are selling their
(14:29):
digital products on subscription.
So let me just cover what'sneeded.
If you're selling a product onsubscription.
It starts with three things thatare very basic.
One is that there has to beclear and conspicuous disclosure
(14:49):
of the subscription billingterms.
How much people are going topay each month when they have to
cancel?
Two is the consumer has toprovide express affirmative
consent to those terms.
So again, back to an uncheckedcheckbox is often the best way
to do it.
If it's so obvious this is asubscription and you're not
(15:10):
offering a one-time purchase ofsomething, there's a good
argument that the consumer isproviding express consent by
just completing the transaction.
But that's the second thing.
And the third thing is thebusiness has to provide a simple
, easy mechanism to cancel thesubscription, and there's a
federal law called ROSCA thatthe FTC enforces.
That stands for the RestoreOnline Shoppers Confidence Act.
(15:32):
It requires those three things,but wait, there's more.
There are state statutes thatare very much like ROSCA, except
they actually require more thanjust those three things, and
that's where, in the last coupleof years, it's gotten
complicated.
There's a California statute,there is a Vermont statute,
(16:02):
there's a Virginia statute,there's a DC statute, there's a
North Dakota statute.
Those statutes have somewrinkles and I won't go into it
in great depth here.
But I encourage I encouragefolks to read this because the
In Vermont you have to have twoseparate checkboxes, one for the
(16:25):
terms of sale and another justfor the subscription billing
terms.
Two separate checkboxes, one forthe terms of sale and another
just for the subscriptionbilling terms.
In California you have to havea click to cancel button so
someone can go online and cancellike that.
Or you have to have thispre-formatted email that someone
can.
If they receive an emailconfirming their subscription,
they can just click a link inthat email to go to an email
(16:50):
that then would be sent to thebusiness to say I want to cancel
.
So there's been a real emphasison by regulators to just
prohibit save the sale effortsas well.
John Newtson (17:06):
This is definitely the dynamic right.
Like everybody who sells stuffwants to create friction in the
cancellation process because ithelps save money, and and the
regulators in the States want toreduce friction in the process
and so do all with all thesedifferent kind of state
regulations.
Um, is it something where, like, there's one basic pattern that
(17:32):
covers all of them?
yeah, the common denominatoryeah, yeah, or is it something
that like oh my god, I have toactually track what state state
to keep covered, because that'salmost like untenable for a
small business?
I know, yeah, um, yeah, vermontit's funny.
Damon Wright (17:46):
I mean I don't think vermont's like a big yeah,
vermont, it's funny.
I mean I don't think Vermont'slike a big regulatory,
aggressive regulatory state.
But Vermont and California bothhave quirks.
Now if you wanted to take thecommon denominator test approach
and satisfy both those quirksand do that for all 50 states,
(18:10):
you could do that.
If you wanna try to geo-target,so you send this type of
confirmation email to Californiaconsumers and you have this
type of checkout page forVermont consumers, you could
also do that.
But that's a technologicalchallenge.
John Newtson (18:26):
Yeah, that's definitely harder to do.
I think people are looking forwhat's the one simple fix.
If I do that, that covers merather than trying to spend.
I mean, some people might havethe dev abilities and strong dev
team in-house that they can goahead and geo-target and things
like that, but I think mostpeople are not going to be doing
that.
Damon Wright (18:46):
No, I agree.
No, I think a lot of businessesare not complying with the
Vermont statute.
Again, it's having an extracheckbox that's the big thing
that separates out the billingterms in its own statement.
There are a lot of businessesthat are applying the California
approach the one-click tocancel the pre-formatted email,
(19:07):
and the FTC is probably going torequire cancel the
pre-formatted email, and the FTChas is probably going to
require that as part of a newrule coming down soon.
So the idea that to cancel,you're on hold and you dropped
off and they have to talk totheir supervisor and then they,
you know, they try to downsell,you, downsell, you downsell.
(19:28):
I know people that do that andget great deals on xm radio, um,
but um, that's the concern andso they want to make it.
If you're able to buy somethingonline in a matter of seconds,
you should be able to cancel itin a matter of seconds.
That's the concept, yeah nice,all right.
Well, let's talk about, uh justone thing you're saying there
(19:51):
have already been cases aroundthese things oh yeah, class
action cases yes, hundreds,hundreds and big names, like
like vitamin shop um right,spotify, I mean, you know yeah,
yeah, well, I mean, that's thething.
John Newtson (20:11):
So one just to back up and and I want to keep
it moving, but, um, there's gotto be a certain size of company
that people are going after,right, um, or no?
Damon Wright (20:20):
I said hundreds.
John Newtson (20:21):
I really should have said tens of thousands
actually yeah, yeah, tens ofthousands, yeah, okay, so
they're going after everybodythat they can.
Damon Wright (20:31):
Yeah.
John Newtson (20:32):
Kind of just shaking the tree and seeing what
falls out.
Damon Wright (20:34):
Yeah, and to go back to your point, yes, they
are going after companies that aplaintiff's lawyer wants to try
to figure out.
What's going to be my biggestbang for the buck.
If I can put in 500 hours andbring a case against a company
that's doing a billion dollarsand win, that's going to get me
more money than 500 hours in acase against a company that's
(20:56):
doing $5 million.
Here's the thing we talkedabout the click wrap in the
website terms.
If you have that in place, youshould be able to avoid the
(21:16):
class action for violatingsubscription billing laws,
because it would be brought bysomeone who already completed
that purchase, who agreed to theclass action.
You could still get suedindividually and you can still
get in problems with regulatorstoo, but you're looking at like
I've got to refund this one guy.
John Newtson (21:37):
It's a much different situation.
It's a much different situationthan, hey, we're going to go
after everybody and send out,Because don't you have to send
out If you have a class actionjudgment against you?
Damon Wright (21:52):
don't you have to send something out to all of
your customers that they can,yes, like participate in that.
That's right.
Like you get to go and a lot ofclass actions yeah, and I
should have said this, but a lotof class actions settle.
But they settle by requiringnotice.
Go to all the class members andit's every single class member
gets uh 25 or a coupon and theplaintiff's lawyers get a
(22:15):
success fee of $2 million orsomething like that.
And if every single classmember took advantage of that
offer, the total amount paid outcould be in the millions of
dollars, say $10, $15 million.
But what happens so often isthe take rate is closer to 5%,
10%.
People are like oh, I don'tknow what this postcard is.
It looks like I get $10 if Isend it in and it goes in the
(22:35):
trash.
So the ultimate payout ends upbeing $5 million instead of $10,
$15.
Right, but that's why it's abusiness model, because the
lawyers are going to get their$2 million or whatever, yep, yep
, or it could go all the way totrial and lawyers could lose or
they could win.
If they win, they get ajudgment and then that process
(22:57):
starts.
Yeah, all right, let's talkabout this is an area where
there's been a tremendous amountof activity.
I want to talk about theTelephone Consumer Protection
Act.
So this is the law that appliesto text messages, sms or
(23:26):
pre-recorded voicemail,artificial voicemail messages,
sms or pre-recorded voicemail,artificial voicemail or
robocalls.
A few years ago there was a USSupreme Court decision De Guede
versus Facebook and it had to dowith what the definition of
automated telephone dialingsystem was kind of like a
(23:46):
robodialer.
And the Supreme Court in a 9-0opinion said the definition in
the statute is really, reallynarrow and because it's so
narrow, these Telephone ConsumerProtection Act cases that have
been being brought for the lastmany years should not have been
(24:06):
brought.
Those defendants weren't usingan ATDS, because the statute
says an ATDS is a technologythat's calling numbers that are
randomly generated and if thenumbers are stored, not randomly
generated, it's not an ATDS,all right.
(24:27):
So it was a 9-0 decision.
The business community said yay, awesome, we're not going to
face these TCPA cases like wedid before, you could still get
sued if the person was on the donot call registry and you
didn't get consent.
I was annoyed because I gotthis kind of case all right.
(24:50):
So anyway, business communitycelebrated and just the opposite
thing happened rather thanthere being fewer cases, there
ended up being many, many morecases.
And the reason is because thestate legislatures saw the
supreme court decision and said,oh, we better jump into this,
we better fill the void.
And suddenly several statespassed their own mini Telephone
(25:12):
Consumer Protection Act statutesthat defined the ATDS
technology in the broadest way.
Does that make sense?
So yeah, what everyonepredicted happening was
counterintuitive.
Just the opposite happened.
So, and class action?
So uh, that.
John Newtson (25:31):
So I want to, I want to take a break for a
second here and just put aresource out there from uh zach
westfall, who spoke down at umfms this year on, because they
they are one of the phone salesis one of their big things,
right, yeah, and one thing, onething that he shared with me was
that he uses dnccom Dot comyeah, which is donotcallcom.
(25:54):
Basically there's the firstletters, so the letter D, as in
dog N, as in Nancy C, as in catdot com, and it scrubs against
the do not call registry, yourphone, your numbers, and no
litigators, and I um governmentagencies too, um, but I'm not
sure about that, but I thinkknown litigators and um people
(26:18):
who have said do not call, uh.
