Hunton Retail Law Resource

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.

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

“Black Truffle Flavored Extra Virgin Olive Oil” Case Dismissed Against Trader Joe’s

On August 30, 2018, the Southern District of New York dismissed class action claims for consumers who purchased Trader Joe’s “Black Truffle Flavored Extra Virgin Olive Oil.” The complaint alleged that the product label contained the words “black truffle” in large black letters, with the words “flavored” and “extra virgin olive oil” in smaller cursive letters underneath. However, DNA testing revealed that the oil did not contain actual truffle, but rather 2,4-dithiapentane, a petroleum-based synthetic injection that imitates the taste and smell of truffles.

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

FTC Used Car Lot Sweep Finds 70 Percent Compliance with New “Buyers Guide”

Last month, the FTC announced the results of its compliance sweep of 94 car dealerships in 20 cities across the country, conducted after the FTC’s amended Used Car Rule (the “Rule”) took effect earlier this year. The revised Rule requires dealers to display a revised “Buyers Guide” containing warranty and other important information—such as a new description of an “As Is” sale—on the window of each used car offered for sale. According to the FTC, 70 percent of the 2,300 vehicles inspected displayed a buyer’s guide; over half of those with the guide displayed the updated version. As a follow-up, the FTC sent letters to each dealership inspected, detailing their findings and providing businesses with guidance material to help aid in compliance.

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

District Judge Boots Putative Class Action Against L.L. Bean

A federal district judge has dismissed an attempted class action against L.L. Bean involving the company’s long-standing no-questions-asked warranty policy. In February 2018, L.L. Bean announced that it was changing its policy to limit customers’ return period to one year, while committing to “work with our customers to reach a fair solution” if a problem arises more than a year after purchase. The plaintiff alleged that changing the warranty violated both the Magnusson-Moss Act and Illinois state law as an anticipatory repudiation of the guarantee. But the District Judge ruled that plaintiff neither alleged an injury nor had he stated a claim for which relief could be granted.

These past two weeks, several consumer actions made headlines that affect the retail industry.

FTC: Come One, Come All to Discussion of 21^st Century Impacts

On June 20, 2018, the Federal Trade Commission announced that it will hold public hearings on competition and consumer protection in the 21st Century. The FTC is looking to assess whether competition and consumer protection laws must change due to recent economic changes, evolving business practices, technological advancements and international developments. According to the FTC, the hearings may identify areas for enforcement and policy guidance, including improvements to the FTC’s investigation and law enforcement processes, as well as areas that warrant additional study. The FTC is soliciting public comments until August 20, 2018, on a variety of related topics; the hearings are set to take place from September 2018 to January 2019.

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

Federal Court OKs Large Warning Requirement for Cigar Products

A federal court has upheld forthcoming health warning requirements that will take up 30 percent of the principal panels of cigar product packages and 20 percent of cigar product advertisements. The court found that the textual warnings were “unambiguous and unlikely to be misinterpreted by consumers,” and that the cigar sellers retained sufficient space on their packaging and advertisements “in which to effectively communicate their desired message.” It also concluded that, under the Zauderer standard for commercial speech, the size, format and other design features of the warning statements were reasonably related to the government’s substantial interest in “providing accurate information about, and curing misperceptions regarding, the health consequences of cigar use.” The case is captioned Cigar Assoc. of Am. et al. v. FDA et al. No. 1:16-cv-1460 (D.D.C.).

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

Federal Court in New York Dismisses Diet Pepsi Case

A federal judge dismissed a complaint accusing Pepsi-Cola Co. of misrepresenting that its “diet” drinks help consumers lose weight. In the proposed class action, plaintiffs claimed that Diet Pepsi is made with no-calorie sweeteners, which allegedly contributes to weight gain and increased risk of metabolic disease, diabetes and cardiovascular disease. The judge rejected the plaintiffs’ studies, finding that the evidence indicated an association between the sweeteners and weight gain, but not causation. The judge also concluded that reasonable consumers understand that the “diet” label simply means low calorie.

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

FTC Expands Agency’s Leadership Team with New Consumer Protection Director

Federal Trade Commission Chairman Joseph Simons announced the appointment of Andrew Smith as Director of the agency’s Bureau of Consumer Protection, beginning next week. Smith is Chair of the American Bar Association’s Consumer Financial Services Committee and a Fellow of the American College of Consumer Financial Services Lawyers. From 2001-2004, he served as Assistant to the Director of the Bureau of Consumer Protection and FACT Act Program Manager, leading implementation of the FACT Act rulemaking, proceedings and studies. The vote to install Smith was 3-2, with the FTC’s two democratic commissioners filing statements in opposition.

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

FTC Swats Misleading Advertising Claims Just in Time for Mosquito Season

The FTC and makers of the “Aromaflage” line of products have agreed to settle charges that Mike & Momo, Inc., deceptively marketed its mosquito-repelling perfume sprays and scented candles. The company agreed to stop making unsubstantiated claims that its products repel disease-carrying mosquitos, work for 2.5 hours, and are as effective as 25 percent DEET. The FTC also alleged that Mike & Momo packed its Amazon storefront with five-star reviews written by the owners and close family members; under the proposed consent order Mike & Momo must disclose any “unexpected material connection” between the company and any endorsers.

