Hunton Retail Law Resource

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.

Bumble Bee Foods’ woes continue to mount as its CEO, Christopher Lischewski, has been indicted for price fixing. The indictment alleges that Lischewski participated in the price fixing conspiracy from approximately November 2010 until about December 2013. Lischewski is not the first Bumble Bee executive to be charged: in late 2016 and early 2017, two Bumble Bee Senior Vice Presidents pled guilty to price fixing, and in May 2017, Bumble Bee agreed to pay $25 million in fines for price fixing. 

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.

E-commerce and online shopping are here to stay, but the explosion of new technology and the number of resources available to facilitate online shopping is an opportunity for retailers to embrace new ideas and concepts that will increase foot traffic to their physical locations. The store-within-a-store concept isn’t new, but the type of store-within-a-store retailers have conventionally seen is changing and bringing in new business.

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.

Several consumer actions affecting the retail industry have made headlines since the New Year.

FTC Issues Multi-Level Marketing Guidance

On January 4, 2018, the FTC issued updated business guidance to multi-level marketers (“MLMs”) to assist organizations in understanding and complying with the law. The FAQ-style guidelines address how core consumer protection principles apply with equal force to MLMs’ interactions with its own current and prospective participants, especially with regard to the compensation structures that MLMs are famous for. The FTC highlights several distinct MLM practices, explaining how each related to the FTC’s regulatory power and focus, and provides advice on how MLMs could best avoid running afoul of the law.

On January 3, 2018, in Italian Colors Restaurant v. Becerra, the Ninth Circuit found unconstitutional a California law barring retailers from imposing surcharges on customers using credit cards. The ruling has important implications for retailers operating in California and potentially for retailers operating in several other states with similar bans on credit card surcharges.

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.

App Operator Im-Pacted by FTC Settlement

The Federal Trade Commission has reached a $948,788 settlement with app developer Pact, Inc. over claims that it engaged in unfair and deceptive business practices. Pact users enter into “pacts” to exercise and/or eat better. The app charges between $5 and $50 per missed activity for users who fail to meet their weekly goals. Users who meet their weekly goals were supposed to be rewarded with a share of the money collected from those who did not.

The FTC alleged that Pact charged “tens of thousands” of consumers even if they met their goals or cancelled their participation in the service. Customers had a difficult time getting refunds or even determining how to cancel. The FTC’s complaint alleged violations of the FTC Act and the Restore Online Shoppers’ Confidence Act.

Under the terms of the settlement, Pact must disclose its billing practices, and is prohibited from misrepresenting its billing practices or engaging in unfair billing practices. A judgement of $1.5 million will be partially suspended upon Pact’s payment of $948,788. 

On September 7, 2017, the FTC announced its first-ever case against social media influencers. In its complaint, the FTC alleged that two widely followed gamers, Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell, posted messages endorsing online gaming service CSGO Lotto without disclosing that the two jointly owned the company. In addition to deceptively endorsing the service, the two are alleged to have paid thousands of influencers to promote the CSGO Lotto on social media without requiring those influencers to disclose the payments, which ranged between $2,500 and $55,000. The consent agreement requires Cassell and Martin to clearly and conspicuously disclose material connections between any endorser and promoted products and services. 

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

Dona J. Fraser Appointed Director of CARU

The Advertising Self-Regulatory Council and Council of Better Business Bureaus announced that Dona J. Fraser was appointed as Director of the Children’s Advertising Review Unit (“CARU”). Fraser is a leading privacy expert who previously worked for the Entertainment Software Rating Board, a self-regulatory program for the video game industry. CARU is an ASRC program dedicated to monitoring child-directed advertising since 1974.

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. 

On August 7, 2017, the FTC announced that it obtained a court order temporarily halting an online marketing scheme that deceptively lured shoppers into expensive negative option plans. The FTC alleged in its complaint that defendants used initial low-cost “trial” offers to hook consumers into expensive monthly shipments for tooth-whitening products without properly disclosing the terms and conditions of the deal or properly obtaining their consent.

The Ninth Circuit will decide whether Great Lakes Reinsurance must defend clothing company, In and Out, against a trademark infringement suit by Forever 21. The dispute focuses on exclusionary language in the general liability policy issued by Great Lakes to In and Out, which broadly bars coverage for claims stemming from violations of intellectual property rights, but which also excepts from the exclusion claims for copyright, trade dress and slogan infringement occurring in the company's advertisements. The appeal concerns last year’s ruling by a California federal judge that Great Lakes owed a defense because the underlying complaint raised a potential that In and Out’s advertising infringed Forever 21’s trade dress.