So if you're doing outboundphone sale or doing phone sales,
if you're doing text messaging,um, because do not call applies
to text too, right, yeah,absolutely so then you need to
be scrubbing.
And if you're not scrubbing,then you can almost guarantee
that in some form you're inviolation.
If you're using SMS and SMS isvery important these days
(26:40):
because we're seeing conversionrates on SMS to our list going
up and being an increasinglysignificant part of sales, and
so that's a big thing.
Dnccom for anyone who's notusing it.
Yep, yep.
Damon Wright (26:58):
I recommend them.
So yeah, back to class actions.
One person gets a couple textmessages they did not want
actions.
One person gets a couple textmessages they did not want.
They didn't provide priorexpress written consent to
receive text messages, marketingtext messages.
And what happens next is theyfile a class action on behalf of
(27:19):
everyone.
And I'm looking at somethingright now that 58.1% of the
Telephone Consumer ProtectionAct cases filed last year were
filed as class actions.
So you, know just one personreceived one person receiving a
few texts suddenly becomes acase where they're saying
(27:42):
everyone who received thesetexts.
I've seen a situation with somereally great, smart, organized
clients who in one way were notso organized, where someone will
reply stop.
A consumer reply stop andthey'll get a response back
saying you've been removed.
But they have that same phonenumber in this list or that list
(28:07):
and that other list and they'reusing maybe a different texting
platform and so they don't havea master unsubscribe, master
suppression, so that consumer aweek later gets another text
from the same business from adifferent sending phone number
and now they say I wasn'tsuppressed, you didn't honor my
stop request and it turns outthat the company needs to
(28:27):
quickly consolidate their listand scrub.
And it's really a big problemand someone just was not paying
well enough attention.
But this discussion here in theguide talks about how to avoid
these kinds of cases.
Under the TCPA the penalties canbe up to $1,500 per text.
(28:51):
The key thing is to get priorexpress written consent for any
kind of marketing text messages,and that's the language that
looks like this I agree toreceive automated calls, text
messages and pre-recordedmessages via an automated
dialing system of our promotionsfirm or on behalf of.
(29:11):
That's the telephone number Iprovide and understand consent
is not a condition of purchase,that's it.
You don't need to have thislanguage if someone is receiving
order updates and it's abouttheir purchase, but the moment
you start talking about and geta 10% discount on your next
purchase, now it's gone fromtransactional to promotional and
(29:36):
there's an argument that unlessyou have this expressed consent
you could be liable.
And it's an issue not just.
It's not as much of an issueunder the telephone consumer
protection act, the federal law.
Unless someone's on the do notcall registry, then you do need
this, but it is an issue underall these state statutes.
Kind of like we were talkingabout the subscription billing
(29:56):
You've got now.
Kind of like we were talkingabout the subscription building
You've got now.
New Jersey, Washington, NewYork, Maryland, Florida.
John Newtson (30:10):
It's a patchwork and so that's so.
Just to go back a second, didyou mean that if a customer
let's say I have a customerwho's on the Do Not Call
registry, yep, am I allowed totext them or call them about
their order?
Yes, those are fine so yes,okay I just want to be clear.
That would be transactional,right.
Okay, so all this transactional, but any but.
(30:31):
So basically, like phone andsms, do not follow what you
would think of as email kind ofstuff, right, just because Just
because they are a customerdoesn't mean you can send them
whatever because you're acustomer, that's right.
That's right.
You have to have specificpermission, basically, or they
could opt out not on yourwebsite from all calls and then
you're legally required to abideby that.
(30:52):
Do not call registry.
That happened outside of yourbusiness relationship, but they
have it there and unless theygive you express permission
specifically to opt into phonestuff, you can't do anything.
Or?
Damon Wright (31:05):
any kind of marketing, promotional stuff.
Right and no marketing, right,right, yeah, and that's a
consequence of and it's a bitconfusing, but if you read the
guide it'll make more sense.
But you need that to the extentthat someone's on the Do Not
Call Registry.
You need that to avoidliability under the Telephone
Consumer Protection Act, theFederal Act.
(31:26):
If someone's on Do Not Call anddon't have that consent and you
send them a promotional text,you're liable.
But then on all these otherstate statutes you could be
liable for sending a promotionaltext to someone, whether or not
they're on do not call.
John Newtson (31:45):
Does that make sense?
I mean it does.
It doesn't make me happy, Iknow, yeah.
So so how do you, how do youmanage with all the States?
Cause again same issue.
Well, dnccom, so they scrubstates too, the state stuff.
Damon Wright (32:04):
Yeah, there are state DNC registers.
And then again, am I sharing myscreen now?
John Newtson (32:09):
I'm not sure, if I am, you're not currently no,
okay.
Damon Wright (32:16):
How do you manage the states?
I mean, this is it it?
I mean there are some otherthings about when you can call,
when you can text uh.
If you're calling uh, there arestate particular statutes about
how quickly you have toidentify with a company, you're
with uh and, of course, you needto let people know if you're
reporting the call.
But this is this is the magiclanguage okay.
(32:40):
So again, relatively simplesolutions do increase friction
in certain certain points, andthat's you know something that's
right to deal with now you know, a big issue is uh, if you're
doing some type of um datamonetization and you're buying
someone else's list, you couldbe walking right into a bunch of
TCPA lawsuits or a class actionlawsuit, because the consumers
(33:02):
didn't give consent to you totax them.
John Newtson (33:07):
Right.
So if you're not buying thebusiness that has the consent.
I mean, we have this different.
We get this in waves.
It's been a while since we'vehad kind of a big push of people
selling lists, yeah, yeah.
Yeah, it's been a while sincewe've had a big push of people
selling lists, yeah.
Damon Wright (33:22):
If it's a business sale, certainly if it's a stock
sale, most likely.
If it's an asset sale, it'sgoing to depend on the language
of the privacy policy.
Two that people signed up for.
But yeah, just don't say hey,give me your list, I'll give you
my list, and off the races forany kind of texting.
Let's talk about somethingthat's similar but different,
(33:47):
and that is email the workhorse.
Yeah, so with email you don'tneed to have consent to send a
marketing email.
You do need to comply withcan't spam act.
And and then there are ofcourse state statutes, of course
(34:10):
california, that are kind oflike mini can't spam act cases.
So this discussion talks aboutwhat to do there and most of
it's pretty much common sense.
You can't use deceptive subjectlines.
You have to identify it as anad.
You can't have misleadingheader information.
John Newtson (34:32):
Pretty straightforward.
The subject line thing, though,is kind of like that's one of
those things that, based on thetype of emails and stuff that we
send, I mean, I guess I guessyou're saying that the whole
like social security says as ifyou're coming from social
security with a sender, but like, I mean, that's such a vague
thing, like subject lines are.
Damon Wright (34:51):
So yeah, you want to get someone's attention right
.
You know your car warranty hasexpired, stuff like that.
Yeah, yeah, yeah, let me.
Let me single out one thingthat's causing problems.
I am leading to a lot oflawsuits right now yes,
(35:13):
including for some people in theFMS community.
They've dealt with this.
Some clients have dealt withthis in the past.
I have clients who are facingthis now.
With any kind of email that'ssent marketing email the sender
(35:35):
is supposed to be traceable bythe recipient, and what that
means under the California caselaw is that you say, john, you
get an email and you want tofind out, ok, who sent me this
email.
This case law says you shouldbe able to click the domain or
the sending domain and does thattake you to a website that says
(35:55):
here's this company, here'swhere they're located, here's
the official company name.
That's one way you could figureout who the sender is.
Another way would be if youlook at the footer of the email
and it would have the companyname and an address and it's got
to be the real company name anda real address that would tell
you who the sender is.
Another way could be actually,those are the two biggest ways.
(36:19):
The two biggest ways.
John Newtson (36:21):
Yeah.
Damon Wright (36:22):
And so so often FinPub companies are using
publishers who are sending outemails, and the domain doesn't
lead to a website or the domain.
If you search it on who is, itsays domain by proxy, so you
can't use the domain to figureout who the sender is, what
(36:45):
their real company name is, whattheir address is.
And then, if you go to thefooter, it's some type of DBA,
it's some PO box and it's in astate, but there's no way to
show up at the PO box and findout what the real company name
is, and the DBA is justsomething catchy.
It's not the real company name.
And so what happens then is theadvertiser is liable for the
(37:09):
acts of the publisher.
The publisher didn't know anybetter.
But they can create massiveliability for the advertiser and
there's some law firms thatspecialize in this type of
litigation, simply saying thesender's not reasonably
traceable.
Therefore the advertiser'sliable and it's up to $1,000 per
(37:33):
email and of course there aretens of thousands of emails that
were sent.
So the fix is to make sure thecompany that's the sender is
identifiable a real company namein the footer, real address and
if you search the secretary ofstate business records in that
state, you should be able tofind that company.
Right, they need to beregistered in that state, okay.
John Newtson (37:59):
Yeah, does that all make sense?