This past week, several self-regulatory advertising decisions made retail headlines.

Finish Quantum Dishwasher Detergent Beaten by “Unbeatable” Claim

In response to a challenge brought by P&G, the NAD recommended that Reckitt Benckiser LLC, manufacturer of dishwasher detergent brand Finish Quantum, discontinue its claims that the detergent provides an “unbeatable clean.” After reviewing Finish Quantum’s test data, the NAD determined that the “evidence was not sufficiently reliable to support the challenged ‘unbeatable clean’ claim.” Finish Quantum can, however, continue use of its value claim that its product provides “25% more loads,” so long as the claim is qualified by adding the phrase, “based on retail pack size comparison” between Finish Quantum and leading alternatives such as Cascade Platinum. Reckitt Benckiser stated that it will comply with the NAD’s recommendations.

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

Nectar Brand to Put Its “Made in America” Claims to Bed

Nectar Brand LLC has agreed to stop making unqualified claims that its mattresses were made in the United States. According to the FTC’s complaint, Nectar Brand sells mattresses under several brand names, including Nectar Sleep, DreamCloud LLC and DreamCloud Brand LLC. Nectar Brand’s ads and product labeling included statements that the products were “Designed and Assembled in USA.” In fact, the FTC alleged that the mattresses all are imported from China and that Nectar Brand has no assembly operations in the U.S.

Under the settlement terms, Nectar Brand is prohibited from representing that its products are made in the United States unless it can substantiate its claims. Further, Nectar Brand’s officers are prohibited from misrepresenting the country of origin of its products.

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

FTC v. AT&T Mobility: “Good News for Consumers” Per FTC Chairman

The Ninth Circuit Court of Appeals rules en banc in FTC v. AT&T Mobility, LLC, that the FTC could challenge AT&T’s broadband data throttling practices, despite the fact that AT&T is a “common carrier” subject to exemption under the FTC Act. The court ruled that the common carrier exemption was activity-based rather than status-based. Therefore, the FTC may challenge a carrier’s non-carriage unfair or deceptive acts or practices. Simply put, “a phone company is no longer just a phone company. The transformation of information services and the ubiquity of digital technology means that telecommunications operators have expanded into website operation, video distribution, news and entertainment production, interactive entertainment services and devices, home security and more.” Acting FTC Chairman Maureen K. Ohlhausen issued a statement praising the Ninth Circuit’s decision as “good news for consumers.”

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

TA Sciences Prohibited from Making False and Unsubstantiated Health Claims

Telomerase Activation Sciences, Inc. (“TA Sciences”) has agreed to stop making certain claims as to the anti-aging and other health properties of two of its supplement products, in response to FTC allegations that it made false or unsubstantiated claims regarding the products’ health benefits. The FTC’s order prohibits TA Sciences from misrepresenting that its products are clinically proven to reverse human aging, prevent or repair DNA damage, restore aging immune systems or increase bone density, or misrepresenting that such evidence or studies exists. The order also prohibits the company from (1) representing that paid commercial advertising is independent programing; (2) failing to disclose material connections between a product endorser and the company; (3) representing that any endorser is an independent user of the product; or (4) helping anyone else make false or misleading health and efficacy claims about its products.

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

Advertising Agency Pays $2 Million to FTC and State of Maine to Settle Unsubstantiated Weight-Loss Claim

The FTC and the State of Maine have settled a case against ad agency Marketing Architects, Inc. (“MAI”) for MAI’s role in creating and disseminating deceptive radio ads replete with unsubstantiated claims for weight-loss products. MAI had been retained to create the ads by dietary supplement supplier, Direct Alternatives, Inc., whom the FTC and Maine had sued in 2016. Under the agreement with MAI, the ad agency is banned from making any of the seven “gut check” weight-loss claims that the FTC has publicly advised are always false. MAI also must have competent and reliable science to support weight-loss claims and must not misrepresent facts relating to return and cancellation policies of the products marketed. Finally, the order imposes a $2 million judgment on MAI, which may be used to provide refunds to consumers harmed by the conduct.

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

FTC Crack Down on “American Made” Marketing Claims Continues in Settlement with Bollman Hat Company

The FTC announced a settlement in the third case in the last 12 months involving deceptive “Made in USA” claims. Here, the FTC alleged that the Bollman Hat Company and its subsidiary deceived consumers with marketing campaign slogans of “Made In USA,” “American Made Matters,” and “Choose American” for its hats and third-party products, despite more than 70 percent of their hat styles being wholly imported finished products. The FTC also alleged that Bollman launched an “American Made Matters” seal campaign in 2010 that misled consumers in which and how many products Bollman and the companies that leased the seal were actually made in America.

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

Department Stores Settle False Discount Claims

Ann Taylor and its parent company, Ann Inc., have entered into settlements amounting to approximately $6.1 million in two unrelated cases alleging false discounts. Ann Inc. settled allegations that it offered misleading “discounts” on clothes sold through its Ann Taylor Factory and LOFT stores. According to the complaint, the stores claimed to sell goods “marked down” from prices that never actually applied to the goods in question.