Recently, the United States Court of Appeals for the Second Circuit affirmed the district court’s finding in Reyes v. Lincoln Automotive Financial Services that a customer could not revoke prior express consent for purposes of the Telephone Consumer Protection Act ("TCPA") if that consent was provided as consideration in a binding contract. In a ruling that departs from two other circuit decisions, Gager v. Dell Fin. Servs., LLC, 727 F.3d 265 (3d Cir. 2013) and Osorio v. State Farm Bank F.S.B., 746 F.3d 1242 (11th Cir. 2014), the Second Circuit held that bargained-for written ...

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 actions made headlines that affect the retail industry.

As reported on Hunton's Privacy and Information Security Law blog, on June 21, 2017, the Federal Trade Commission updated its guidance, Six-Step Compliance Plan for Your Business, for complying with the Children’s Online Privacy Protection Act (“COPPA”). The FTC enforces the COPPA Rule, which sets requirements regarding children’s privacy and safety online. The updated guidance adds new information on situations where COPPA applies and steps to take for compliance.

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 protection actions made headlines that affect the retail industry.

NAD Recommends Kauai Coffee Discontinue and Modify Compost Claims

This week, NAD released their recommendations in their review of Kauai Coffee’s environmental claims for their single-serve coffee pod products. Kauai Coffee’s ads claim that the pods are “100% compostable,” but fail to clearly disclose that the pods are certified compostable only in industrial composting facilities, and are not suitable for home composting. While the pods are certified compostable by the Biodegradable Products Institute (“BPI”), BPI specified in its certification of the pods that they will disintegrate “swiftly and safely in a professionally managed composting facility.” NAD recommended that Kauai Coffee discontinue certain claims, and modify others to include the qualifying language: “Compostable in industrial facilities. Check locally, as these do not exist in many communities. Not certified for backyard composting.” Kauai Coffee said it will comply with NAD’s recommendations.

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

The NAD Refers Sports Drink Maker to FTC

The NAD has referred BA Sports Nutrition, the maker of BodyArmor sports drinks, to the FTC after the advertiser failed to alter certain comparative ads. The ad at issue implores customers to “Ditch artificial Sports Drink[s]: artificial flavors, artificial sweeteners, artificial colors” and depicts a bottle of a competing sports drink. The NAD found that the ad implied that the competing sports drink contained artificial flavors, sweeteners and colors when, in fact, many of the competitor’s sports drinks did not.

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.

Recently, in a case that should remind retailers and their suppliers to consider their First Amendment rights as they relate to the regulation of product labeling, the Eleventh Circuit Court of Appeals held in Ocheesee Creamery LLC v. Putnam, 851 F.3d 1228, that the actions of the Florida Commissioner of Agriculture and the Chief of the Florida Bureau of Dairy Industry (the “State”) violated the dairy company’s First Amendment rights relating to use of the term “skim milk.”

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.

On April 19, 2017, the Federal Trade Commission issued warnings to more than 90 brands and “influencers” that their social media posts should more clearly and conspicuously disclose brand connections. The warning letters follow petitions filed by consumer advocacy groups aimed at influencer advertising on Instagram. The FTC’s warning letters show that the agency is committed to capitalizing on its recent enforcement actions against brands and influencers, and will continue to scrutinize social media compliance with the Endorsement Guides.

Read the full client alert.

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

Grocers and Convenience Stores Argue FDA's Menu Label Rule Too Broad

The National Grocers Association (“NGA”) and the National Association of Convenience Stores (“NACS”) filed a citizen petition claiming that the FDA's final menu rule, effective on May 5, 2017, requiring calorie counts on menus for "restaurants and similar retail food establishments," is overbroad and imposes significant costs for compliance. The NGA and NACS petition makes several arguments for delaying or changing the proposed final rule, including: (1) the $1 billion compliance cost estimate over 10 years is too low, and instead the $1 billion will be "initial" costs to comply, (2) the FDA has failed to show any evidence that the rule will actually address obesity and consumer health, so the rule would violate the First Amendment, and (3) the rule sweeps in any business that sells prepared food, which was not contemplated by Congress in the Affordable Care Act. The FDA stated that it is considering the petition and an extension of time.