That's interesting.
So it's not just like hey,here's my domain name.
It's down to the registeredentity in the state that you're
saying your site is.
That's right, exactly.
Damon Wright (38:17):
Yep, yep.
So this is what we're sayinghere.
You can be exposed to liabilityeven if you've engaged an email
marketing company to sendemails on your behalf.
The sender not just theadvertiser needs to be readily
ascertainable or traceable.
Ascertainable or traceable, andso it's common for an agency or
(38:40):
network to send an emailadvertising a product from a
privately registered domain.
While they disclose theidentity of the advertiser in
the body of the email, thesender is never identified, and
consumers are unable to locatethe entity responsible for
actually sending the email.
John Newtson (38:52):
So basically, if you have an agency that is
sending stuff for you or youadvertise somewhere and they put
your ad in a list where theyare not compliant with this,
then you are findable.
They can't find them, so theycan find you, so they're going
to go ahead and find you instead, because they can't find them.
Damon Wright (39:16):
That's right, yeah , so what we're saying here is
email marketing companies shoulduse a publicly registered
domain name or identifythemselves by a full legal name
and properly registered postaladdress.
At the bottom of each email,the sender's corporate name,
including any DBA contactinformation, should match what's
on file in the state where theemail marketing company is
(39:41):
authorized to do business.
John Newtson (39:42):
Yeah, well, I think we're thankful that a lot
of our larger groups that doemail have email networks are
pretty good operators at thispoint, but there's a lot of
small people out there who areselling stuff and doing stuff
and you find any and all typesof problems in terms of just
this kind of logistical stuffthat maybe they're not aware of.
Everyone, be aware of it again,why we're doing these things.
Damon Wright (40:09):
All right, let me go to another topic here.
This is the last year and ahalf.
This has become the newfavorite kind of claim brought
by class action leaders.
I like the title a differentkind of cookie monster.
(40:32):
So I think I was sharing myscreen then just now, wasn't I?
Nope, I'm just talking tomyself.
Okay, so back in the I think,late 60s, early 70s, the
(40:55):
California legislature maybewatched some James Bond movies
or something like that, or maybewatch some James Bond movies or
something like that, andsuddenly we were concerned about
the idea that you could have amicrophone recording device in a
martini, olive, toothpick orwhatever you know, on your lapel
.
Eavesdropping, it was theconcern.
And so they passed theCalifornia Invasion of Privacy
(41:17):
Act and basically saying it'sillegal to report someone
without their consent andCalifornia is a two-party state
for purposes of phone calls.
So if you're on a phone callwith someone in California and
you're recording it and theydon't know it, you could be
liable.
And there are several otherstates that are two-party
consent states like that too.
(41:37):
So statutes intended to dealwith being, you know, someone
being reported without theirknowledge, maybe James Bond
style or something like that.
Years later, 2022, 2023, 2024,.
Creative plaintiffs lawyers sayI think we can use this statute
(41:58):
to say that when a consumervisits a website and the
website's collecting informationabout them just by virtue of
their arrival at the site andthen that information gets
communicated to others, thatthat violates this California
Invasion of Privacy Act statute.
California Invasion of PrivacyAct statute.
(42:24):
Down to the ridiculousness ofwebsite has a chatbox feature.
Consumer goes to the chatbox,says I'm interested in learning
more about your products.
Chatbot says oh, okay, well,let me tell you more.
If that chatbox feature isactually owned and operated by a
separate company that has thedata, plaintiff's lawyers are
(42:45):
saying that also is illegalwiretapping used for recording
without their consent, unlessyou have a privacy banner or a
cookie banner.
So these are ridiculous cases.
John Newtson (43:06):
This is why people hate lawyers.
I know these guys who come upwith this stuff.
I know.
Damon Wright (43:16):
So it's ridiculous and this is probably the
shortest section we have in theguide.
But a cookie banner consent isreally the key thing.
If you can say establishthere's consent, then these
cases are over.
John Newtson (43:34):
So that's like the GDP of the R and like pop ups
that everyone's kind of at thispoint.
I hope most people do.
That's right.
That's right.
Damon Wright (43:41):
That's right.
Yeah, just for reference here,there have been thousands of
cases brought under thisCalifornia invasion of privacy
act case Thousands, thousands,yeah, and a lot of arbitrations
(44:05):
too.
So most of this is happeningout in the California courts.
Some is happening in theFlorida courts.
It's again a simple fix, andbeing able to say that the
(44:27):
consumer consented to anyreporting at the outset
basically eliminates thatactually.
Let's go to one more topic andthat's website accessibility
lawsuits.
You've spent months developingyour website, the enrollment
(44:47):
paths and checkout pages, andinvested tons of money in
copywriters and campaignmanagers to help you market and
sell your products.
Your new website's beautiful.
You've split-tested ads, dialedin everything.
Now it's time to sit back andrelax and then you receive a
demand letter.
The letter says your website isinsufficiently accessible by
the firm's visually impairedclients and your beautiful new
(45:10):
enrollment path wreaks havocwith end-user screen reading
software and the lawyer demandsthat you immediately remove the
barriers to access and write alarge check to avoid a class
action for violating theAmericans with Disabilities Act
and state and localaccessibility laws.
So this is common, just likewheelchair ramps and other kind
(45:38):
of brick and mortar features ofthe Americans with Disabilities
Act allowing people to be ableto visit places of public
accommodation.
Courts, for the most part, haveheld that websites are places of
public accommodation andtherefore people with various
disabilities should be able tohave access to these websites.
The case law around the countryis not consistent.
(46:04):
Some places, some courts, haveheld that websites are not
places of public accommodationand they're not subject to these
laws.
Other courts have said in otherparts of the country yes, they
are, but again, unless you'regoing to sort of geo-target, if
you're going to be liable inhalf the states or two-thirds of
the states, you might as wellcomply and provide the same
(46:25):
access across all the states.
Unlike the other things we'vetalked about here, there is not
a legal hook or legal solutionto these problems where you add
some language to your site andyou've suddenly reduced your
liability or exposuretremendously.
This is instead a technicalissue or technological issue,
(46:52):
and what it means is that youshould, if your business um
doesn't.
If you have a website andyou're receiving traffic to your
website, you should work with aconsultant or a really good
website designer to make surethat you're complying with the
web content accessibilityguidelines and you should make
(47:15):
sure your consultant, yourwebsite designer, understands
what these guidelines require,and your website designer
understands what theseguidelines require, and it
really has to do with makingsure that the website can
integrate with software thathearing impaired, visually
impaired, other people withimpairments, that they use to be
able to access the Internet.
And these are the requirementsfor the website.
(47:35):
Formats perceivable, operable,understandable, robust formats
perceivable, operable,understandable, robust.
And so, again, not a legalsolution.
Here's all you need to do toreally reduce liability.
It's about working with someonevery knowledgeable on how to
make sure you comply For a whileand to some extent still, and
(48:12):
for a while and to some extentstill.
There are companies that say wehave a plug-in and just pay us
the license fee for our plug-inand you're going to be too well
protected against these kind oflawsuits.
The plaintiff's lawyers haveargued more and more that those
plug-ins aren't sufficient andthey actually create a worse
user experience.
And so, whereas three years agowe could represent a client and
say, look, they have thissoftware and maybe the
plaintiff's counsel would say,all right, I'll settle for
(48:33):
$10,000.
Now we say we have, our clienthas the software, and
plaintiff's counsel says, well,that just makes the problem
worse and my demand's gone up.
Most of these cases settle.
(48:57):
But just to give you a sense ofthings 2023, there are
approximately 4,300 of theselawsuits were filed against
businesses with under 25 milliondollars in revenue man yeah
(49:17):
that sucks.
John Newtson (49:17):
So, um, the small guys, yeah, yeah, because it's
probably they figure forsettlement, in the sense like
everyone's gonna try and settlebecause they don't want to deal
with this and yeah, that's thething.
Damon Wright (49:29):
It can be really frustrating that there are
plenty of lawyers who there aresome who are real zealots and
are it's a I'm.
I'm going to, um, I'm a youknow, a warrior and I'm going to
go to the mat and try to doeverything I can to make as much
money for the people that Irepresent and create as much
good in the world.
And that's one mentality.
(49:51):
Another mentality is I'm goingto just go after lots of
companies and make a settlementdemand.
That's less than the cost ofdefense.
Lots of companies and make it asettlement demand.
That's less than the cost ofdefense.
So if it's going to cost a halfa million dollars to litigate
this case and the defendantknows it I'm going to start my
settlement negotiations at$250,000.
And they'd be stupid not totake it because even if they win
(50:15):
at the end of the day, if theylitigate and they win at the end
of the day, they will havespent twice that.
There's that other kind ofapproach.
One more section to talk about,don, and if you have a couple
more minutes here.
John Newtson (50:34):
Yeah, just a few more of them coming up on a
deadline here in a minute, allright.
Damon Wright (50:39):
So this is a section about the benefits of
business insurance and, yeah, Ithink it's every.