The Neiman Marcus Group LLC also has reportedly reached a settlement over similar claims; details of this settlement currently are not available to the public.

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

Weight-Loss Drug Maker Settles Claims and Sheds $3.7 Million

Makers of BioTherapex and NeuroPlus agreed to refrain from engaging in numerous business practices, including making marketing claims that are not substantiated by scientific evidence. Specifically, they are banned from making any of the seven “gut check” weight-loss claims that the FTC has warned are always false for over-the-counter dietary supplements, like BioTherapex. Additionally, they are banned from making unsubstantiated or false claims about the benefits of NeuroPlus in protecting against Alzheimer’s and dementia. Defendants are also ordered to pay $3.7 million, which will be suspended upon payment of $800,000.

These past two weeks, several consumer actions made headlines that affect the retail industry.

Competitor Pacified After Infant Cereal Maker Discontinues Advertising Claims

Beech-Nut Nutrition Company said it will stop advertising claims connected to infant cereal products that a competitor challenged before the NAD. The challenged claims include “0” grams of sugar, “natural,” “complete” nutrition, and “formulated to be gentle on baby’s tummy,” among others. The NAD will treat the discontinued claims as if it had recommended they be discontinued and Beech-Nut complied.

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

FTC Seeks Public Comment on Sears’ Petition to Modify Prior Order

Sears Holding Management Corporation has requested that the FTC reopen and modify a 2009 Commission Order settling charges that Sears inadequately disclosed the scope of consumer data collected through the company’s software application. The initial FTC complaint alleged that Sears represented to consumers that its downloadable software application would track users’ “online browsing,” but in fact tracked nearly all of the users’ Internet behavior. Sears petitioned the FTC to modify the Order’s definition of “tracking system,” which the company contends is overbroad and impracticable. The FTC is seeking public comment on Sears’ petition, which it will receive until December 8, 2017.

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

Hilton Reaches $700,000 Settlement with New York and Vermont Over Data Breaches

The Attorney Generals of New York and Vermont announced a $700,000 settlement with Hilton Domestic Operating Company, Inc., formerly Hilton Worldwide, Inc. (“Hilton”), over two data breaches in 2014 and 2015.

Hilton was notified in February 2015 that it had likely suffered a data breach in December of 2014. In July of 2015, Hilton was notified of a second data breach from the prior three months. Hilton did not provide notice of either data breach until November 24, 2015. New York law requires that businesses provide notice in the “most expedient time possible and without unreasonable delay.” Vermont requires that businesses provide notice of data breaches to the Vermont Attorney General within 14 days of discovery, and within 45 days of discovery to consumers.

Under the terms of the settlements, Hilton has agreed to pay New York $400,000 and Vermont $300,000 and to comply with certain behavior remedies related to their notification and security procedures.

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

District Court Sides with FTC Over Weight-Loss Supplement Marketers

A federal district judge in Atlanta issued an order last week finding several supplement marketers in contempt for violating previous court orders and continuing to market weight-loss dietary supplements. The contempt order, which imposes a judgment in excess of $40 million, provides that the FTC may use the money to refund product purchasers. The defendants, including one FTC repeat offender, deceptively marketed their supplements as fat-burning and appetite-curbing, and promised rapid and extreme weight loss.

Have you ever seen an advertisement for a product that seemed a little too good to be true? Truth in advertising is a hotly contested issue, and advertising that may cross the line could be drawn into a dispute with the Federal Trade Commission or into court by a competitor. But did you know that there is another group that monitors and polices advertising? The National Advertising Division ("NAD") of the Better Business Bureau is an industry group set up to review false or misleading advertising and referee complaints between competitors.

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

FTC Extends Comment Period for Paint Claims

On August 7, 2017, the FTC extended the public comment period related to four proposed settlements with paint companies. According to the original complaints from June 2017, Benjamin Moore, Imperial Paints, ICP Construction and YOLO Colorhouse deceptively claimed that their paint products were either emission-free or contained zero volatile organic compounds, including during and immediately after application. 

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

First Circuit Dismisses Deceptive Advertising Claims against Two Large Retailers

The First Circuit Court of Appeals has held that consumers who brought nearly identical deceptive pricing cases against two large retailers failed to prove that they had been injured. One suit alleged that one company falsely advertised “compare at” prices on sales tags; the other suit alleged that the other company deceptively set lower prices for its exclusive and private-label products and advertised them as discounted. In both cases, the plaintiffs alleged that the mere purchase of the item itself constituted injury. The First Circuit rejected this argument, observing that the consumers (1) had not alleged that the items were poorly made, (2) had received the benefits of their bargains, and (3) that a false sense of a product’s value does not constitute injury.  

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

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

Judge Stays Chicago Soda Tax at Last Minute

On June 30, 2017, a Cook County Circuit Court judge granted a temporary restraining order halting a new county law taxing sugar sweetened beverages. The tax was enacted in November of 2016 and originally was scheduled to go into effect on July 1, 2017. Siding with the Illinois Chamber of Commerce and several grocers, the judge found the tax to be unconstitutionally vague, as it applies only to bottled sodas and coffees, not prepared drinks from servers ...

