Hunton Retail Law Resource

As reported on the Privacy & Information Security Law blog, on July 29, 2016, the FTC announced that it had issued an opinion and final order concluding that LabMD, Inc. (“LabMD”) violated the unfairness prong of Section 5 of the FTC Act by failing to maintain reasonable security practices to protect consumers’ sensitive personal information. The unanimous decision reverses a November 2015 administrative law judge’s initial decision that, as we previously reported, dismissed the FTC’s charges against LabMD for failing to show that LabMD’s allegedly unreasonable data security practices caused, or were likely to cause, substantial consumer injury.

This past week, several consumer protection and regulatory actions made headlines:

Class Plaintiffs Just Keep Swimming Against Safeway in Underfilled Tuna Case

On July 13, 2016, Safeway escaped negligent misrepresentation claims in a putative class action consumer suit alleging that Safeway violated federal guidelines when it chronically underfilled two of its private label canned tuna products. Safeway filed a limited motion to dismiss the class plaintiffs’ unjust enrichment and negligent misrepresentation claims. The court found that, though duplicative, unjust enrichment was properly plead, but the negligent misrepresentation claim failed because class plaintiffs could not show that they suffered any loss other than an economic loss. Unfortunately for the grocer, eight other claims in the suit survived, including various breaches of warranty, unjust enrichment and California unfair competition counts. 

This past week, several consumer protection and regulatory actions made headlines:

Federal Trade Commission

FTC Settlement Casts Shadow Over Online Video Game Reviews

This past week, the FTC settled with Warner Bros. Home Entertainment over online influencer charges. The FTC alleged that Warner Bros. deceived consumers while marketing its video game, Middle Earth: Shadow of Mordor. Warner Bros. paid online “influencers,” like the popular gamer “PewDiePie,” to post positive reviews of the game online through YouTube, Twitter, Facebook and other social media. While Warner Bros. instructed these influencers to disclose the connection, they told them to do so in a description box below the video, not in the video itself, so that the monetary connection was not immediately apparent. The FTC has been particularly focused on cracking down on misleading online reviews in the past few years.

This past week, several consumer protection and regulatory actions made headlines:

Technology

Volkswagen to Pay an Additional $86 Million to California

On July 6, California Attorney General Kamala Harris announced that Volkswagen (“VW”) will pay the state an additional $86 million in a second partial settlement over VW’s emissions “defeat devices.” This civil penalty sum is the largest amount ever recovered by California from an automaker, and comes on the heels of the recently announced $14.7 billion settlement negotiated by the EPA and the FTC over the German automaker’s emissions-cheating scandal. The $86 million is part of a total $603 million VW has agreed to pay to resolve consumer-protection claims with 46 jurisdictions. As part of the settlement, VW agreed to strict injunctive terms, including prohibitions on false advertising and affirmative disclosure of defeat devices.

This past week, several consumer protection and regulatory actions made headlines:

FTC Announces Substantial Maximum Civil Penalties Increases Due to “Catch-Up” Cost-of-Living Adjustment

Pursuant to the Federal Civil Penalties Inflation Adjustment Act of 2015, the FTC has approved new maximum civil penalties for 16 law provisions governed by the Agency. Many of the maximum penalties had not been adjusted in decades and are increasing substantially under the statutorily mandated “catch up” cost-of-living adjustment.

For many consumers, online reviews play a role in the decision to make any purchase. Before making dinner reservations, choosing a hotel, hiring a service provider or even buying a toaster, consumers often look to online reviews as an assessment of the product, service or experience they want to buy. In a market where a negative online review or rating from a dissatisfied customer can influence countless other potential buyers — not just people the dissatisfied customer knows in real life — companies have a strong incentive to maintain a positive reputation online. However, in a desire to separate themselves from the competition with strong reviews, some companies have taken the race for positive online reviews too far, and the Federal Trade Commission is watching.