Every business should make surethat they've got insurance and
some of the types of claimswe've talked about.
You can get insurance to helpwith the cost of defense or
cover the claim.
Yeah, and that's something touse.
John Newtson (50:58):
A certain size it starts to become economical in
terms of defense or cover theclaim.
Yeah, that's something.
To use a certain size, itstarts to become economical in
terms of the risk reward on that, and I think this is like you
know.
This is all the stuff that,like you know, nobody wants to
take the time to think aboutbecause it sucks.
It's not about making money butit's about, like you said,
keeping the money.
That you know, and I'd muchrather do a lot of these
(51:20):
conversations with you, damon,than a lot more of those
conversations with people whoare like, hey, let me tell you
about my experience in the lasttwo and a half years dealing
with this major lawsuit that Ihad to deal with that cost me
millions of dollars and shutdown my business.
Those conversations suck.
Everyone wants to pay attentionto those because they're so
interesting in, like, holy crap,let's hear what happened.
(51:42):
Yeah, but much better to havethese conversations so that
you're not that case study.
Nobody wants to be that casestudy.
I don't want you to be thatcase study.
I don't want to do any more ofthose episodes.
Yeah, yeah, I don't want to doany more of those episodes with
people from the community.
I know, like everybody like,pay attention to this stuff.
It's, you know it's not, youknow it's it's.
It's easy to get likedistracted from it and be like,
(52:04):
hey, this isn't something I candeal with right now because I
got a campaign going out today,but somebody should be going
through this guide and goingthrough these things and talking
to him and other.
You know, just like, get thisstuff handled so that you're not
a future case study, please.
Damon Wright (52:17):
Yeah, yeah, please , yeah, yeah.
I mean the, the e-commercelegal guide.
I think I told you before westarted in 2019, probably a
thousand hours of legal workthat's gone into that.
Uh, so that's, you know, ourrates.
That's, that's a lot of moneyuh, and it could save you.
It could save you and help tomake you millions of dollars.
There's other sections wedidn't talk about, um, so
there's a lot of value there andwe're giving away for free and
(52:45):
the things we're talking about.
There are things that you canimplement to avoid having to pay
lawyers and having to payothers a lot of money.
We actually make my law firmmore money when people haven't
done that kind of stuff we'vetalked about here and then they
get sued and then we're we're inthe thick of it, um, but so
it's, maybe it's againstinterest, but I'd like to help
clients grow and sleep well andmake a lot of money and uh,
(53:07):
certainly we, we litigate and uhfight for our clients when
necessary in court.
But yeah, a lot of this ispretty simple and it can help
you in a huge way.
John Newtson (53:17):
That's awesome.
Yes, I'm going to link to thatguide.
Everybody um download it.
It pass it to whoever he needsto on your team to read it.
I'll link to the DNC as well.
The Do Not Call scrubber andDamon, thanks for taking the
time and doing this and thanksfor you guys putting that guide
together and everybody check itout.
Thanks, john.
All right, hey everyone, it's John again from
FMS, and today I'm joined againby Damon Wright, and we are
going to talk about somethingthat is not strictly the FTC
cases that we've had recently,since we've talked a lot about
that.
There is a new thing that'sbeen happening in a lot of the
internet marketing communities.
It's called class actionlawsuits.
I'm sure you guys are familiarwith it across all kinds of
(00:23):
things.
It is a threat and it's athreat that's easily, um, from
my understanding, um avoidable,um if you know about it ahead of
time and kind of how to dealwith it, and that's kind of what
we're going to be talking abouthere with damon today.
Um, damon also has, um.
You guys remember we sent out um.
Gordon reese, his law firm, putout this huge kind of of
e-commerce guide on regulatorypractices and things like that,
(00:46):
and they have an updated one.
We're going to send that outbecause it includes a lot of
stuff on this.
So anyway, with that, damon,thanks for being here.
Thank you, john, all right.
So first let's just like divein real fast, because there's a
lot to talk about here.
Let's go through to begin with,just for clarity's sake, when
(01:08):
we say class action lawsuit,what specifically?
Damon Wright (01:10):
does that mean and what is it?
Yeah, so a class action lawsuitis basically a case where there
are hundreds or thousands ortens of thousands of plaintiffs,
and the way it starts is oneperson says I am suing this
company because of falseadvertising or because I got a
text message that I didn'tconsent to it, or whatever it
(01:31):
may be.
I'm one person, I had thisexperience, but I'm suing on
behalf of everyone else who'shad the same experience.
And it just means that in thecomplaint there are some
additional paragraphs thatdescribe how this is widespread.
Lots of people have sufferedthe same situation, same
injuries, and it's more feasible, efficient to do this as a
(01:51):
class.
And so what happens then is, atsome point in the case, if it's
not dismissed or settled, theplaintiff moves for class
certification and says theplaintiff moves for class
(02:12):
certification and says now,judge, I want you to find that
this can be a class actionbecause there are 50, 100, 1,000
people have had a similarsituation.
And of course, the defendantsays no, no, no, this should
just be in one single plaintiffcase, but often or not uncommon
the judge grants classcertification, which now makes
it a big class, which means thedollars that went from one
person, and one person'spurchase maybe was $1,000.
Now are exponentially largerand there's certain elements
(02:33):
that have to be satisfied tobring a case as a class action.
But with internet marketers andfinancial publishers of course
there's serious risk.
We're seeing lots of casesaround the country.
John Newtson (02:46):
Yeah, and I think the one thing that I remember
you telling me that I think isso striking about this
particular type of litigationversus what we are used to
thinking of as like look, therewere complaints that ended up
from customers that basicallywere customer originated Right
Right.
Like, yeah, pissed off customer, they had complaints, they sent
a letter to somebody that theydid something.
It started with one of yourcustomers being unhappy.
You had a pissed off customer,they had complaints, they sent a
(03:07):
letter to somebody, they didsomething.
It started with one of yourcustomers being unhappy, which
is something that we'recomfortable with.
What's weird or different orscary about class actions is
class action lawsuits are abusiness model for some law
firms, correct?
Damon Wright (03:19):
No doubt, no doubt , and for law firms and for some
plaintiffs too.
There are firms that arededicated to nothing but sending
out demand letters and filingcomplaints, almost like an
assembly line basis, dealingwith idea that this website has
(03:41):
communicated information aboutthe consumer to a third party
because the consumer signed upfor meta Facebook years ago and
or it could be again.
The Telephone ConsumerProtection Act, text messages,
email, website accessibility.
There are people who arevisually impaired, hearing
impaired, who you know theAmericans with Disabilities Act
(04:05):
is an important act, but thereare folks who have filed
plaintiffs 500, 1,000 lawsuitswhere they're always the
plaintiff and they always justhappen to be coming across this
website where they wanted to buysome random product, and it
makes you a little skepticalright, so you basically have
(04:25):
like a type of litigation that'soriginated essentially by
professional and semi-pro.
John Newtson (04:33):
Oh yeah, yeah.
Damon Wright (04:35):
And some of our community goes to a trafficking
conversion summit and affiliatesummit and there's a big
business in legal leads.
Those are class action lawyersthat are trying to buy leads to
bring class actions.
It's just another type of leadgeneration.
So there are some folks that Imeet that think that I'm there
(04:56):
to buy leads because I want todo roundup mass tort litigation
or Camp Lejeune litigation orwhatever the other kind of uh
big class actions are, but it's,it's a real thing.
We talked a lot about the fbc,uh, and that's an important
thing, but class actions, the,the cost of defense can be in
the millions of dollars and theconsequence can also, of course,
(05:18):
be in the millions of dollars,because you're talking about
every single consumer that havethis experience, right.
John Newtson (05:23):
so that's that's I mean.
I don't know, it's so weird tome Well here's the thing we have
vendors there selling classaction leads essentially to
lawyers at the biggest marketingconference in the industry.
For marketers, it's such abizarro world at this point.
Damon Wright (05:43):
I don't want us to get depressed, um, because
there's a, there's a solution,is it?
There's a lot that can be donevery easily to fend this off.
And, um, you want to jump into?
John Newtson (05:55):
it?
Yeah, let's go like.
What is it because that'sthat's why I wanted to do this
is like it's like, here's thisbig threat, but it's actually a
relatively simple orstraightforward, I should say,
way to make sure that this isn'ta problem for you.
So that's right, let's go to it.
What is?
Damon Wright (06:08):
it.
Okay, all right, all right.
Okay, all right.
So this is what you weretalking about at the opening.
It's our e-commerce retailerlegal guide, and I want to talk
about a couple sections of this.
The first one obviously one easyway to avoid class actions.
(06:30):
We're going to talk about that.
Then I want to talk aboutsubscription billing.
There are class actions broughtover companies, internet
marketers not complying withsubscription billing law.
Then I want to talk about thetext and telemarketing.
That's the Telephone ConsumerProtection Act.
Then email marketing there's aCalifornia statute called 17-529
(06:54):
.
There are a lot of classactions brought under this
statute, so we're going to talkabout how to avoid litigation
there.