This past week, several regulatory and self-regulatory consumer protection actions made headlines affecting the retail industry.

FDA Continues to Reverse Course on Obama-Era Food Label Regulations

After delaying the Menu Labeling Rule effective date to May 7, 2018, the FDA also has indefinitely delayed the launch of changes to the Nutrition Facts labels. These updates, which include information regarding added sugars and emphasized caloric counts, originally were planned to go into effect in July 2018. Despite the delay, a number of manufacturers already have rolled out new labels.

This past week, several consumer actions took place that affect the retail industry.

Trader Joe’s Catches a Winner in Tuna Can Underfilling Litigation

A California judge has granted Trader Joe’s motion to dismiss in the case In re: Trader Joe’s Tuna Litigation, 2:16-cv-01371, in the U.S. District Court for the Central District of California, where plaintiffs had alleged fraud, breach of warranty and other claims for the company’s alleged underfilling of its cans of tuna as prescribed by the U.S. Food and Drug Administration.

According to the court’s order, plaintiffs improperly made claims under the Federal Food, Drug and Cosmetic Act, which does not allow for a private right of action.

“Consequently, the theory underlying plaintiffs’ state law claims depends entirely on an FDA regulation,” the court wrote. “Plaintiffs’ state law claims are in reality claims violations of an FDA regulation, and therefore, the FDCA prohibits plaintiffs from bringing them.”

This case was a consolidation of a number of similar cases filed in California, Illinois and New York. The court’s order does give plaintiffs a month to amend their lawsuit should they wish to refile.

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

FTC Jumps to Consumers' Defense in Trampoline Marketing Deception

On May 31, 2017, brothers Son Le and Bao Le agreed to settle FTC charges that their trampoline marketing deceived consumers by directing them to review websites that were not, but claimed to be, independent, and by failing to disclose financial interests when posting online product endorsements. The Le brothers created fictitious trampoline experts, including "Trampoline Safety of America" and the "Bureau of Trampoline Review," and built fake websites with fake expert reviews to induce customers to buy their trampolines. The administrative consent order prevents the Le brothers from engaging in such deceptive behavior and requires clear and conspicuous disclosure of any material connections between the reviewer and the product. 

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

FTC Action Forces Advertiser to Withdraw Claims Regarding Efficacy of Herbal Opioid Cure

The FTC has settled charges against the sellers of the herbal remedies “Withdrawal Ease” and “Recovery Ease,” which claimed to alleviate symptoms of opioid addiction. According to the complaint, Catlin Enterprises and the founder/CEO claimed their products significantly increased the likelihood of a person overcoming opiate dependency. The FTC’s complaint alleged that these claims were unfair and deceptive and were unsubstantiated by clinical studies. The defendants also allegedly misrepresented that clinical studies proved Withdrawal Ease’s effectiveness.

This past week, several self-regulatory actions made headlines that affect the retail industry.

NAD Finds Sherwin-Williams Claims Don’t Require Substantiation

In a challenge brought by Rust-Oleum Corporation, the NAD concluded that Sherwin Williams’s ads for its “CoverMaxx” spray paints did not require substantiation because they did not communicate a message of superior paint coverage. The NAD also found that the name, “CoverMaxx,” did not require revision because there was no reliable extrinsic evidence of consumer confusion.

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

Public Comment Period Extended for FTC’s Connected Car Workshop

The FTC has announced that the public now has until May 1, 2017, to submit public comment ahead of its June 28 workshop on connected cars.

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

NetSpend Settles Deceptive Advertising Claims with FTC

NetSpend Corp recently agreed to settle FTC allegations that the company deceived consumers about access to funds deposited to debit cards. The FTC voted to approve the stipulated final order, with Commissioner McSweeney and former Commissioner Ramirez voting to approve and Acting Chairman Ohlhausen dissenting.

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

Health App Makers Settle with NY Attorney General Over Heart Rate Claims and Murky Privacy Policies 

Three mobile health app developers have agreed to a settlement with the NY AG over allegations that they made false claims about their apps’ ability to measure vital statistics and failed to inform users what data the apps collected and stored. The app makers promised their products accurately measured heart rates and detected fetal heart beats, but the NY AG alleged the companies lacked sufficient information to back these claims. The companies’ privacy policies also neglected to inform consumers that the apps collected and stored sensitive information such as unique device identifiers and geolocation data. The app developers have agreed collectively to pay the AG $30,000 in penalties, revise their privacy policies to enhance disclosure and require users’ affirmative consent, and refrain from making misleading claims about their products.

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

NARB Permits Unilever’s Challenge of Colgate Palmolive’s Tom’s of Maine “Natural” Claims

The National Advertising Review Board (“NARB”), the appellate body of the advertising industry’s self-regulation system, upheld Unilever’s challenge regarding the truthfulness of Colgate Palmolive’s claims for Tom’s of Maine antiperspirant, despite the fact that the challenged claims were the subject of a court-ordered settlement in class action litigation. Unilever had challenged claims that Tom’s is “Naturally Dry,” “It really works. Naturally,” and “meets our stewardship model for safe, effective and natural” before the NAD. Colgate argued that the challenge should be dismissed based on NAD procedures for providing closure where the challenged claims are subject to pending litigation. The NARB found that the settlement order did not make any findings with respect to the claims challenged by Unilever, and that NAD’s exercise of jurisdiction posed no danger of conflicting court findings.

