Hunton Retail Law Resource

The following consumer protection actions made headlines this week:

Self-Regulatory

Zeltiq’s CoolSculpt Claims Referred to FTC and FDA

On October 5, 2016, the NAD referred advertising claims from Zeltiq Aesthetics, Inc., to the FTC and the U.S. Food and Drug Administration (“FDA”) for Zeltiq’s “CoolSculpting Cryolipolysis Body Contouring System,” a medical device that, according to the advertiser, uses a cooling treatment to target fat cells beneath the skin. The device is FDA approved, and the NAD found that the claims that the product is “FDA-cleared” and would result in a “slimmer you” were supported. However, the NAD recommended that Zeltiq add further disclosures about how the product works. Zeltiq said that it would comply with most, but not all, of NAD’s recommendations; per NAD procedure, the matter will be referred to the FTC and FDA.

NAD Refers Brainwave Drug to FTC

NAD referred another case to the FTC, regarding claims made by UltraMax Health, Inc., for its “Max Synapse” supplement. The claims included that the supplement would increase and improve (1) short- and long-term memory, (2) concentration and brain performance, and (3) energy levels. The advertiser failed to file a substantive written response to NAD, or provide any substantiation for the challenged claims.

Agency Actions

Highway to Health

On September 28, 2016, the FDA issued a guidance document and opened a comment period focused on redefining the “healthy” nutrient content claim for food labeling. The guidance document states that the FDA will not enforce regulatory requirements for products labeled “healthy” if certain criteria are met, such as the types of fats and the amount of potassium or vitamin D in the product. The FDA hopes change their definition to reflect evolving healthy dietary patterns.

Best Buy Penalties

The Consumer Product Safety Commission (“CPSC”) announced this week that Best Buy has agreed to pay an almost $4 million civil penalty for distributing and selling recalled products over the span of five years. Between September 2010 and October 2015, Best Buy sold recalled Canon cameras, Toshiba Satellite computers, LG Electronics washing machines and Frigidaire blenders, all recalled due to the possibility of danger to the consumer. The CPSC also alleged that Best Buy did not implement adequate procedures for identifying the recalled products, allowing them to be sold. Best Buy settled the matter but does not admit to the CPSC’s charges.

Litigation

Second Circuit Upholds Fine Against Network Marketing Operator

On October 4, 2016, the Second Circuit upheld a lower court ruling requiring LeadClick Media, LLC, to pay a multimillion dollar fine for recruiting affiliate marketers to use fake news sites in order to drive internet traffic to their website for a deceptively marketed weight-loss supplement. The FTC had originally sued both LeadClick and LeanSpa, the maker of the supplement (which settled in 2014), for deceiving consumers. The appellate court upheld a lower court ruling requiring LeadClick to disgorge $11.9 million in ill-gotten gains from the scheme. This ruling marks the first time a court of appeals has held the operator of an affiliate marketing network liable for deception by third-party marketers.

Consumers Proceed in Class Actions Against Deceptive Advertising

Last week, California and New York federal judges entertained several potential class actions involving retailers. In California, a federal judge threw out most claims against ConAgra Foods for allegedly mislabeling its Fleischmann’s-brand margarine, but allowed the case to go forward on the claim that the “healthy lifestyle” label on the package was potentially misleading. In New York, consumers of PepsiCo’s Naked juices filed a complaint in a putative class action, alleging that the company misrepresented the health of their drinks, which can contain more sugar than a 12-ounce can of Pepsi. The plaintiffs seek to represent a New York subclass and a California subclass. Another New York federal judge certified three classes of consumers in a deceptive advertising class action against Johnson & Johnson's line of Aveeno products. The plaintiffs allege that labeling the products as “Active Naturals” is misleading, because the products contain synthetic ingredients. The classes are consumers from New York, California and Florida.