On June 28, 2016, in two related settlements, German auto-manufacturer, Volkswagen AG (“VW”), has agreed to pay $14.7 billion to resolve allegations that the company cheated diesel emissions tests for nearly 500,000 2.0 liter diesel vehicles sold over six years. One settlement partially resolves EPA allegations for alleged violations of the Clean Air Act’s federal emissions standard; the other partially resolves FTC claims that VW violated the FTC Act by deceptively and unfairly advertising its “clean diesel” vehicles. VW also will pay damages to 44 states, Washington, D.C., and Puerto Rico. The announced settlements do not resolve pending civil claims concerning VW’s 3.0 liter diesel vehicles, or potential criminal liability.

This past week, several consumer protection and regulatory actions made headlines:

FTC Issues Closing Letter in Bedrock “Made in USA” Labeling Investigation

On June 16, 2016, the FTC issued a closing letter in its investigation of Bedrock Manufacturing Company, the parent of Filson and Shinola. The FTC had raised concerns regarding Bedrock’s unqualified use of the phrases “Made in USA” and “Built in USA.” Despite using these labels, many of Shinola and Filson’s products were made with materials mostly or entirely sourced from outside of the US. The FTC closed its investigation as a result of Bedrock’s self-imposed corrective actions, including replacing hangtags and information cards for various products, updating employee training materials and advertising materials, and changing labelling integrated on the products themselves.

On June 22, 2016, the Federal Trade Commission announced a settlement with Singaporean-based mobile advertising network, InMobi, resolving charges that the company had deceptively tracked hundreds of millions of consumers’ locations, including children, without their knowledge or consent. Among other things, the settlement orders the company to pay $950,000 in civil penalties. 

On June 21, 2016, the Federal Trade Commission settled claims against the purveyors of the “Doctor Trusted” seal certification program. The FTC’s action was against defendants SmartClick Media LLC, d/b/a Doctor Trusted, and the company’s owner. According to the FTC’s complaint, defendants marketed the “Doctor Trusted” certification and seal to health-related websites claiming that it was “one of the most effective ways to increase sales with the least amount of effort.” Despite representing to consumers that websites carrying the Doctor Trusted seal were “carefully evaluated by an independent medical doctor who reviewed its medical information, claims, products, terms of service, and policies,” the FTC alleged that the certification review was a sham. In fact, the Doctor Trusted review process consisted of two freelance physicians who only gave a cursory review of member websites, with no scientific evaluation of the sites’ health claims.

This past week, several consumer protection and regulatory actions made headlines:

Once You Pop, the Suit Can’t Stop: 7-Eleven Chip Labeling Suit Begins Again

On June 7, 2016, the Ninth Circuit reversed the district court’s dismissal of a proposed class action alleging that plaintiffs were misled by 7-Eleven’s potato chip bags, claiming they had no trans-fat or cholesterol. The lead plaintiff in the case claimed that he relied on the front-of-package labeling and would not have purchased the chips had the front also included the FDA-mandated, “See nutrition information for fat content,” disclosure. Importantly, the Ninth Circuit’s holding clarified that California’s consumer protection statute makes misleading statements actionable, even if they are not “technically false.” Plaintiffs allege that 7-Eleven’s attempts to gain a market advantage by a half-truth claim misled customers nationwide.

This week, the following consumer protection actions made headlines:

Litigation

Claims Dismissed in San Francisco Soda Suit

A federal judge dismissed several constitutional claims in a suit against the city of San Francisco over its ban on ads for sugary drinks, because the ordinance has since been repealed. Both San Francisco and the plaintiffs, including the American Beverage Association and other trade groups, asked the judge to dismiss the free speech and due process violation claims from the original complaint. Although the advertising component of the ordinance was repealed in December, the suit continues over a new ordinance, set to take effect on July 25, 2016, that requires ads for soda and other sugary drinks to display a mandatory health warning. The judge previously declined to enjoin the ordinance, saying that it was not likely for the plaintiffs to succeed on their First Amendment claim under the rational basis test for commercial speech.