On March 6, 2017, an NLRB administrative law judge (“ALJ”) issued a ruling finding that a nonunion automotive manufacturing facility in Alabama violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) when it terminated three employees who walked off the job over a holiday-season scheduling dispute. The ALJ found that the employees were engaged in protected concerted activity despite the fact that they denied discussing the decision to leave work before their shifts had ended.

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

FTC Settles Claim Against LA Car Dealership Group for $3.6 Million

The FTC has settled a claim brought against a group of nine auto dealerships and their corporate owners for over $3.6 million. According to the complaint, Sage Auto Group engaged in unfair and deceptive practices, as well as violations of the Truth in Lending Act and Consumer Leasing Act.

The FTC alleged that Sage targeted consumers with poor credit or who would otherwise have difficultly acquiring financing, frequently omitting or concealing material terms in ads. The FTC also alleged that Sage deceptively posted falsified positive consumer reviews to combat overwhelmingly negative reviews on social media websites.

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

Kraft Suit Stayed Pending Outcome of FDA Guidance

A federal judge in Puerto Rico granted Kraft Foods Group Inc.’s (“Kraft’s”) motion to stay pending the completion of the FDA’s inquiry into the use of the term “natural” on food labeling. The suit alleges that Kraft falsely labeled its shredded cheese as “natural” despite containing artificial food coloring. The case is stayed until the FDA provides guidance on the use of that term on food labels. 

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

FTC Issues Business Guidance under Consumer Review Fairness Act

On February 21, 2017, the FTC issued guidance to help businesses comply with the Consumer Review Fairness Act. Signed into law in December 2016, the Act is aimed at protecting consumers’ right to share honest opinions about a product or service in any forum. The FTC's guidance stresses that it’s illegal for companies to include standardized provisions that threaten or penalize people for posting honest reviews, while protecting companies’ rights to prohibit or remove reviews that contain confidential or private information, are libelous, abusive, vulgar or inappropriate, are irrelevant or are clearly false or misleading.

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

Litigation Bubbles Up Over Wal-Mart Beer Claims

Wal-Mart was sued in Ohio last week in a proposed class action, alleging that the company falsely marketed and priced mass-produced beer as craft beer. The plaintiff explains that he bought a 12-pack of beer that was packaged to look like craft beer, and sold at a higher price point than other mass-produced beers. In order to be called a craft beer, the Brewers Association requires that the brewery make fewer than 6 million barrels annually and be less than 25 percent owned by a mass producer. Wal-Mart’s beer is a part of a collaboration with Trouble Brewing, which the complaint alleges does not exist but is a subset of a large mass beer producer.

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

NAD Clears “Clinically Proven” Jelly Belly Sports Beans, Recommends Against Formulation Claims

The National Advertising Division (“NAD”) found that Jelly Belly could support claims that its Sports Bean Energizing Jelly Beans are “clinically proven” to maximize sports performance, but cautioned the company to nix its claims that the beans are “Scientifically Formulated to Maximize Sports Performance.” Although the NAD expressed some hesitations about study methodology, it found that Jelly Belly’s clinically proven claims were supported by a published clinical study. However, after reviewing the Sports Beans’ ingredients, including electrolytes, carbohydrates, Vitamin C and Vitamins B1-B3, and the evidence Jelly Belly provided demonstrating the role of these ingredients in providing energy during intense exercise, the NAD advised the advertiser to abandon its formulation claim. The NAD noted that Jelly Belly failed to offer any studies indicating how the beans would demonstrably maximize sports performance. Jelly Belly responded by stating that it will comply with the NAD’s recommendation.

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

The Federal Trade Commission Announced Class Action Settlement of VW 3.0-Liter Claims

The FTC announced a settlement with Volkswagen Group of America (“VW”) requiring VW to fully compensate consumers who purchased its 3.0-liter TDI diesel vehicles. The settlement stems from VW’s installation of emissions defeat devices in its diesel TDI vehicles that deceived consumers and emissions testers. The settlement package requires a combination of repairs, monetary compensation and buyback of certain models. It is estimated that VW will pay at least $1 billion under the settlement but could pay as much as $4 billion if it is unable to provide consumers with an adequate emissions repair. The FTC previously obtained a separate $10 billion judgment against VW to compensate consumer who purchased 2.0-liter TDI diesel vehicles with the defeat device.

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

Ohlhausen Named Acting Chairman of FTC

Maureen K. Ohlhausen has been designated Acting Chairman of the Federal Trade Commission. Acting Chairman Ohlhausen joined the FTC as a Commissioner in 2012, after serving in various capacities at the agency from 1997 – 2008.

