Hunton Retail Law Resource

The U.S. Court of Appeals for the Ninth Circuit has continued to clarify when a court can consider the back label of a product in connection with a false advertising claim.  Misleading label information is a common basis for false advertising suits, especially under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. However, in recent decisions, the court has detailed new circumstances in which a label might be saved.

We recently posted an article on Hunton’s Privacy & Information Security Law Blog on a newly issued federal district court opinion citing that New York City’s “Consumer Data Law” violated the First Amendment and the regulation of commercial speech.  A federal judge declared the municipal law requiring food-delivery companies to share customer data with restaurants unconstitutional.

Earlier this week, the Federal Trade Commission (FTC) and Food and Drug Administration (FDA) sent cease-and-desist letters to several companies warning them that their products, which were marketed to mimic popular children’s snacks, ran the risk of unintended consumption of the Delta-8 THC by children. In addition to the FDA’s concerns regarding marketing an unsafe food additive, the agencies warned that imitating non-THC-containing food products often consumed by children through the use of advertising or labeling is misleading under Section 5 of the FTC Act. The FTC noted that “preventing practices that present unwarranted health and safety risks, particularly to children, is one of the Commission’s highest priorities.”

The Children’s Advertising Review Unit (CARU) of BBB National Programs announced an investigation into the popular kids YouTube channel “Vlad and Niki,” owned by Content Media Group FZC, LLC (CMG), which produces videos under various licensing and merchandising agreements. Because these agreements obligate CMG to produce the videos and allow CMG to share in generated revenue, CARU considers CMG an endorser of the products in Vlad and Niki videos and subject to CARU’s Self-Regulatory Guidelines for Children’s Advertising.

BBB National Programs’ Children’s Advertising Review Unit (CARU) has released new Guardrails for Child-Directed Advertising and Privacy in the Metaverse. As explained in a BBB press release, the Guardrails are intended to provide companies with best practices as they navigate the complexities of engaging with children in metaverse experiences. The Guardrails offer “actionable recommendations” on developing metaverse experiences directed to children, complying with existing advertising and privacy law, and engaging responsibly with children online. These guidelines build on earlier CARU guidance regarding metaverse activities.

The National Advertising Division (“NAD”) has recommended that Goya Foods, Inc. toss claims that its Excelsior brand pasta is “Puerto Rico’s Favorite Pasta,” following a challenge by Goya’s competitor, Riviana Foods, Inc. Riviana, the maker of Ronzoni pasta, argued that Goya had not substantiated its “favorite” claim through consumer survey or sales data. Goya responded that its claim was classic puffery. NAD disagreed with Goya, finding that “favorite” is objectively measureable and means a product is preferred over all others. NAD ...

This past week, several consumer actions made headlines that affect the retail industry.

Federal Court in Florida Grants FTC a Win in Gastric Bypass Alternative Case

A U.S. district court in Florida has ruled in favor of the FTC in its longstanding litigation against Roca Labs, Inc., a seller of weight-loss powders advertised as an alternative to gastric bypass surgery. The court found that Roca Labs had made deceptive weight-loss claims and misrepresented that one of its promotional websites was an objective information site. The court also found that Roca Labs’ gag clause, which the company used to sue and threaten to sue customers who shared negative comments or complained about their dissatisfaction with the product, was unfair under the FTC Act. After additional briefing, the court will decide how much of the defendants’ $26.6 million in gross sales should be awarded in consumer redress.