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 14, 2017, the Consumer Review Fairness Act of 2016 (the “Fairness Act”) will come into effect, 90 days after it was signed into law by President Obama. The Fairness Act voids any provision in a form contract between a consumer and a business that (1) restricts the consumer’s ability to leave reviews, (2) imposes penalties for leaving negative reviews or (3) transfers intellectual property rights in reviews or feedback content from the consumer to the business. The Fairness Act was passed in response to an increase in the use of so-called “non-disparagement clauses” that prohibited consumers from sharing their honest opinions about a seller’s goods, services or conduct.

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.

TCCWNA case law has continued to develop with no end in sight. Recently, courts have grappled with definitional questions that could impact the scope of the law and affect sellers of consumer goods and services.

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.

As reported on the Hunton Privacy and Information Security Law blog, on February 6, 2017, the FTC announced that it has agreed to settle charges that VIZIO, Inc., installed software on about 11 million consumer televisions to collect viewing data without consumers’ knowledge or consent. The stipulated federal court order requires VIZIO to pay $2.2 million to the FTC and New Jersey Division of Consumer Affairs. 

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.

In a 2-1 vote on January 19, 2017, with Commissioner Ohlhausen dissenting, the FTC took action against Uber Technologies for allegedly making exaggerated claims about potential earnings and the costs of Uber’s Vehicle Solutions Program. Uber has agreed to pay $20 million in driver redress to resolve these charges.

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:

In August 2016, the Supreme Court of California issued its decision in Bristol-Myers Squibb v. Superior Court, which – as detailed more fully in our earlier post – features an expansive interpretation of specific personal jurisdiction that is difficult to reconcile with the U.S. Supreme Court’s general personal jurisdiction decisions in Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011) and Daimler AG v. Bauman, 134 S. Ct. 746 (2014). Those decisions significantly limited the exercise of general personal jurisdiction over defendant corporations to their state of incorporation and principal place of business unless “exceptional circumstances” exist. 

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. 

On December 8, 2016, four major retailers were accused of unfair competition and false advertising under California law. According to complaints filed by the City of Los Angeles in California state court, J.C. Penney, Kohl’s, Macy’s and Sears have each misrepresented the regular retail price of thousands of goods in an effort to make consumers believe the items are available at steeper discounts than actually being offered.

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.

After a long and unconventional campaign, we finally know the election results: early next year, businessman Donald Trump will be sworn in as the 45th president of the United States, supported by a Republican Congress. What the election results mean for the nation’s retailers, however, remains an open question. Trump, as a candidate, staked out bold policy positions on issues with potentially significant effects on retailers. Both positive and negative developments on a wide range of issues are possible over the next four years. Once sworn in, Trump will have considerable latitude to implement his policies through executive branch agencies and their enforcement priorities. In other instances, however, he will require support from the 115th Congress, and in some instances his actions could be constrained by the effect of appointments and policy choices made by the Obama administration and the 114th Congress.

Last month, the U.S. Court of Appeals for the D.C. Circuit heard oral argument in ACA International v. FCC, the appeal of the Federal Communication Commission’s (“FCC's”) July 2015 declaratory order interpreting the Telephone Consumer Protection Act (“TCPA”). Although scheduled to last 40 minutes, oral argument before the three-judge panel lasted almost three hours. The nature of the judges’ questioning suggests that the D.C. Circuit may soon clarify the TCPA’s restrictions on automated telephone dialing, a result many affected businesses throughout the country would welcome.

DOJ Merger Investigation Opened a Whole Can of Worms

Retailers and consumers may have been paying out the gills for canned tuna. The Wal-Mart family of stores has alleged a price fixing scheme for canned tuna in Arkansas federal court. Wal-Mart’s complaint casts a wide net, alleging that Bumble Bee Foods, StarKist, Del Monte Foods (former owners of StarKist) and Tri-Union Seafoods (owners of Chicken of the Sea) engaged in large-scale price fixing in violation of Section 1 of the Sherman Act. The defendants allegedly hatched the scheme between 2008 and 2010 and canned it in July of 2015.

This past week, several consumer actions made headlines:

Hyundai and Kia Set State Attorneys General Investigations for $42.1 Million

Hyundai Motor Co. and Kia Motor Corp. have agreed to pay $42.1 million to settle claims by the Attorneys General of 33 states and the District of Columbia that the companies misrepresented mileage and fuel economy ratings for certain vehicles. Hyundai issued a statement regarding the settlement, noting that it contains no admission of any wrongdoing. The companies previously paid $100 million to settle claims that they had misrepresented emissions to the U.S. Environmental Protection Agency, and $225 million to a consumer class for overstating the fuel efficiency of their vehicles.