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

Chairwoman Ramirez Announces Resignation

FTC Chairwoman Edith Ramirez announced that she will resign effective February 10, 2017. Chairwoman Ramirez joined the FTC on April 5, 2010, and has headed the agency since March 4, 2013. During her tenure as Chairwoman, the FTC brought close to 400 consumer protection action and approximately 100 challenges to mergers and business conduct.

The following consumer protection actions made headlines this week:

Unilever Plans to Appeal NAD’s Findings on Body Wash Product Advertising

The NAD recommended that Unilever discontinue certain advertising claims for Suave Essential Body Wash products, a decision that Unilever announced it will appeal. After a competitor challenge, the NAD concluded that claims comparing Suave fragrances to Bath & Body Works fragrances were not supported by the advertisers’ consumer perception survey. In addition, the NAD did not find the survey sufficiently reliable due to the fact that it did not meet the minimum of 300 respondents to substantiate a parity claim. Unilever responded that it is a “strong and ongoing supporter of NAD,” but nevertheless plans to appeal the decision to the National Advertising Review Board.

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

New Suit Claims Coca-Cola Falsely Advertised Health Effects of Sugary Drinks

On January 4, 2017, the Praxis Project, a non-profit health organization, sued Coca-Cola, claiming the beverage conglomerate misled the public as to the negative health effects of its sodas. The suit alleges that Coca-Cola peddled industry-supported research deflecting focus from sugary drinks to balancing a healthy lifestyle with more physical activity and argues that Coca-Cola’s marketing created the impression that sugary drinks are not linked to obesity, type 2 diabetes and cardiovascular diseases. The lawsuit seeks an injunction to stop the advertising practices, to require disclosure of all research on the impact of sugary drinks and to require a corrective public education campaign to reduce public consumption of sugary drinks.

This past week, several consumer actions made headlines:

VW and the FTC Agree in Principle on Settlement to Compensate Consumers

FTC Chairwoman Edith Ramirez issued the following statement regarding the announcement of nearly completed agreements resolving the EPA’s Clean Air Act claims and consumer injury claims against Volkswagen:

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

FTC Actions

FTC Settles Charges Against Marketer of Blood Pressure App

The FTC settled charges against a marketer of a blood pressure app called “Instant Blood Pressure.” According to the complaint, Aura Labs deceptively claimed that its app could use consumers’ phones to measure blood pressure as accurately as a traditional blood pressure cuff. In addition, the FTC alleges that the company’s founder left “five-star” reviews of the app in the Apple App Store without disclosing his connection with the company.

On December 12, 2016, the Federal Trade Commission announced a summary decision against California Naturel, Inc., holding that advertising sunscreen as “all natural” violates Sections 5 and 12 of the FTC Act because 8 percent of the product is comprised of the synthetic ingredient dimethicone. 

This past week, several consumer and self-regulatory actions made headlines that affect the retail industry.

Court Dismisses ‘Made in USA’ Claims against Citizens of Humanity

A California federal judge dismissed claims against Citizens of Humanity alleging that it falsely labeled its products as “Made in the USA.” While plaintiffs alleged that the fabric, thread, buttons and other components were foreign-made, the court found that this was not enough to satisfy California’s standard, allowing the use of “Made in the USA” labels on products containing 5 to 10 percent of foreign materials. Significantly, the court applied the 5 to 10 percent standard found in the California rule despite the fact that the products at issue had been purchased prior to the rule’s enactments. The court also dismissed claims under the Unfair Competition Law and California Legal Remedies Act, finding that the plaintiffs failed to plead with particularity. 

This past week, several regulatory, self-regulatory and consumer actions made headlines that affect the retail industry.

Regulatory Actions: FTC

FTC Drives Home Privacy and Security Point in Comment to NHTSA

On November 21, 2016, the FTC’s Director of the Bureau of Consumer Protection filed a comment with the National Highway Traffic Safety Administration (“NHTSA”) in support of including consumer privacy and cybersecurity guidance in NHTSA's Federal Automated Vehicles Policy. The guidance governs the collection, transmission and sharing of personal data, and how to protect that data, as cars become smarter and add Apple CarPlay, Google Android Auto and Windows Embedded Automotive, among other Internet-connected software options. The FTC applauded NHTSA's efforts to embed consumer privacy protections and cybersecurity into the software, expressing wholesale support of NHTSA's efforts while emphasizing the FTC's expertise in this area, including the Consumer Privacy Bill of Rights, to offer further guidance.

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

VitaPulse Modifies Ad Practices after NAD Review

Princeton Nutrients LLC, the maker of the dietary supplement, VitaPulse, has agreed to modify its advertising practices following an investigation by the National Advertising Division (“NAD”). The NAD investigated claims that the product reduces cholesterol, lowers blood pressure and increases energy, as well as the company’s use of online reviews and testimonials. As a result, Princeton Nutrients elected to permanently discontinue its health claims rather than provide NAD with supportive substantiation.