Then, a different kind ofcookie monster there are these
California invasion of privacyact cases and federal wire tap
cases that are really distortingthe statute, but that's a big
deal.
And then website accessibilitysuits and then maybe, if we have
(07:15):
time, I want to talk aboutbusiness insurance.
So these if someone takes thetime to read these sections or
listen to this podcast or, evenbetter, both you're going to be
in a much better spot to nothave to worry about class
actions and you know I linkedthat underneath here.
John Newtson (07:32):
So great for everybody so.
Damon Wright (07:34):
So let me let me jump down to here.
All right, this is one easy wayto avoid class actions.
So let's just uh, step back fora second.
Um.
So, john, with a lot of classactions.
People are walking into a brickand mortar store.
They're buying something offthe shelf, um, with product or
(07:56):
service sold online on yourwebsite.
You have such a great advantagebecause you can easily form a
contract with that consumer.
If someone walks into Target orWalmart or a grocery store LL
Bean, whatever they're notsigning a contract.
They're signing a credit cardreceipt, perhaps, but they're
(08:18):
not signing a contract there atthe store.
But online you can form thatcontract, and that kind of
contract is called a click wrapagreement.
If the consumer has to check abox that says I agree to the
terms of sale, terms of salehyperlinked, the simple, easy
(08:51):
thing to avoid class actionsfrom people who have purchased
from you, that have gone all theway to the end and purchased,
is to have those terms include aclass action waiver and also
often a mandatory arbitrationprovision.
So the case will also not bepublic, it'll be an arbitration.
I can't tell you how easy thatis.
It's such a simple thing to do,but right now there are lots of
businesses selling products andservices online that don't have
(09:13):
that Right.
John Newtson (09:15):
I mean, that seems pretty straightforward.
Damon Wright (09:17):
Oh, it's super basic.
It's so basic.
So we explain here.
Imagine that right now.
Now a litigious, opportunisticconsumer is diligently searching
the Internet.
He goes from one e-commercewebsite to the next.
At each, he doesn't stop tostudy the product images or
features.
He doesn't care about theproduct the product claims are
the testimonials but he knowswhat he wants to find.
(09:37):
He keeps moving his mouse,clicking the hyperlinks,
visiting the checkout page andscrolling down the website terms
.
So this is a guy who's a pro seplaintiff, looking in the
middle of the night to find atarget.
He's hunting on the internetHalfway through the terms, he
frowns, but he clicks away, goesto the next website and keeps
searching.
He knows what he wants to find.
(09:58):
He knows he'll find what hewants soon enough and finally he
gets paid.
Or he's found an e-commercewebsite that does not have a
click grab contract, a mandatoryarbitration provision or a
class action waiver provision.
He buys the most expensiveproduct on the site, then takes
a lunch break.
He's going to start working onhis class action lawsuit in the
afternoon.
But that's based on a verycommon fact pattern.
(10:21):
So what we describe here isabout again, I agree to the
website terms of sale and I'vehad clients that have told me oh
, I think it might hurtconversion to have a checkbox,
an unchecked checkbox.
It needs to be unchecked, I'vesaid.
I've had clients, countlessclients, have told me it doesn't
hurt conversion, to wit, thatpeople are filling out their
name and their address and theircredit card number and they're
(10:45):
not suddenly going to go whoa,whoa, whoa.
What's this box?
What does it mean?
Website terms?
That's just not reality.
It's not as ironclad.
But if someone is really notexcited about the unchecked
checkbox, an alternative is tohave language above the button
that says by clicking buy below.
(11:05):
I agree to the website terms.
There are some outlier casesthat say that's not enough.
You basically need the checkbox to approximate the signature
of someone to a contract.
That's the affirmative actionthey're taking to agree.
This can really insulate abusiness from again people
(11:30):
who've actually bought theproduct.
There could be class actionsfrom others who haven't, who've
just visited the site.
John Newtson (11:41):
That's really the threat, right there is that
there are people who are outthere going through websites, um
, looking for whether or notthey they know what they're
looking for, right Cause they'renot gonna waste their time.
So they're looking at it,they're looking at the terms and
is there a class action waiver,is there the other thing?
And if not, then they're goingafter and doing things.
And so the reason I think thisis important, right, is you know
, we I went back and looked wewere about two and two years
(12:04):
ahead of the ftc kind of stuffcoming into the space, when we
had brought some stuff to thefms about, like, hey, this is
kind of a threat, um, and youcan tell there's threats because
they're happening in largerinternet marketing communities,
like class actions are happeningnow, um, and with the issue of
of financial informationproducts going more mainstream
than we've been talking aboutfor the last two years, I think
(12:26):
that this is an area thateventually, maybe in the very
near future, we're going tostart to see some kind of
actions, and so it's alwayseasier to deal with it by fixing
it now, before somebody attacksor goes after you, than it is
fixing or dealing with the caseafterwards.
Oh, it's so much cheaper.
That's why we thought this wasimportant to do right now and
(12:48):
why it's like hey, pay attentionto this.
This is a simple thing that canprevent a hell of a lot of
headaches and a hell of a lot offines and a hell of a lot of
problems later.
That's exactly right.
Damon Wright (12:57):
Now, a couple thoughts.
The Shopify template doesn'thave the unchecked checkbox
language.
You have to work to add it.
It should be there.
At FMS there was a fellow whodid a great presentation on
split testing and put up acheckout page, and I didn't want
(13:21):
to be that obnoxious guy, but Ireally wanted to point out that
there was one thing missingfrom that checkout page.
You're talking about trying totweak conversion with split
testing ever so slightly, butyou also want to make sure
you're able to keep the moneyyou've made.
Very important, very important.
Yeah, all right, so let me gonow to an area where there are a
(13:42):
lot of class actions.
Go now to an area where thereare a lot of class actions.
Now, if you have the click wrap, you should be able to avoid
this type of class action, butnevertheless, it's important to
be aware of this, and that'sespecially for this, our
community.
This has to do with subscriptionbilling.
This hypothetical here talksabout Cigar of the month
(14:05):
subscription business and peopleare getting the same product
month after month.
But you could just as easilysay it's the financial finpub
company blitz alert trade alertservice.
It's being sold on asubscription and and I think
most of the folks in the FMScommunity are selling their
(14:29):
digital products on subscription.
So let me just cover what'sneeded.
If you're selling a product onsubscription.
It starts with three things thatare very basic.
One is that there has to beclear and conspicuous disclosure
(14:49):
of the subscription billingterms.
How much people are going topay each month when they have to
cancel?
Two is the consumer has toprovide express affirmative
consent to those terms.
So again, back to an uncheckedcheckbox is often the best way
to do it.
If it's so obvious this is asubscription and you're not
(15:10):
offering a one-time purchase ofsomething, there's a good
argument that the consumer isproviding express consent by
just completing the transaction.
But that's the second thing.
And the third thing is thebusiness has to provide a simple
, easy mechanism to cancel thesubscription, and there's a
federal law called ROSCA thatthe FTC enforces.
That stands for the RestoreOnline Shoppers Confidence Act.
(15:32):
It requires those three things,but wait, there's more.
There are state statutes thatare very much like ROSCA, except
they actually require more thanjust those three things, and
that's where, in the last coupleof years, it's gotten
complicated.
There's a California statute,there is a Vermont statute,
(16:02):
there's a Virginia statute,there's a DC statute, there's a
North Dakota statute.
Those statutes have somewrinkles and I won't go into it
in great depth here.
But I encourage I encouragefolks to read this because the
In Vermont you have to have twoseparate checkboxes, one for the
(16:25):
terms of sale and another justfor the subscription billing
terms.
Two separate checkboxes, one forthe terms of sale and another
just for the subscriptionbilling terms.
In California you have to havea click to cancel button so
someone can go online and cancellike that.
Or you have to have thispre-formatted email that someone
can.
If they receive an emailconfirming their subscription,
they can just click a link inthat email to go to an email
(16:50):
that then would be sent to thebusiness to say I want to cancel
.
So there's been a real emphasison by regulators to just
prohibit save the sale effortsas well.
John Newtson (17:06):
This is definitely the dynamic right.
Like everybody who sells stuffwants to create friction in the
cancellation process because ithelps save money, and and the
regulators in the States want toreduce friction in the process
and so do all with all thesedifferent kind of state
regulations.
Um, is it something where, like, there's one basic pattern that
(17:32):
covers all of them?
yeah, the common denominatoryeah, yeah, or is it something
that like oh my god, I have toactually track what state state
to keep covered, because that'salmost like untenable for a
small business?
I know, yeah, um, yeah, vermontit's funny.
Damon Wright (17:46):
I mean I don't think vermont's like a big yeah,
vermont, it's funny.
I mean I don't think Vermont'slike a big regulatory,
aggressive regulatory state.
But Vermont and California bothhave quirks.
Now if you wanted to take thecommon denominator test approach
and satisfy both those quirksand do that for all 50 states,
(18:10):
you could do that.
If you wanna try to geo-target,so you send this type of
confirmation email to Californiaconsumers and you have this
type of checkout page forVermont consumers, you could
also do that.
