Business Succession

When Does Conversion Marketing” Cross The Line Into “False Advertising?

A very interesting area that has recently caught the attention of the legal system is that of “influencer conversion marketing”. Specifically, when does an influencer (paid or unpaid) cross the line between “false advertising”, or just an entrepreneur with enough business savvy to take advantage of monetized marketing?

As we all know, the pioneers are the ones who bear the most scars, and in the U.S. legal system, due to our common law judicial system, many times it is those who endure the first lawsuits that create the case law that in turn, creates the parameters for those following. On the subject of “influencer marketing”, actress and business owner Gwyneth Paltrow and her company can be considered as such. As one of the first celebrities to begin leveraging her celebrity into a business (Goop), Paltrow also recently learned a lesson (to the tune of $145,000).

Since 2012 (really 2008), Gwyneth Paltrow, and her company, Goop, have been “extremely efficient at converting people, both to the company’s neo–New Age way of thinking and to piling products into virtual shopping carts.” (Wall Street Journal, “Gwyneth Paltrow Wants To Convert You” (hereinafter cited to as “Wall Street Journal”).  For example, Goop has been known to charge customers $90 for a month’s supply of “Why Am I So Effing Tired” supplements, a $499 firewood tote from Goop’s recent capsule collection with home furnishings company CB2 or $22,560 one-of-a-kind sapphire-and-diamond earrings by L.A.-based jewelry company Vram.” Wall Street Journal.  

Goop focuses generally on wellness- both education and products, and has presumably brought many “wellness” products to light for it’s read years. However, recently a group of medical professionals believed that Goop crossed a line when they sold certain types of “eggs mixed with essential oils”, marketed to promote women’s health. Those doctors, who became the plaintiffs in the lawsuit against Goop, accused Goop of “undermining the scientific method and engaging in quackery, citing everything from promoting stickers that claim to rebalance the body’s energy to publishing articles by a self-described “medical medium.” (CBS News, “Goop Settlement For False Advertising”, hereinafter cited to as “CBS News”).

This group of doctors, represented by ten California district attorneys, sued Goop under claims of “misleading advertising” for three specific products. The lawsuit specifically centered around false advertising, of course, but also around the fact that Goop had stepped too far into the realm of giving “medical advice”.

The Orange County District Attorney and prosecutors from 10 California Counties said that “the company did not have scientific backing for health claims it made for three products sold online: two vaginal eggs and a mix of essential oils.  People have been selling snake oil for a long time. This is just another type of snake oil,’ Rackauckas said. Prosecutors alleged the descriptions were ‘not supported by competent and reliable scientific evidence.'” CBS News.

Goop lost the lawsuit, and paid $145,00 in civil penalties.

Should Gwyneth Paltrow be viewed as a “trailblazer”, in her words? A pioneer that had to suffer some blows and earn some scars for the wave of celebrity-based brands that came after her? In her words, I’m so happy to suffer those slings and arrows, because if you look at the culture from then to now, people are so curious,” Paltrow says. “It’s so beautiful to see people feeling empowered by natural solutions or ancient modalities alongside science and medicine.” Wall Street Journal.  


Maybe, but as a business owner, don’t get distracted by that romanticized view of the subject, regardless of the voracity or relevance of that statement.

Key Takeaways:

As a business owner, before you engage in selling or promoting any products:

  1. On behalf of another company or sharing your own opinions that may step into the realm on licensed advice, you MUST be aware of all FTC rules that would govern it; and you must also be aware of potential issues that can arise if you decide to give out unlicensed advice. For example, in Paltrow’s case, she had to pay what most of what most of us would consider to be a considerable sum in penalties because her product was not supported by competent and reliable scientific evidence.
  2. Recognize that products you offer must be subject to the same requirements as advertising, rather than just opinion. Always be aware of FTC rules regarding advertising, affiliate marketing, sponsoring products, etc, before engaging in doing so.
  3. There’s a third lesson to be learned from this case: remain cognizant of the difference between giving an honest review of a product or it’s effectiveness, and false advertising.

Paltrow’s case is an expensive lesson we can all learn from, that shows that if you’re making any sort of health, wellness, or science-based claims, you must tread extremely lightly between sharing your opinion, or giving medical advice. There is a distinct difference between just sharing your opinion on a cute jacket you think someone should buy, and providing unlicensed advice. If you do not have a license in license-required area, and your advice causes damage to someone who takes that advice, even the best of disclaimers may not protect you

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