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

Eleventh Circuit Stays FTC Order in LabMD Case

The Eleventh Circuit Court of Appeals stayed an FTC Final Order requiring the now-defunct LabMD to implement numerous compliance measures stemming from a 2008 data leak. In July, the FTC ordered LabMD to establish an information security program and notify those affected by the data leak. LabMD closed in January 2014, citing prohibitive costs related to the FTC litigation. An Eleventh Circuit panel found that “[t]he costs of complying with the FTC’s Order would cause LabMD irreparable harm,” noting that the company has under $5,000 cash on hand, a pending $1 million judgment against it and is no longer operational. The court granted LabMD’s motion to stay the Order pending appeal.

On November 15, 2016, the Federal Trade Commission released a new policy statement announcing how the agency will examine over-the-counter (“OTC”) homeopathic drugs going forward. The policy statement explains that the FTC will hold OTC homeopathic products to the same standards as non-homeopathic drugs making similar wellness claims in terms of efficacy and safety.

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

The following consumer protection actions made headlines this week:

Epson to Make Advertising Modifications Following NAD Recommendations

Epson America Inc. has agreed to make some modifications to its advertising after a challenge from HP. The NAD recommended Epson discontinue its “loaded and ready” claim as it may confuse consumers into thinking its EcoTank printers are pre-filled with ink and ready to print immediately. The NAD reviewed numerous other Epson claims, including: (1) EcoTank printers offer “an unbeatable combination of convenience and value”; (2) EcoTank printers will “save [consumers] a small fortune on ink”; and (3) implied claims that EcoTank printers provide environmental benefits versus other printers. While the NAD found that the EcoTank printer can save a consumer money in the long run, it recommended that Epson discontinue its “small fortune” claim. The NAD also found that Epson provided support for its implied comparative environmental claims.

The following consumer protection actions made headlines this week:

Mylan Reaches $465 Million Settlement Over Medicaid Classification

On October 7, 2016, Mylan Inc. announced that it had agreed to pay $465 million to resolve a DOJ investigation into Mylan's classification of EpiPen as a generic drug that resulted in Medicaid and Medicare receiving a significantly smaller rebate on every prescription since 2007. The DOJ, on behalf of the Centers for Medicare & Medicaid Services (“CMS”), investigated whether EpiPen should have been classified as a "branded" drug, which would have given CMS at least a 23.1 percent rebate, as compared to the 13.1 percent rebate CMS received for Mylan's self-classification of EpiPen as a generic drug. Mylan believed that although the injector pen device was patented, the relevant consideration for CMS classification is that the active ingredient in EpiPen is off-patent. The DOJ agreement resolves the government’s classification concerns, but does not address potential private class action litigation.

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.

This past week, several consumer actions made headlines:

Claims Against Advertisers for the Misuse of “Natural” Gain Traction

Claims that Nature’s Bounty's “natural” menopause remedy is ineffective and contains synthetic ingredients and lead survived a motion to dismiss and may proceed as a class action, according to a judge in the Eastern District of New York. The named plaintiff accuses Nature’s Bounty of advertising its black cohosh menopause remedy as “natural” and “nonsynthetic”; she also alleges that the effectiveness of the remedy is not supported by scientific evidence. A key issue before the court was whether a reasonable consumer would assume that the product – labeled as “natural” with a disclaimer that it contains “other ingredients” – contained only natural ingredients. The court found that a reasonable consumer would make this assumption and allowed the plaintiff’s advertising claims to proceed on that basis.

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.

This past week, several consumer actions made headlines:

General Mills Faces Potential Class Action Over Health Claims of Sugary Foods

General Mills has been sued in the Northern District of California over claims that it has put misleading labels on a number of its products. According to the complaint, labels with phrases such as “whole grains” and “fiber” are deceptive “because they are incompatible with the significant dangers of the excessive added sugar.” General Mills and other large food companies have been facing similar suits over labelling recently, including a lawsuit over the protein content of its “Cheerios Protein” brand.

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

Clearblue Label Not So Clear

A Second Circuit panel affirmed a district court ruling that SPD Swiss Precision Diagnostics GmbH, maker of the Clearblue Advanced Pregnancy Test with Weeks Estimator, violated the Lanham Act. While medical professionals estimate the length of pregnancy by the date of a woman’s last menstrual period, the Clearblue test estimates it by the length of time since a woman ovulated, but does not disclose this difference in measurement. The appeals court rejected Clearblue’s argument that the Lanham Act claim was precluded because it's label and marketing materials had been approved by the U.S. Food and Drug Administration. The case was brought by competitor Church & Dwight Co. Inc.

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

Full Throttle: Ninth Circuit Dismisses FTC Data Suit Against AT&T

On August 29, 2016, the Ninth Circuit dismissed a suit brought by the FTC against AT&T Mobility LLC, ruling that the telecommunications company is exempt as a “common carrier” from enforcement under the FTC Act. The FTC claimed that AT&T had not properly informed customers with grandfathered unlimited data plans that their internet speed would be reduced after using a certain amount of data in a billing cycle. While the district court denied AT&T’s motion to dismiss, the Ninth Circuit reversed that ruling, finding that, based on the language and structure of the FTC Act, the common carrier exception was a status-based, not activity-based, exemption and that AT&T, as a common carrier, was not covered by Section 5.