This week, the following consumer protection actions made headlines:

Teavana Settles with Consumer Product Safety Commission

Teavana, a Starbucks-owned tea retailer, settled allegations with the Consumer Product Safety Commission (“Commission”) that Starbucks failed to report complaints of exploded tea tumblers. The settlement split the Commission on a company’s obligation to report complaints to the agency. Commissioner Joseph P. Mohorovic, who opposed the settlement with its $3.75 million civil penalty, said that Teavana did not have a clear obligation to report the complaints saying, “The [Consumer Product Safety Act] and our rules under it do not establish a clear line for when a company must report, but at best blurred zone of indecision.”

This past week, several consumer protection and regulatory actions made headlines:

FTC to Host Consumer Disclosure Workshop in September

The Federal Trade Commission has announced that it will be hosting a September 15, 2016 workshop, “Putting Disclosures to the Test,” on the efficacy and costs of consumer disclosures in advertising and in privacy policies. Planned discussion topics include examining disclosures meant to avoid deception in advertising, disclosures designed to inform consumers of data tracking, and industry-specific disclosures for jewelry, environmental and fuel-saving claims. The workshop is open to the public and will take place at the FTC’s Constitution Center offices in Washington, D.C. The FTC currently is soliciting presentation proposals for the workshop; submissions may be sent to disclosuretesting@ftc.gov.

This past week, the following regulatory and consumer actions made headlines:

Cheez-It Whole Grain Crackers ‘Not Ready,’ lawsuit claims

The Kellogg Company is being sued over its “whole grain” Cheez-It crackers. According to the complaint filed in U.S. District Court for the Eastern District of New York, the claim that these crackers are whole grain is “false and misleading, because the primary ingredient in Cheez-It Whole Grain crackers is enriched white flour.”

While the Cheez-It Whole Grain crackers do contain some whole wheat flour, plaintiffs argue it is almost negligible. A comparison of the Cheez-It Original crackers and the Cheez-It Whole Grain crackers shows identical nutritional values in every category, except fiber. The Original crackers contain “less than 1g,” while the Whole Grain crackers contain 1 gram.

Plaintiffs argue the Cheez-It claims are thus misleading, and have caused consumers to purchase or pay a premium for a product, that they otherwise would not have paid. The Kellogg Company has denied any misconduct, including any alleged impropriety in its labeling.

As we previously reported, Judge Emmet Sullivan of the U.S. District Court of the District of Columbia had granted the FTC’s request for a preliminary injunction blocking the proposed Staples-Office Depot merger. Earlier this week, Judge Sullivan released a public version of the opinion supporting his decision.

This week, the following consumer protection actions made headlines:

Mortgage Scammer Under Water After FTC Settlement

On May 9, 2016, the FTC announced that it is returning $1.87 million to 1,630 consumers who lost money in the Expense Management America telemarketing scheme that never provided debt or mortgage relief services after absconding with homeowners’ up-front fees. The repayment to consumers is a capstone on a three and a half year joint effort with the DOJ, FBI and HUD to crack down on mortgage scammers taking advantage of distressed homeowners. Related efforts, underway since 2008, resulted in a new FTC rule providing increased protection to homeowners by prohibiting any collection of fees until the homeowner has an acceptable written offer from their lender. In prosecuting Expense Management America, the FTC worked closely with various enforcement agencies in Canada to track down and prosecute the scammers.

On May 10, 2016, Judge Emmet Sullivan of the District Court of the District of Columbia held that the Federal Trade Commission had “met their burden” to show a reasonable probability that Staples’ acquisition of its rival, Office Depot, would likely cause competitive harm and that a preliminary injunction to halt the deal was in the public’s interest. Shortly after the court issued the preliminary injunction blocking the proposed merger, Staples announced that it was abandoning the transaction. 