But that's a technologicalchallenge.
John Newtson (18:26):
Yeah, that's definitely harder to do.
I think people are looking forwhat's the one simple fix.
If I do that, that covers merather than trying to spend.
I mean, some people might havethe dev abilities and strong dev
team in-house that they can goahead and geo-target and things
like that, but I think mostpeople are not going to be doing
that.
Damon Wright (18:46):
No, I agree.
No, I think a lot of businessesare not complying with the
Vermont statute.
Again, it's having an extracheckbox that's the big thing
that separates out the billingterms in its own statement.
There are a lot of businessesthat are applying the California
approach the one-click tocancel the pre-formatted email,
(19:07):
and the FTC is probably going torequire cancel the
pre-formatted email, and the FTChas is probably going to
require that as part of a newrule coming down soon.
So the idea that to cancel,you're on hold and you dropped
off and they have to talk totheir supervisor and then they,
you know, they try to downsell,you, downsell, you downsell.
(19:28):
I know people that do that andget great deals on xm radio, um,
but um, that's the concern andso they want to make it.
If you're able to buy somethingonline in a matter of seconds,
you should be able to cancel itin a matter of seconds.
That's the concept, yeah nice,all right.
Well, let's talk about, uh justone thing you're saying there
(19:51):
have already been cases aroundthese things oh yeah, class
action cases yes, hundreds,hundreds and big names, like
like vitamin shop um right,spotify, I mean, you know yeah,
yeah, well, I mean, that's thething.
John Newtson (20:11):
So one just to back up and and I want to keep
it moving, but, um, there's gotto be a certain size of company
that people are going after,right, um, or no?
Damon Wright (20:20):
I said hundreds.
John Newtson (20:21):
I really should have said tens of thousands
actually yeah, yeah, tens ofthousands, yeah, okay, so
they're going after everybodythat they can.
Damon Wright (20:31):
Yeah.
John Newtson (20:32):
Kind of just shaking the tree and seeing what
falls out.
Damon Wright (20:34):
Yeah, and to go back to your point, yes, they
are going after companies that aplaintiff's lawyer wants to try
to figure out.
What's going to be my biggestbang for the buck.
If I can put in 500 hours andbring a case against a company
that's doing a billion dollarsand win, that's going to get me
more money than 500 hours in acase against a company that's
(20:56):
doing $5 million.
Here's the thing we talkedabout the click wrap in the
website terms.
If you have that in place, youshould be able to avoid the
(21:16):
class action for violatingsubscription billing laws,
because it would be brought bysomeone who already completed
that purchase, who agreed to theclass action.
You could still get suedindividually and you can still
get in problems with regulatorstoo, but you're looking at like
I've got to refund this one guy.
John Newtson (21:37):
It's a much different situation.
It's a much different situationthan, hey, we're going to go
after everybody and send out,Because don't you have to send
out If you have a class actionjudgment against you?
Damon Wright (21:52):
don't you have to send something out to all of
your customers that they can,yes, like participate in that.
That's right.
Like you get to go and a lot ofclass actions yeah, and I
should have said this, but a lotof class actions settle.
But they settle by requiringnotice.
Go to all the class members andit's every single class member
gets uh 25 or a coupon and theplaintiff's lawyers get a
(22:15):
success fee of $2 million orsomething like that.
And if every single classmember took advantage of that
offer, the total amount paid outcould be in the millions of
dollars, say $10, $15 million.
But what happens so often isthe take rate is closer to 5%,
10%.
People are like oh, I don'tknow what this postcard is.
It looks like I get $10 if Isend it in and it goes in the
(22:35):
trash.
So the ultimate payout ends upbeing $5 million instead of $10,
$15.
Right, but that's why it's abusiness model, because the
lawyers are going to get their$2 million or whatever, yep, yep
, or it could go all the way totrial and lawyers could lose or
they could win.
If they win, they get ajudgment and then that process
(22:57):
starts.
Yeah, all right, let's talkabout this is an area where
there's been a tremendous amountof activity.
I want to talk about theTelephone Consumer Protection
Act.
So this is the law that appliesto text messages, sms or
(23:26):
pre-recorded voicemail,artificial voicemail messages,
sms or pre-recorded voicemail,artificial voicemail or
robocalls.
A few years ago there was a USSupreme Court decision De Guede
versus Facebook and it had to dowith what the definition of
automated telephone dialingsystem was kind of like a
(23:46):
robodialer.
And the Supreme Court in a 9-0opinion said the definition in
the statute is really, reallynarrow and because it's so
narrow, these Telephone ConsumerProtection Act cases that have
been being brought for the lastmany years should not have been
(24:06):
brought.
Those defendants weren't usingan ATDS, because the statute
says an ATDS is a technologythat's calling numbers that are
randomly generated and if thenumbers are stored, not randomly
generated, it's not an ATDS,all right.
(24:27):
So it was a 9-0 decision.
The business community said yay, awesome, we're not going to
face these TCPA cases like wedid before, you could still get
sued if the person was on the donot call registry and you
didn't get consent.
I was annoyed because I gotthis kind of case all right.
(24:50):
So anyway, business communitycelebrated and just the opposite
thing happened rather thanthere being fewer cases, there
ended up being many, many morecases.
And the reason is because thestate legislatures saw the
supreme court decision and said,oh, we better jump into this,
we better fill the void.
And suddenly several statespassed their own mini Telephone
(25:12):
Consumer Protection Act statutesthat defined the ATDS
technology in the broadest way.
Does that make sense?
So yeah, what everyonepredicted happening was
counterintuitive.
Just the opposite happened.
So, and class action?
So uh, that.
John Newtson (25:31):
So I want to, I want to take a break for a
second here and just put aresource out there from uh zach
westfall, who spoke down at umfms this year on, because they
they are one of the phone salesis one of their big things,
right, yeah, and one thing, onething that he shared with me was
that he uses dnccom Dot comyeah, which is donotcallcom.
(25:54):
Basically there's the firstletters, so the letter D, as in
dog N, as in Nancy C, as in catdot com, and it scrubs against
the do not call registry, yourphone, your numbers, and no
litigators, and I um governmentagencies too, um, but I'm not
sure about that, but I thinkknown litigators and um people
(26:18):
who have said do not call, uh.
So if you're doing outboundphone sale or doing phone sales,
if you're doing text messaging,um, because do not call applies
to text too, right, yeah,absolutely so then you need to
be scrubbing.
And if you're not scrubbing,then you can almost guarantee
that in some form you're inviolation.
If you're using SMS and SMS isvery important these days
(26:40):
because we're seeing conversionrates on SMS to our list going
up and being an increasinglysignificant part of sales, and
so that's a big thing.
Dnccom for anyone who's notusing it.
Yep, yep.
Damon Wright (26:58):
I recommend them.
So yeah, back to class actions.
One person gets a couple textmessages they did not want
actions.
One person gets a couple textmessages they did not want.
They didn't provide priorexpress written consent to
receive text messages, marketingtext messages.
And what happens next is theyfile a class action on behalf of
(27:19):
everyone.
And I'm looking at somethingright now that 58.1% of the
Telephone Consumer ProtectionAct cases filed last year were
filed as class actions.
So you, know just one personreceived one person receiving a
few texts suddenly becomes acase where they're saying
(27:42):
everyone who received thesetexts.
I've seen a situation with somereally great, smart, organized
clients who in one way were notso organized, where someone will
reply stop.
A consumer reply stop andthey'll get a response back
saying you've been removed.
But they have that same phonenumber in this list or that list
(28:07):
and that other list and they'reusing maybe a different texting
platform and so they don't havea master unsubscribe, master
suppression, so that consumer aweek later gets another text
from the same business from adifferent sending phone number
and now they say I wasn'tsuppressed, you didn't honor my
stop request and it turns outthat the company needs to
(28:27):
quickly consolidate their listand scrub.
And it's really a big problemand someone just was not paying
well enough attention.
But this discussion here in theguide talks about how to avoid
these kinds of cases.
Under the TCPA the penalties canbe up to $1,500 per text.
(28:51):
The key thing is to get priorexpress written consent for any
kind of marketing text messages,and that's the language that
looks like this I agree toreceive automated calls, text
messages and pre-recordedmessages via an automated
dialing system of our promotionsfirm or on behalf of.
(29:11):
That's the telephone number Iprovide and understand consent
is not a condition of purchase,that's it.
You don't need to have thislanguage if someone is receiving
order updates and it's abouttheir purchase, but the moment
you start talking about and geta 10% discount on your next
purchase, now it's gone fromtransactional to promotional and
(29:36):
there's an argument that unlessyou have this expressed consent
you could be liable.
And it's an issue not just.
It's not as much of an issueunder the telephone consumer
protection act, the federal law.
Unless someone's on the do notcall registry, then you do need
this, but it is an issue underall these state statutes.
Kind of like we were talkingabout the subscription billing
(29:56):
You've got now.
Kind of like we were talkingabout the subscription building
You've got now.
New Jersey, Washington, NewYork, Maryland, Florida.
