Hunton Retail Law Resource

This past week, several regulatory and self-regulatory enforcement actions made headlines:

FTC Settles with NutraClick Over Deceptive Billing Practices

The FTC has settled claims that supplement maker NutraClick engaged in deceptive billing practices. According to the FTC, NutraClick offered “free” samples through its website, but consumers who ordered these samples were then enrolled into a membership program with monthly bills of $29.99 - $79.99. Over 70,000 people registered complaints about these practices with the FTC.

Under the settlement, NutraClick is barred from implying that its products are free if ordering them will cause customers to be charged for other services. Additionally, NutraClick may not obtain billing information without disclosing that the consumer may be charged for a service, fail to send sales confirmations within 10 days of a sale, use consumer billing information without getting written authorization from the consumer, or fail to provide a method of canceling a charge. NutraClick is also required to return over $350,000 in profits from this scheme.

NAD Makes Recommendations Based on DirecTV Complaints

After a challenge by DirecTV, the NAD has recommended that DISH Network and Comcast Cable Communications discontinue certain advertising claims. Both DISH and Comcast have agreed to follow the NAD’s recommendations.

DirecTV challenged DISH commercials claiming that DirecTV prices were over $100 per month and that DirecTV had “Year One Price Increases” for its customers. As a result of the NAD investigation, DISH agreed to voluntarily discontinue these claims. Separately, the NAD found that a claim in DISH’s advertisements regarding “local channel fees” did not specifically implicate DirecTV. Because an estimated 58 million of the 113 million cable subscribers in the U.S. do pay local channel fees, the NAD found that DISH had adequate substantiation for the claim.

DirecTV also challenged claims made in Comcast commercials, suggesting that DirecTV is built on older technology and has more limited and outdated shows. The NAD recommended that Comcast discontinue claims about older technology and implying that DirecTV does not offer voice-control search features. Additionally, Comcast claimed that its X1 cable service offered “four times” as much programming as DirecTV. Because this was mathematically incorrect, the NAD recommended that Comcast alter its claims to accurately compare the number of unique titles available on different services.

Colgate Palmolive Rejects NAD Recommendation to Discontinue “Natural” and “Naturally” Claims for Tom’s of Maine Antiperspirant; Will Challenge Jurisdiction with NARB

The NAD has recommended that Colgate Palmolive discontinue using the words “natural” and “naturally” in describing its Tom’s of Maine Naturally Dry Antiperspirants, but Colgate Palmolive has indicated that it will appeal the decision to the National Advertising Review Board, the appellate division of the self-regulatory system.

Colgate competitor Unilever challenged claims that: (1) Tom’s of Maine would keep users “Naturally dry”; (2) Tom’s of Maine “really works naturally”; (3) Tom’s of Maine is made of a “natural powder”; and (4) the ingredients are “natural.” The NAD noted that because aluminum chlorohydrate, the active ingredient of Tom’s of Maine Naturally Dry Antiperspirant, is not naturally occurring, claims that the product is “natural” are misleading even if a majority of the ingredients are indeed natural. The NAD said that Colgate Palmolive was free to continue noting that the product contains natural ingredients but recommended against claims about the efficacy of the product originating from natural ingredients.

NARB Recommends Rust-Oleum Nix “2X” from Product Name

The NARB has recommended that Rust-Oleum discontinue using “2X” as part of the Painter’s Touch Ultra Cover product name. Rust-Oleum’s claims were originally challenged by Sherwin Williams. The NAD investigated claims of Rust-Oleum’s coverage, including the use of “Ultra Cover 2X” as part of product name and visual depictions of one can equaling two.

The NAD typically does not recommend name changes for products unless the name is likely to cause consumer confusion or if the product name includes unsubstantiated, express performance claims. In this case, the NAD found that Rust-Oleum could not substantiate claims that its product had twice the coverage ability as other products and therefore recommended that Rust-Oleum remove “2X” from the product name. The NARB panel agreed with the NAD’s recommendation.

Rust-Oleum has indicated that while it disagrees with the decisions of the NAD and NARB, it will comply with the recommendations.

CARU Recommends Children’s Baseball Bat Advertiser Modify and Discontinue Claims

The Children’s Advertising Review Unit (“CARU”) has recommended that Dirty South modify or discontinue certain claims about its W.A.R. baseball bat.

According to CARU, Dirty South published advertisements in Baseball Youth magazine, appearing to be directed towards children, and contained claims that suggested that users of W.A.R. bats could either “hit[] the fence at 210ft” and be “dominant” against other teams.

Because the claims of dominance and distance were unsubstantiated by evidence, CARU recommended that Dirty South discontinue the claim regarding dominance and either discontinue or modify the claim regarding distance to better disclose the typical distances expected from its W.A.R. bats. Dirty South indicated that it would follow CARU’s recommendations.