This week, the following consumer protection actions made headlines:

Federal Trade Commission:

FTC Obtains Multimillion Dollar Judgment Against Repeat Offender

At the FTC’s request, the U.S. District Court for the Southern District of New York entered a $13.4 million judgment against BlueHippo’s CEO, Joseph Rensin, as well as finding Rensin, BlueHippo Funding LLC and BlueHippo Capital LLC, in contempt for violating a 2008 federal court order concerning BlueHippo’s operation of a deceptive computer financing scheme. The FTC charged BlueHippo with contempt in 2009, alleging that the company contracted with thousands of consumers to finance new computers, but failed to provide those computers, in addition to having a deceptive refund policy. In July 2010, the Court issued an order partially granting the FTC’s motion for contempt. The FTC appealed the compensatory sanctions portion of that order, and in August 2014, the United States Court of Appeals for the Second Circuit vacated the damages portion of the order and remanded the case for a reconsideration of damages. The contempt judgment will go towards consumer redress.

On May 2, 2016, the Supreme Court declined to review the D.C. Circuit’s January 2015 ruling upholding a 2013 FTC decision finding that POM Wonderful, LLC (“POM”) misled consumers in advertising that its 100% Pomegranate Juice and POMx supplements could prevent, treat or reduce the risk of prostate cancer, heart disease and erectile dysfunction.

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.

On April 27, 2016, a federal district court judge in the Western District of Washington ruled that the Federal Trade Commission (“FTC”) had proven that Amazon.com had engaged in unfair business practices in billing Amazon account holders for in-app charges without express, informed consent to such charges. At the same time, the judge denied the FTC’s request for a permanent injunction against Amazon, finding no cognizable danger of a recurring violation. The judge ordered additional briefing on calculating monetary relief.

This past week, several consumer protection actions made headlines:

FTC to Let the Sun Shine on Consumer Protection Issues in Rooftop Solar Panel Businesses

The FTC announced that it will be holding a workshop focused on competition and consumer protection in the growing industry of consumer-oriented rooftop solar panels. The workshop, which will take place in Washington D.C. on June 21, 2016, is meant to expand the FTC’s understanding and approach to the growing consumer solar panel industry. Planned topics of discussion include: (1) how consumers can get needed information when deciding whether to install rooftop solar panels; (2) how utility regulators currently approach compensating consumers for power generated on their solar panels; and (3) competition in the solar power generation industry.

This past week, the following consumer protection actions made headlines:

FTC Reminds Consumers to Watch for Misleading Sales; Warns Retailers of the Same

In a recent consumer information piece, the FTC sought to warn consumers of misleading “sales.” Of concern to consumers and the FTC are advertisements or in-store tags that suggest a consumer will save on a product, when in reality the consumer will pay full price and the promised discount is applied on a future purchase.

The FTC also published a warning to retailers that offers must be sufficiently transparent for consumers to be able to determine the final price of a product or service.

On April 12, 2016, the Federal Trade Commission announced a package of four settlements and one lawsuit against the marketers of sunscreen, body lotion and hair care products. Each of these matters was brought in the FTC’s administrative forum and allege a single count: that the products could not be considered all natural because each product contained at least one synthetic ingredient.

This past week, the following regulatory and consumer actions made headlines:

FDA Scratches Out Shionogi’s Misleading Labeling on its Children’s Head Lice Lotion

On April 1, 2016, the Food & Drug Administration (“FDA”) hit Shionogi & Co. Ltd. with a warning letter stating that it had mislabeled its Ulesifa children’s head lice lotion because the labeling failed to inform patients that it should not be used on children under six months old and that it does not eliminate lice eggs. The labeling was in Shionogi & Co.’s recently issued customer co-pay assistance voucher that offered patients discounts to bring their co-pays down to $10. The FDA acknowledged that the voucher’s fine print stated it was only indicated for children over six months of age, but the FDA said that was not enough to avoid mislabeling violations. The agency requested that Shionogi & Co. cease the mislabeling immediately and submit a written response within two weeks.

On April 6, 2016, the Federal Trade Commission formally welcomed the updated Recommendation on Consumer Protection in E-commerce (the “Recommendation”) issued by the Organization for Economic Cooperation and Development (“OECD”) on March 24, 2016, endorsing the Recommendation’s broadened scope and increased consumer protections that “are designed to strengthen consumers’ trust in the expanding electronic marketplace.”