John Newtson (30:10):
It's a patchwork and so that's so.
Just to go back a second, didyou mean that if a customer
let's say I have a customerwho's on the Do Not Call
registry, yep, am I allowed totext them or call them about
their order?
Yes, those are fine so yes,okay I just want to be clear.
That would be transactional,right.
Okay, so all this transactional, but any but.
(30:31):
So basically, like phone andsms, do not follow what you
would think of as email kind ofstuff, right, just because Just
because they are a customerdoesn't mean you can send them
whatever because you're acustomer, that's right.
That's right.
You have to have specificpermission, basically, or they
could opt out not on yourwebsite from all calls and then
you're legally required to abideby that.
(30:52):
Do not call registry.
That happened outside of yourbusiness relationship, but they
have it there and unless theygive you express permission
specifically to opt into phonestuff, you can't do anything.
Or?
Damon Wright (31:05):
any kind of marketing, promotional stuff.
Right and no marketing, right,right, yeah, and that's a
consequence of and it's a bitconfusing, but if you read the
guide it'll make more sense.
But you need that to the extentthat someone's on the Do Not
Call Registry.
You need that to avoidliability under the Telephone
Consumer Protection Act, theFederal Act.
(31:26):
If someone's on Do Not Call anddon't have that consent and you
send them a promotional text,you're liable.
But then on all these otherstate statutes you could be
liable for sending a promotionaltext to someone, whether or not
they're on do not call.
John Newtson (31:45):
Does that make sense?
I mean it does.
It doesn't make me happy, Iknow, yeah.
So so how do you, how do youmanage with all the States?
Cause again same issue.
Well, dnccom, so they scrubstates too, the state stuff.
Damon Wright (32:04):
Yeah, there are state DNC registers.
And then again, am I sharing myscreen now?
John Newtson (32:09):
I'm not sure, if I am, you're not currently no,
okay.
Damon Wright (32:16):
How do you manage the states?
I mean, this is it it?
I mean there are some otherthings about when you can call,
when you can text uh.
If you're calling uh, there arestate particular statutes about
how quickly you have toidentify with a company, you're
with uh and, of course, you needto let people know if you're
reporting the call.
But this is this is the magiclanguage okay.
(32:40):
So again, relatively simplesolutions do increase friction
in certain certain points, andthat's you know something that's
right to deal with now you know, a big issue is uh, if you're
doing some type of um datamonetization and you're buying
someone else's list, you couldbe walking right into a bunch of
TCPA lawsuits or a class actionlawsuit, because the consumers
(33:02):
didn't give consent to you totax them.
John Newtson (33:07):
Right.
So if you're not buying thebusiness that has the consent.
I mean, we have this different.
We get this in waves.
It's been a while since we'vehad kind of a big push of people
selling lists, yeah, yeah.
Yeah, it's been a while sincewe've had a big push of people
selling lists, yeah.
Damon Wright (33:22):
If it's a business sale, certainly if it's a stock
sale, most likely.
If it's an asset sale, it'sgoing to depend on the language
of the privacy policy.
Two that people signed up for.
But yeah, just don't say hey,give me your list, I'll give you
my list, and off the races forany kind of texting.
Let's talk about somethingthat's similar but different,
(33:47):
and that is email the workhorse.
Yeah, so with email you don'tneed to have consent to send a
marketing email.
You do need to comply withcan't spam act.
And and then there are ofcourse state statutes, of course
(34:10):
california, that are kind oflike mini can't spam act cases.
So this discussion talks aboutwhat to do there and most of
it's pretty much common sense.
You can't use deceptive subjectlines.
You have to identify it as anad.
You can't have misleadingheader information.
John Newtson (34:32):
Pretty straightforward.
The subject line thing, though,is kind of like that's one of
those things that, based on thetype of emails and stuff that we
send, I mean, I guess I guessyou're saying that the whole
like social security says as ifyou're coming from social
security with a sender, but like, I mean, that's such a vague
thing, like subject lines are.
Damon Wright (34:51):
So yeah, you want to get someone's attention right
.
You know your car warranty hasexpired, stuff like that.
Yeah, yeah, yeah, let me.
Let me single out one thingthat's causing problems.
I am leading to a lot oflawsuits right now yes,
(35:13):
including for some people in theFMS community.
They've dealt with this.
Some clients have dealt withthis in the past.
I have clients who are facingthis now.
With any kind of email that'ssent marketing email the sender
(35:35):
is supposed to be traceable bythe recipient, and what that
means under the California caselaw is that you say, john, you
get an email and you want tofind out, ok, who sent me this
email.
This case law says you shouldbe able to click the domain or
the sending domain and does thattake you to a website that says
(35:55):
here's this company, here'swhere they're located, here's
the official company name.
That's one way you could figureout who the sender is.
Another way would be if youlook at the footer of the email
and it would have the companyname and an address and it's got
to be the real company name anda real address that would tell
you who the sender is.
Another way could be actually,those are the two biggest ways.
(36:19):
The two biggest ways.
John Newtson (36:21):
Yeah.
Damon Wright (36:22):
And so so often FinPub companies are using
publishers who are sending outemails, and the domain doesn't
lead to a website or the domain.
If you search it on who is, itsays domain by proxy, so you
can't use the domain to figureout who the sender is, what
(36:45):
their real company name is, whattheir address is.
And then, if you go to thefooter, it's some type of DBA,
it's some PO box and it's in astate, but there's no way to
show up at the PO box and findout what the real company name
is, and the DBA is justsomething catchy.
It's not the real company name.
And so what happens then is theadvertiser is liable for the
(37:09):
acts of the publisher.
The publisher didn't know anybetter.
But they can create massiveliability for the advertiser and
there's some law firms thatspecialize in this type of
litigation, simply saying thesender's not reasonably
traceable.
Therefore the advertiser'sliable and it's up to $1,000 per
(37:33):
email and of course there aretens of thousands of emails that
were sent.
So the fix is to make sure thecompany that's the sender is
identifiable a real company namein the footer, real address and
if you search the secretary ofstate business records in that
state, you should be able tofind that company.
Right, they need to beregistered in that state, okay.
John Newtson (37:59):
Yeah, does that all make sense?
That's interesting.
So it's not just like hey,here's my domain name.
It's down to the registeredentity in the state that you're
saying your site is.
That's right, exactly.
Damon Wright (38:17):
Yep, yep.
So this is what we're sayinghere.
You can be exposed to liabilityeven if you've engaged an email
marketing company to sendemails on your behalf.
The sender not just theadvertiser needs to be readily
ascertainable or traceable.
Ascertainable or traceable, andso it's common for an agency or
(38:40):
network to send an emailadvertising a product from a
privately registered domain.
While they disclose theidentity of the advertiser in
the body of the email, thesender is never identified, and
consumers are unable to locatethe entity responsible for
actually sending the email.
John Newtson (38:52):
So basically, if you have an agency that is
sending stuff for you or youadvertise somewhere and they put
your ad in a list where theyare not compliant with this,
then you are findable.
They can't find them, so theycan find you, so they're going
to go ahead and find you instead, because they can't find them.
Damon Wright (39:16):
That's right, yeah , so what we're saying here is
email marketing companies shoulduse a publicly registered
domain name or identifythemselves by a full legal name
and properly registered postaladdress.
At the bottom of each email,the sender's corporate name,
including any DBA contactinformation, should match what's
on file in the state where theemail marketing company is
(39:41):
authorized to do business.
John Newtson (39:42):
Yeah, well, I think we're thankful that a lot
of our larger groups that doemail have email networks are
pretty good operators at thispoint, but there's a lot of
small people out there who areselling stuff and doing stuff
and you find any and all typesof problems in terms of just
this kind of logistical stuffthat maybe they're not aware of.
Everyone, be aware of it again,why we're doing these things.
Damon Wright (40:09):
All right, let me go to another topic here.
This is the last year and ahalf.
This has become the newfavorite kind of claim brought
by class action leaders.
I like the title a differentkind of cookie monster.
(40:32):
So I think I was sharing myscreen then just now, wasn't I?
Nope, I'm just talking tomyself.
Okay, so back in the I think,late 60s, early 70s, the
(40:55):
California legislature maybewatched some James Bond movies
or something like that, or maybewatch some James Bond movies or
something like that, andsuddenly we were concerned about
the idea that you could have amicrophone recording device in a
martini, olive, toothpick orwhatever you know, on your lapel
.
Eavesdropping, it was theconcern.
And so they passed theCalifornia Invasion of Privacy
(41:17):
Act and basically saying it'sillegal to report someone
without their consent andCalifornia is a two-party state
for purposes of phone calls.
So if you're on a phone callwith someone in California and
you're recording it and theydon't know it, you could be
liable.
And there are several otherstates that are two-party
consent states like that too.
(41:37):
So statutes intended to dealwith being, you know, someone
being reported without theirknowledge, maybe James Bond
style or something like that.
Years later, 2022, 2023, 2024,.
