Hunton Retail Law Resource

This week, the following consumer protection actions made headlines:

Self-Regulatory Decisions:

Steuart’s Pain Formula Referred to the FTC

The National Advertising Division (“NAD”) referred Steuart Laboratories, Inc., the producer of Steuart’s Pain Formula, to the FTC for the second time after it failed to provide the NAD with substantiation for challenged claims. Steuart was initially referred to the NAD by Steuart’s competitor, EuroPharma, Inc., who challenged several efficacy and testimonial claims.

CARU Recommends Spiral Toys Modify Ads

Spiral Toys, which manufactures Cloud Pets plush toys with an accompanying Cloud Pet mobile app, agreed to modify its TV ads to clearly disclose that batteries are not included with the advertised toy, and to modify its privacy practices at the request of the Children’s Advertising Review Unit (“CARU”). The Cloud Pet can receive and send recorded messages sent from mobile devices. A small plastic heart on the toy lights up when there is a message is waiting. Squeezing the animal’s paw causes the message to play. CARU’s principal concern with the app was whether it should employ an age-gate before collecting personal identifiable information from the user during registration. Spiral Toys agreed to modify its registration process.

Aquabeads Will Modify its Ads

The producer of Aquabeads Ultimate Design Studio agreed to modify its TV ads to ensure that it did not make inaccurate advertising claims about the product. The Aquabeads ad claimed, “Spray with water, and the beads magically stick together.” CARU took issue with the fact that in order for the “magic” to work, the beads required drying time not depicted in the ad.

Consumer Litigation:

GNC Customers Claim to Feel the Burn of Reference Pricing Claims

A class action complaint against General Nutrition Centers ("GNC"), a chain of nutritional supplement stores, accuses the store of deliberately pumping up the retail prices of its online products, then discounting the products to their normal prices to give the appearance that the consumer is getting a good deal. The complaint alleges, “The difference between this ‘Regular’ price and GNC’s ‘Sales Price’ is viewed as a discount or purported savings. GNC’s advertised ‘discounts,’ however, are completely illusory or, at best, grossly overstated.”

Federal Court Dismisses Action Against Kraft Heinz for “Made in USA” Ads

A California federal judge dismissed a proposed class action that accused Kraft Heinz of falsely making “Made in USA” ad claims while including in its product foreign ingredients. The court found the complaint failed to state a claim by not alleging which ingredients were foreign saying, “As its name suggests, Heinz 57 Sauce may contain dozens of ingredients. Yet, Plaintiff does not allege a single specific ingredient in the sauce to be of foreign origin. In fact, Plaintiff does not allege any of the ingredients of Heinz 57 Sauce.”

Ninth Circuit Affirms Dismissal of Deceptive Ad Allegations Against Walmart

The Ninth Circuit affirmed a lower court decision, which dismissed claims that Walmart deceptively advertised a $9 migraine pill by using different color packaging to cause consumers to believe it was more effective than an equivalent $3 remedy. In its unpublished opinion, the court explained that the “fatal flaw in [the claims] is [the] assertion that the mere fact of the proximate presentation of the two products with their different colors and prices is sufficient to run afoul of [state consumer protection laws], even though the ingredients and their amounts are listed on the packages.”

Chobani Prevented from Telling Consumers that Rival Dannon’s Yogurt has “Chlorine”

A New York federal judge refused to reconsider a previous ban on Chobani advertising claiming that Dannon adds chlorine to its yogurt. The dispute arose out of an ad that depicts a woman sitting by a pool choosing between Chobani and Dannon yogurt, and describes the Dannon product has having chlorine added to it. In fact, Dannon argues that its sweetener contains chlorine atoms in the form of a chloride that are in numerous food sources such as salt or milk – not the chlorine that is added to swimming pools. Chobani argued that the order was so broad as to prevent it from describing Dannon’s product as “bad.” The judge reasoned that phrases that may, in some context, amount to puffery may “take on a specific, non-puffing meaning when connected to an express or implied factual assertion about a specific competitor’s product.”

PETA’s False Ad Claims Against Whole Foods Dismissed

PETA’s proposed class action against Whole Foods for allegedly misleading consumers about the farming practices of its meats was dismissed by a California federal judge. The court rejected claims that Whole Foods mislead consumers by using the phrases “Great-Tasting Meat From Healthy Animals” and “Raised Right Tastes Right” on napkins and signage saying the phrases are “unspecific and unmeasurable, and therefore constitute puffery.” The court also found that use of the phrase “No Cages” when describing the meat products, which is factually true, was not misleading even if that claim mirrors the industry standard. This left the court to decide whether there were actionable omissions by Whole Foods for not disclosing that its meat farming procedures were an alleged “sham and that key standards merely mimic industry practices.” On this issue, the court reasoned that such disclosures are only necessary when they relate to consumer safety, but that was not the case here.