This past week, the following regulatory and consumer actions made headlines:

U.S. Supreme Court Rejects Procter & Gamble’s Challenge on “Snake Oil” Claim

Procter & Gamble’s (“P&G’s”) efforts to get the U.S. Supreme Court to review an Ohio federal judge’s class certification finding ended when the high court denied certiorari in The Procter & Gamble Co. v. Dino Rikos, thereby upholding the Sixth Circuit’s 2-1 decision.

On March 29, 2016, the Federal Trade Commission (“FTC”) filed suit against Volkswagen Group of America (“VW”), which includes Volkswagen of America and Audi of America, for its “Clean Diesel” advertisements.

The complaint alleges VW’s “Clean Diesel” ads made various deceptive claims, including that its diesel technology produced “30% fewer emissions” and reduced “nitrogen-oxide emissions by 90%.” The FTC alleges that the vehicles with VW’s “Clean Diesel” technology were also equipped with a “defeat device” designed to calibrate the vehicle’s emission system to produce legally-compliant emissions during standard emissions testing.

This past week, the following consumer protection actions made headlines:

Litigation Halted:

Jury finds Pom Wonderful Failed to Prove Coke Misled Customers

A California federal jury found that Pom Wonderful failed to prove by a preponderance of the evidence its claims under the Lanham Act that Coca-Cola misled customers into thinking that Minute Maid’s “Enhanced Pomegranate Blueberry Flavored 100% Juice Blend” contained more than 50 percent of pomegranate and blueberry juice combined. Pom Wonderful had sought $77.5 million from Coca-Cola, claiming that the company had stolen its business by tricking consumers into buying its juice.

This past week, the following consumer protection actions made headlines:

NAD Actions

Rust-Oleum to Appeal NAD Ruling on “2X” Product Names and Marketing

The National Advertising Division of the Advertising Self-Regulatory Council (“NAD”) has recommended that Rust-Oleum Corp. stop making claims that its “Painter’s Touch Ultra Cover 2X Spray Paint” has double the coverage capacity as competing spray paints. The NAD also has recommended that Rust-Oleum change the product name. Rust-Oleum plans to appeal NAD’s decision to the National Advertising Review Board. NAD also found Rust-Oleum’s in-house testing to be lacking and its marketing claims to be unsupported by testing.

Yesterday, the Federal Trade Commission laid down a clear marker for retailers in announcing a settlement with Lord & Taylor. This is the agency’s first native advertising case since issuing its Enforcement Policy Statement on Deceptively Formatted Advertising and its Native Advertising Business Guidance in December 2015.

This past week, the following consumer protection actions in federal courts and agencies made headlines:

The Ninth Circuit

The Ninth Circuit was busy addressing consumer protection issues this week. Two proposed class actions brought against Apple, Inc. were decided in favor of the company. In the first action, Hodges v. Apple, Inc., a three-judge panel affirmed a lower court’s dismissal of a putative class action alleging deceptive practices in the advertising and sale of Apple’s MacBook Pro with retina display computers. The plaintiff was dissatisfied with the quality of his retina display screen, but the Ninth Circuit agreed with the lower court that Apple had not misled consumers about the retina displays in its advertising. In the second case, a three-judge panel again upheld a dismissal of a proposed class action against Apple that accused the company of misrepresenting the speech capabilities of its iPhone 4S product. The majority of the appeals court agreed with the lower court’s assessment that the allegations about the capabilities of the Siri speech recognition software were too broad, and did not meet the pleading requirements under the Federal Rules of Civil Procedure.

Finally, a three-judge panel revived a class action that had previously been dismissed by a district judge against Hain Celestial’s Alba Botanica skincare line. Plaintiffs claimed that marketing the products as “natural” misled consumers into buying products that contained synthetic substances at a higher cost.

This past week, the following regulatory and consumer protection actions made headlines:

Outlet Retailers Sued over Allegedly Deceptive Pricing Practices

Class action lawsuits against several retailers, including Burberry and Dooney & Bourke, allege that outlet discount prices tags that compare the outlet price with purported retail prices deceive consumers into believing they are getting a bargain when, in fact, they are not. Reference pricing rules (e.g., the FTC’s Guides on Deceptive Pricing) prohibit sellers from offering fictitious bargains. In these cases, the plaintiffs allege that the retailers’ practice of offering for sale made-for-outlet goods that never were sold at the referenced price is deceptive.