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

Starbucks’ Glass Half Full: Coffee Purveyor Wins Underfilling Dismissal

On August 22, 2016, a U.S. District Court Judge in the Central District of California dismissed with prejudice class plaintiffs’ claims that Starbucks defrauded customers by overfilling its cold beverages with ice and underfilling with the ordered beverage. The Court found that the reasonable customer understands that ice displaces liquid and that some portion of a customers’ iced beverage would, indeed, contain ice. The Court defended Starbucks’ practice, saying that transparent cups plus the lack of advertising that the cold beverages would contain a specific number of ounces of actual liquid precluded class plaintiffs’ claims. Despite the dismissal, Starbucks still faces several similar underfilling class suits nationwide.

The National Advertising Division (“NAD”) was busy this past week. The organization recommended that several companies modify or discontinue claims made for the following consumer products.

NAD Refers Infrared Grill Ads to FTC for Review

The NAD passed along its concerns over certain ads for infrared grills to the FTC. Char-Broil LLC, a competitor of NexGrill Industries, maker of “Evolution Infrared Plus” grill, asked the NAD to investigate NexGrill’s advertising claims. The NAD referred the matter to the FTC after NexGrill failed to fully respond to the NAD’s inquiry.

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

FTC Warns Marketers of Zika-Prevention Products: Claims Must Be Substantiated

The Federal Trade Commission has issued warning letters to 10 marketers of products that purport to protect users from Zika infection. The letters remind marketers that health-related claims must be supported by competent, reliable scientific evidence. Specifically, the FTC warned that claims as to the efficacy of the various products must be supported by “well-controlled human clinical testing using the species of mosquitos that carry the disease in question, and must demonstrate that the effects last as long as advertised.” Additionally, claims that a product applied to a specific part of the body will confer full-body protection must be supported by scientific evidence. The FTC has urged the marketers to review their ads and to alter or remove any unsupported claims.

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

Mars Petcare Settles With the FTC Over False Advertising Claims

Mars Petcare U.S., Inc., (“Mars Petcare”) has agreed to settle FTC allegations that the company falsely advertised its Eukanuba dog food.

The FTC’s complaint alleges that, in 2015, Mars Petcare claimed in TV, print and Internet ads that its dog food could increase a dog’s lifespan by 30 percent or more. This claim was allegedly based on a 10-year study of dogs who were fed Eukanuba. According to the FTC, the claim was false or unsubstantiated.

The National Advertising Division (“NAD”) was busy this past week. The organization recommended that several companies modify or discontinue claims made for the following consumer products.

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.

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.

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 National Advertising Division (“NAD”) of the BBB issued a number of opinions and recommendations.

NAD Recommends Clorox Packaging Change

The NAD has issued a recommendation that The Clorox Company modify its packaging and a package insert to ensure consumers understand that Clorox’s zinc pyrithione works to prevent odors on the drawstring of the company’s “Glad Tall Kitchen Drawstring Bags.”

The issue was not whether the product worked as described, but whether the branding and description led consumers to believe that the product protected against food-borne or disease-causing bacteria or germs.

NAD’s conclusion was that “the combined design elements, in the context in which they are found on the product packaging, reasonably conveyed a confusing, if not inaccurate, message as to the specific antimicrobial protection offered...[and] that consumers could reasonably understand ‘antimicrobial protection’ to mean protection from bacteria and germs rather than odor produced by bacteria and germs on the drawstring.”

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.

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.

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.

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.

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.

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.

The National Advertising Division (“NAD”) was busy this past week. The organization recommended that several companies modify or discontinue claims made for the following consumer products:

Disinfecting Wipes

After a challenge by The Clorox Company, NAD recommended that Reckitt Benckiser, Inc., discontinue certain claims made in both print and television ads for Lysol Disinfecting Wipes and Spray products. The claims included statements declaring that Lysol “helps fight the flu before it starts” and kills “45% more types of germs” as compared to other wipes. NAD concluded that these claims were not supported by evidence in the record, and Reckitt Benckiser announced that it plans to appeal NAD’s findings to the National Advertising Review Board. Clorox has been active recently in challenging competitors’ claims–just a few weeks ago, in a challenge brought by Clorox, the NAD recommended that the maker of OxiClean White Revive non-chlorine bleach modify its television ad campaigns.

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.

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.

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.”

In response to an investigation by the National Advertising Division (“NAD”), Silver Star Brands will discontinue its “JuniorSlim” dietary supplement. JuniorSlim is a weight-loss product marketed toward children. In conjunction with the Council for Responsible Nutrition, which is designed to expand NAD’s review of advertising claims for dietary supplements, NAD requested substantiation for several claims—both explicit and implicit—on Silver Star’s website.

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 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.

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.”

On May 13, 2014, in Millennium Laboratories, Inc. v. Darwin Select Insurance Company, Case No. 12-CV-2742 H (KSC), a California federal district court ruled that Darwin Select Insurance Company breached its duty to defend Millennium in a pair of lawsuits in which two business rivals accused Millennium of false advertising, finding that the underlying lawsuits sufficiently alleged covered disparagement claims. In so doing, the court reaffirmed the longstanding rule in California that a carrier’s duty to defend is broad and requires the carrier to defend where there exists a ...