Hunton Retail Law Resource

Several consumer actions affecting the retail industry have made headlines since the New Year.

FTC Issues Multi-Level Marketing Guidance

On January 4, 2018, the FTC issued updated business guidance to multi-level marketers (“MLMs”) to assist organizations in understanding and complying with the law. The FAQ-style guidelines address how core consumer protection principles apply with equal force to MLMs’ interactions with its own current and prospective participants, especially with regard to the compensation structures that MLMs are famous for. The FTC highlights several distinct MLM practices, explaining how each related to the FTC’s regulatory power and focus, and provides advice on how MLMs could best avoid running afoul of the law.

FTC and CellMark Settle Complaint over Cancer Treatment Products

The FTC and CellMark reached an agreement that the company would be prohibited from making unsupported claims for CellAssure, a product aimed at treating cancer with “anti-tumor properties,” and Cognify, touted for its ability to alleviate “chemo fog.” CellMark agreed that it would not misrepresent the results of any study, test or research, and that it will only make claims supported by competent and reliable scientific evidence.

Children’s Advertising Watchdog Says Stride Rite Should Give Soaring Shoe Claims the Boot

The Children’s Advertising Review Unit (“CARU”) recommended that shoemaker Stride Rite discontinue advertising that implies “Leepz” footwear allows children to jump higher. The 30-second commercial for the light-up shoes features children jumping great distances, soaring into the air and floating past the sun, and the slogans “sky-high technology” and “reach new heights with Leepz!” CARU was not sold by the shoemaker’s explanation that the commercial is meant to demonstrate the sophisticated lighting sequence in the shoe that makes a child’s step look like a bounce, that “sky-high technology” is synonymous with “high-tech,” and that the “reach new heights” language was a reference to children growing up. CARU said one reasonable message children can take from the ad is that Leepz could make them jump higher, which was not mitigated by the video super “does not make you jump higher,” or the fact that children were unlikely to make their own shoe purchases without an adult.

Memory Supplement Maker Tells NAD ‘Forget It,’ Will Challenge Recommendation to Discontinue Claims

The NAD recommended that Cebria, maker of “Senior Moment,” discontinue its broad claims that the dietary supplement containing neuropeptides supports cognitive function in healthy individuals with normal age-related memory loss. Six studies of the active ingredient, including three human trials, were not enough to convince the NAD that the product as a whole could be marketed as providing the same benefits without qualification. Cebria pointed to the fact that the FTC had closed an earlier investigation without taking any action, and protested the NAD’s evidentiary requirement that it said exceeds what's required by the FDA. Cebria stated that it would appeal the recommendation to the National Advertising Review board.

NAD Recommends Cessation of “Zero Leaks” Claims for Adult Diapers

The NAD investigated Kimberly-Clark Corporation’s complaint that competitor SCA Personal Care’s TENA Overnight adult incontinence underwear has “ZERO LEAKS.” NAD took issue with the third-party testing methodology supporting SCA’s claim, which focused on absorbency in a laboratory setting and did not account for a variety of body positions and body types that might result in real-world problems. NAD also took issue with claims that TENA is recommended by “9 out of 10 women,” finding that the testimonials relied upon were not representative of women as a whole. SCA noted that it had already discontinued use of the claims.

Vitamin Cocktail Maker Agrees to Limit Claims Regarding Product’s Addiction Recovery Efficacy

The Electronic Retailing Self-Regulation Program (“ERSP”) and dietary supplement maker NutraVictory found the right formula for claims regarding the company’s “Recovery24” product, a regimen of vitamins targeted at those recovering from addiction and the general public. NutraVictory agreed to stop using certain testimonials and statements regarding Recovery24 after ERSP launched an inquiry into the wide-ranging claims regarding the benefits of the product. ERSP concluded that NutraVictory did not have a reasonable basis for claims that the product would confer any specific benefit on a person in recovery and recommended that the company discontinue any advertising that suggests to consumers that Recovery24 would help them achieve or maintain sobriety. ERSP allowed NutraVictory to continue the claim that Recovery24 “helps support heart health” in the general population.