As we previously reported in Looking Back: Retail Antitrust Enforcement in 2015, last year was a booming year for consumer products mergers (and the antitrust review of those mergers). With a robust market and incentives strongly in favor of further acquisitions, we expect the trend to continue in 2016.

2015 was a record year for mergers and acquisitions activity, with over $4.7 trillion in transactions announced. This record volume has kept U.S. antitrust authorities fully engaged.

Federal antitrust agencies reviewing more M&A transactions. Increased M&A activity in 2015 kept U.S. antitrust agencies busy. The number of transactions reported under the Hart-Scott-Rodino Act increased by 25 percent from FY2013 to FY2014, and the upward trend appeared to continue, although official statistics are not yet available.

The antitrust cops are on the beat. Implementing their “litigation readiness” focus, the U.S. antitrust agencies brought many merger challenges in 2015. Combined, the Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) sued to block over 25 mergers, including Staples/Office Depot, Sysco/US Foods, Electrolux/General Electric appliances business, Dollar Tree/Family Dollar and more.

This past week, the following regulatory and consumer actions made headlines:

National Advertising Division Weighs in on “Scary Bleach” Claims

After a challenge by The Clorox Company, the National Advertising Division (“NAD”) recommended that Church & Dwight, the maker of OxiClean White Revive non-chlorine bleach, modify its television ad campaign suggesting that chlorine bleach could be “scary.” The commercials in question highlighted garment care labels directing consumers to “use only non-chlorine bleach, when needed,” thus implying that Chlorox’s product was damaging to the kinds of white garments depicted in the ads. The NAD found that Church & Dwight was required to provide a reasonable basis for its use of care labels in its ads, particularly advertising claims that denigrated Chlorox’s product. This decision followed on a 2014 NAD recommendation that Church & Dwight avoid conveying the unsupported message that chlorine bleach is damaging to white garments.

M&A in 2015: Shattering prior records. With the economy in a modest recovery and with cheap financing readily available, M&A activity was at an all-time high in 2015. Surpassing the prior record of $4.3 trillion in deals in 2007, 2015 saw M&A activity of $4.7 trillion worth of transactions, of which approximately half involved U.S. companies. In fact, U.S. deals alone exceeded $2 trillion for the first time ever.

Each week, we will present a summary of key consumer protection developments affecting the retail industry. This past week, the following regulatory and consumer actions made headlines:

FTC Continues Focus on False Weight Loss Claims, Settles with Sale Slash for $43 million

After a nearly year-long litigation, California company Sale Slash LLC has agreed to pay $43 million to settle Federal Trade Commission charges that the company deceptively sold “bogus” weight loss pills, including through unauthorized celebrity endorsements. As part of the settlement, Sale Slash may not represent that its products are endorsed by any specific individual, or claim that its products aid in weight loss or are safe for consumers unless the claims are supported by “competent and reliable scientific evidence.”

Late last year, as the holidays approached, the Federal Trade Commission issued enforcement guidance on “native advertising” — ads that purposely are formatted to appear as noncommercial and are integrated into surrounding editorial content. The agency’s guidance took two parts: an Enforcement Policy Statement on deceptively formatted ads, and a Guide for Business on native advertising. These long-awaited guidance documents follow on the FTC’s December 2013 “Blurred Lines” workshop on native advertising. Importantly, the FTC notes that its policy statement does not apply just to advertisers but also to other parties that help create the content: ad agencies, ad networks and potentially, publishers.

As reported in the Hunton Employment & Labor Perspectives Blog, Retailer Big Lots Stores, Inc. is facing a putative class action in Philadelphia, wherein the plaintiff alleges that the company “systematically” violated the Fair Credit Reporting Act’s (“FCRA”) “standalone disclosure requirement” by making prospective employees sign a document used as a background check consent form that contained extraneous information. Among other things, the plaintiff alleges that Big Lots’ form violates the FCRA because it includes the following three categories of ...