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.

On October 19, 2016, Chemence, Inc., the manufacturer of products such as Hammer Tite, Krylex Glues and Kwik Fix, agreed to resolve an FTC challenge of the company’s “Made in USA” and “Proudly Made in USA” claims. The settlement  requires Chemence to pay $220,000 and substantiate any future “Made in USA” 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.

On October 3, 2016, Amazon announced that it will eliminate most incentivized reviews – reviews written by customers in exchange for free or discounted products – except those reviews facilitated through the Amazon Vine program. Amazon, which has always banned compensated reviews, previously had allowed businesses to offer free samples to customers in exchange for reviews, as long as customers disclosed the fact of the incentive. In theory, customers receiving free products should have provided unbiased reviews; a recent study, however, showed the average rating for ...

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:

Regulatory Actions

FTC Releases Newly Approved Energy Labeling Rules, Considering Other Changes

The FTC has approved changes to the Energy Labeling Rule, which it says are designed to improve access to energy labels and the labeling for refrigerators, ceiling fans, central air conditioners and water heaters. The labeling is designed to help consumers understand the energy cost of consumer products and make it easier for consumers to compare different product models.

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.

Zara USA, Inc. (“Zara”), the popular European-based fashion retailer which boasts several celebrity clientele, has been targeted in a class action complaint filed in federal court, accused of allegedly carrying out a systematic “bait-and-switch” overpricing scheme. 

Since the U.S. Supreme Court’s 2014 decision in Daimler AG v. Bauman, 134 S.Ct. 746 (2014), numerous courts across the country have applied its holding to narrow the permissible bounds of the exercise of general jurisdiction over companies in jurisdictions without a connection to the specific claims in the case. On August 29, 2016, in Bristol-Myers Squibb v. Superior Court, No. S221038 (Calif. 2016), the California Supreme Court left many wondering what Daimler may mean for the exercise of specific jurisdiction in cases involving nationwide courses of business conduct affecting both resident and nonresident plaintiffs. 

As retailers continue to look for new and innovative ways to maintain communication and “touch points” with their customers, many are looking to technology-infused or “smart” packaging and advertising materials. There are many ways to drive customer interaction and web traffic through smart packaging and advertising materials, including through the use of hyperlinks, quick response (“QR”) codes and near field communication (“NFC”) chips. 

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.

In this post-Spokeo world, a defendant facing the all-too-common “no-injury” putative class action might be tempted to seek dismissal of the lawsuit on Article III grounds. But a panel of Ninth Circuit judges recently gave a compelling reason why defendants should strongly consider otherwise. In Polo v. Innoventions Intern. LLC, a Ninth Circuit panel reversed the dismissal of a putative class action based on a lack of jurisdiction, with instructions to remand the case to state court. We previously reported about this possibility following the issuance of Spokeo, into which a Ninth Circuit panel now has breathed life.

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

Federal Guidance

D.C. Federal Judge Vacates Part of FDA Tobacco Guidance

A D.C. federal judge vacated a portion of FDA guidance relating to the labeling of tobacco products. The key issue before the court was whether changing a tobacco product’s label to a distinct new label creates a new tobacco product subject to FDA approval. The court also considered the question of whether changing a product’s quantity resulted in the creation of a new tobacco product subject to the FDA’s “substantial equivalence review process.” The court found that while a change in the existing product’s label did not create a new tobacco product, a change in a product’s quantity did.

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.

On July 29, 2016, President Obama signed into law a bill that will establish federal standards for labeling of food products that contain ingredients from genetically modified organisms (“GMOs”). Several consumer advocates opposed the bill, as it preempts more stringent labeling requirements in states like Vermont. However, several advocates on the other side favored the notion of national, uniform standards, as opposed to a patchwork of individualized state labeling laws.

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

Court of Appeals Rules Spokeo Requires Actual Harm

A three-judge appellate panel dismissed the case in Hancock et al. v. Urban Outfitters, a putative class action against two retailers, Urban Outfitters and Anthropologie, who were alleged to have violated District of Columbia consumer protection laws by seeking consumers’ zip code information.