Creative plaintiffs lawyers sayI think we can use this statute
(41:58):
to say that when a consumervisits a website and the
website's collecting informationabout them just by virtue of
their arrival at the site andthen that information gets
communicated to others, thatthat violates this California
Invasion of Privacy Act statute.
California Invasion of PrivacyAct statute.
(42:24):
Down to the ridiculousness ofwebsite has a chatbox feature.
Consumer goes to the chatbox,says I'm interested in learning
more about your products.
Chatbot says oh, okay, well,let me tell you more.
If that chatbox feature isactually owned and operated by a
separate company that has thedata, plaintiff's lawyers are
(42:45):
saying that also is illegalwiretapping used for recording
without their consent, unlessyou have a privacy banner or a
cookie banner.
So these are ridiculous cases.
John Newtson (43:06):
This is why people hate lawyers.
I know these guys who come upwith this stuff.
I know.
Damon Wright (43:16):
So it's ridiculous and this is probably the
shortest section we have in theguide.
But a cookie banner consent isreally the key thing.
If you can say establishthere's consent, then these
cases are over.
John Newtson (43:34):
So that's like the GDP of the R and like pop ups
that everyone's kind of at thispoint.
I hope most people do.
That's right.
That's right.
Damon Wright (43:41):
That's right.
Yeah, just for reference here,there have been thousands of
cases brought under thisCalifornia invasion of privacy
act case Thousands, thousands,yeah, and a lot of arbitrations
(44:05):
too.
So most of this is happeningout in the California courts.
Some is happening in theFlorida courts.
It's again a simple fix, andbeing able to say that the
(44:27):
consumer consented to anyreporting at the outset
basically eliminates thatactually.
Let's go to one more topic andthat's website accessibility
lawsuits.
You've spent months developingyour website, the enrollment
(44:47):
paths and checkout pages, andinvested tons of money in
copywriters and campaignmanagers to help you market and
sell your products.
Your new website's beautiful.
You've split-tested ads, dialedin everything.
Now it's time to sit back andrelax and then you receive a
demand letter.
The letter says your website isinsufficiently accessible by
the firm's visually impairedclients and your beautiful new
(45:10):
enrollment path wreaks havocwith end-user screen reading
software and the lawyer demandsthat you immediately remove the
barriers to access and write alarge check to avoid a class
action for violating theAmericans with Disabilities Act
and state and localaccessibility laws.
So this is common, just likewheelchair ramps and other kind
(45:38):
of brick and mortar features ofthe Americans with Disabilities
Act allowing people to be ableto visit places of public
accommodation.
Courts, for the most part, haveheld that websites are places of
public accommodation andtherefore people with various
disabilities should be able tohave access to these websites.
The case law around the countryis not consistent.
(46:04):
Some places, some courts, haveheld that websites are not
places of public accommodationand they're not subject to these
laws.
Other courts have said in otherparts of the country yes, they
are, but again, unless you'regoing to sort of geo-target, if
you're going to be liable inhalf the states or two-thirds of
the states, you might as wellcomply and provide the same
(46:25):
access across all the states.
Unlike the other things we'vetalked about here, there is not
a legal hook or legal solutionto these problems where you add
some language to your site andyou've suddenly reduced your
liability or exposuretremendously.
This is instead a technicalissue or technological issue,
(46:52):
and what it means is that youshould, if your business um
doesn't.
If you have a website andyou're receiving traffic to your
website, you should work with aconsultant or a really good
website designer to make surethat you're complying with the
web content accessibilityguidelines and you should make
(47:15):
sure your consultant, yourwebsite designer, understands
what these guidelines require,and your website designer
understands what theseguidelines require, and it
really has to do with makingsure that the website can
integrate with software thathearing impaired, visually
impaired, other people withimpairments, that they use to be
able to access the Internet.
And these are the requirementsfor the website.
(47:35):
Formats perceivable, operable,understandable, robust formats
perceivable, operable,understandable, robust.
And so, again, not a legalsolution.
Here's all you need to do toreally reduce liability.
It's about working with someonevery knowledgeable on how to
make sure you comply For a whileand to some extent still, and
(48:12):
for a while and to some extentstill.
There are companies that say wehave a plug-in and just pay us
the license fee for our plug-inand you're going to be too well
protected against these kind oflawsuits.
The plaintiff's lawyers haveargued more and more that those
plug-ins aren't sufficient andthey actually create a worse
user experience.
And so, whereas three years agowe could represent a client and
say, look, they have thissoftware and maybe the
plaintiff's counsel would say,all right, I'll settle for
(48:33):
$10,000.
Now we say we have, our clienthas the software, and
plaintiff's counsel says, well,that just makes the problem
worse and my demand's gone up.
Most of these cases settle.
(48:57):
But just to give you a sense ofthings 2023, there are
approximately 4,300 of theselawsuits were filed against
businesses with under 25 milliondollars in revenue man yeah
(49:17):
that sucks.
John Newtson (49:17):
So, um, the small guys, yeah, yeah, because it's
probably they figure forsettlement, in the sense like
everyone's gonna try and settlebecause they don't want to deal
with this and yeah, that's thething.
Damon Wright (49:29):
It can be really frustrating that there are
plenty of lawyers who there aresome who are real zealots and
are it's a I'm.
I'm going to, um, I'm a youknow, a warrior and I'm going to
go to the mat and try to doeverything I can to make as much
money for the people that Irepresent and create as much
good in the world.
And that's one mentality.
(49:51):
Another mentality is I'm goingto just go after lots of
companies and make a settlementdemand.
That's less than the cost ofdefense.
Lots of companies and make it asettlement demand.
That's less than the cost ofdefense.
So if it's going to cost a halfa million dollars to litigate
this case and the defendantknows it I'm going to start my
settlement negotiations at$250,000.
And they'd be stupid not totake it because even if they win
(50:15):
at the end of the day, if theylitigate and they win at the end
of the day, they will havespent twice that.
There's that other kind ofapproach.
One more section to talk about,don, and if you have a couple
more minutes here.
John Newtson (50:34):
Yeah, just a few more of them coming up on a
deadline here in a minute, allright.
Damon Wright (50:39):
So this is a section about the benefits of
business insurance and, yeah, Ithink it's every.
Every business should make surethat they've got insurance and
some of the types of claimswe've talked about.
You can get insurance to helpwith the cost of defense or
cover the claim.
Yeah, and that's something touse.
John Newtson (50:58):
A certain size it starts to become economical in
terms of defense or cover theclaim.
Yeah, that's something.
To use a certain size, itstarts to become economical in
terms of the risk reward on that, and I think this is like you
know.
This is all the stuff that,like you know, nobody wants to
take the time to think aboutbecause it sucks.
It's not about making money butit's about, like you said,
keeping the money.
That you know, and I'd muchrather do a lot of these
(51:20):
conversations with you, damon,than a lot more of those
conversations with people whoare like, hey, let me tell you
about my experience in the lasttwo and a half years dealing
with this major lawsuit that Ihad to deal with that cost me
millions of dollars and shutdown my business.
Those conversations suck.
Everyone wants to pay attentionto those because they're so
interesting in, like, holy crap,let's hear what happened.
(51:42):
Yeah, but much better to havethese conversations so that
you're not that case study.
Nobody wants to be that casestudy.
I don't want you to be thatcase study.
I don't want to do any more ofthose episodes.
Yeah, yeah, I don't want to doany more of those episodes with
people from the community.
I know, like everybody like,pay attention to this stuff.
It's, you know it's not, youknow it's it's.
It's easy to get likedistracted from it and be like,
(52:04):
hey, this isn't something I candeal with right now because I
got a campaign going out today,but somebody should be going
through this guide and goingthrough these things and talking
to him and other.
You know, just like, get thisstuff handled so that you're not
a future case study, please.
Damon Wright (52:17):
Yeah, yeah, please , yeah, yeah.
I mean the, the e-commercelegal guide.
I think I told you before westarted in 2019, probably a
thousand hours of legal workthat's gone into that.
Uh, so that's, you know, ourrates.
That's, that's a lot of moneyuh, and it could save you.
It could save you and help tomake you millions of dollars.
There's other sections wedidn't talk about, um, so
there's a lot of value there andwe're giving away for free and
(52:45):
the things we're talking about.
There are things that you canimplement to avoid having to pay
lawyers and having to payothers a lot of money.
We actually make my law firmmore money when people haven't
done that kind of stuff we'vetalked about here and then they
get sued and then we're we're inthe thick of it, um, but so
it's, maybe it's againstinterest, but I'd like to help
clients grow and sleep well andmake a lot of money and uh,
(53:07):
certainly we, we litigate and uhfight for our clients when
necessary in court.
But yeah, a lot of this ispretty simple and it can help
you in a huge way.
John Newtson (53:17):
That's awesome.
Yes, I'm going to link to thatguide.
Everybody um download it.
It pass it to whoever he needsto on your team to read it.
I'll link to the DNC as well.
The Do Not Call scrubber andDamon, thanks for taking the
time and doing this and thanksfor you guys putting that guide
together and everybody check itout.
Thanks, john.
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