Over the last 18 months, patrons of the nation’s most popular outlet stores have hit well-known retailers, including Gap Outlet, Banana Republic Factory Store and Saks Off 5th, with a flood of class action lawsuits for false and misleading advertising. In early 2014, four members of Congress wrote to the Federal Trade Commission (“FTC”) asking the agency to begin an investigation into the sales practices at outlet stores.

As reported on the Privacy & Information Security Law blog, Hunton & Williams welcomes Phyllis H. Marcus as counsel to the firm’s privacy and competition teams. Phyllis joins the firm from the Federal Trade Commission, where she held a number of leadership positions, most recently as Chief of Staff of the Division of Advertising Practices. Phyllis led the FTC’s children’s online privacy program, including bringing a number of enforcement actions and overhauling the Children’s Online Privacy Protection Act (“COPPA”) Rule. She offers the privacy team a keen ...

An important Federal Trade Commission (FTC) decision was announced yesterday that trains a spotlight on claims of “biodegradability.” The FTC found that a manufacturer’s unsubstantiated claims regarding the biodegradability of plastic pellets used as product additives deceived industry and end-use customers. The case reemphasizes the FTC’s intent to enforce the FTC Act against unsupported “green” claims. For retailers and consumer product manufacturers, this case and the recent increase in consumer false advertising class actions emphasizes the importance of:

• due diligence regarding product claims made by vendors – ask for and maintain material to back up the claims and stick to the claims that can be supported; and
• strong indemnities against false and deceptive advertising claims.

On April 23, 2015, the Federal Trade Commission (FTC) announced that Nomi Technologies (Nomi) has agreed to settle charges stemming from allegations that the company misled consumers with respect to opting out of the company’s mobile-device tracking service at retail locations. The settlement marks the FTC’s first § 5 enforcement action against a retail tracking company.

On Friday, January 30, 2015, the U.S. Court of Appeals for the D.C. Circuit issued its opinion in POM Wonderful, LLC, et al. v. Federal Trade Commission, affirming the Federal Trade Commission's ruling in 2013 that a series of advertisements for POM’s pomegranate juice and supplements were deceptive and thus violated the FTC Act. However, the court provided some limited, yet important, relief to POM Wonderful and the other petitioners. The D.C. Circuit’s decision provides important guidance to companies advertising consumer products.

Read the full client alert.

As reported in the Privacy & Information Security Law blog, the Federal Trade Commission announced a settlement of at least $90 million with mobile phone carrier T-Mobile USA, Inc. (“T-Mobile”) stemming from allegations related to mobile cramming. This settlement amount will primarily be used to provide refunds to affected customers who were charged by T-Mobile for unauthorized third party charges. As part of the settlement, T-Mobile also will pay $18 million in fines and penalties to the attorneys general of all 50 states and the District of Columbia, and $4.5 million to the ...

The chairwoman of the Federal Trade Commission, Edith Ramirez, has announced that the FTC is significantly increasing scrutiny and enforcement of mainstream advertising by reputable companies. Chairwoman Ramirez recently said that the FTC is increasing enforcement against not only “outright fraud,” but also national advertising campaigns. The FTC’s recent approach of vigorous false advertising enforcement is intended to support the goal that, as the chairwoman stated, “advertising must be truthful and non-deceptive.”

As reported in the Privacy & Information Security Law blog, the Federal Trade Commission announced that it has approved final consent orders with two companies that marketed genetically customized nutrition supplements. In addition to charges that the companies’ claims regarding the effectiveness of their products were not sufficiently substantiated, the settlements also allege that the companies misrepresented their privacy and security practices.

Read the full post.

Most marketers and retailers know that the consumer protection laws require that their advertising claims be substantiated, truthful and not misleading. But the new year is a good time to take stock of advertising campaigns, practices and procedures to make sure they pass muster under the Federal Trade Commission’s (FTC’s) latest guidance. The FTC’s recent enforcement actions provide a starting point.