Hunton Retail Law Resource

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

With the National Retail Foundation estimating 8 to 12 percent growth in U.S. e-commerce in 2017, retailers across the country are vying to compete for a piece of the $400B+ pie. Crucial to their efforts is that retailers offer a seamless online and in-home customer experience, which includes maximizing shipping and returns efficiencies. But equally as important is that retailers remain compliant with FTC regulations and state unfair competition and business practices laws, in order to minimize their exposure to an ever-expanding putative class of the 80 percent of Americans who place online orders each year.

In that vein, we have previously reported and advised on the rise in ADA and TCCWNA claims in 2015 and 2016. Now, over the past few months, a new trend has emerged that has ramifications for virtually every participant in the online retail space: a rise in the number of class action claims challenging allegedly excessive shipping & handling (“S&H”) fees. Regardless whether an online retailer offers flat or incremental S&H fees, standard and expedited S&H options or free shipping with returns-only S&H fees, few are immune from claims that the fees charged do not align perfectly with retailers’ underlying shipping costs.

On July 10, 2017, in a 775-page release, the Consumer Financial Protection Bureau (“CFPB”) issued its long-awaited final arbitration rule (“Arbitration Rule”) pertaining to consumer finance contracts. The Arbitration Rule, which until now was in the comment stage with its final issuance in question, largely mirrors the proposed rule from May 2016, with a few modifications. The Arbitration Rule is important for three reasons: (1) it prohibits consumer finance companies from relying on class action waivers to block class action lawsuits; (2) it prohibits the inclusion ...

On July 11, 2017, the Consumer Financial Protection Bureau (“CFPB”) adopted a final rule that bars financial firms from forcing consumers into mandatory arbitration clauses as a condition of opening an account.

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.

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.

At the end of May, President Trump unveiled his latest proposed budget blueprint for 2018. The proposed budget contains significant funding cuts for many government programs, including more than a 25 percent cut to the Supplemental Nutrition Assistance Program (“SNAP”), formerly known as the Food Stamp Program.

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. 

On May 23, 2017, various Attorneys General of 47 states and the District of Columbia announced that they had reached an $18.5 million settlement with Target regarding the states’ investigation of the company’s 2013 data breach. This represents the largest multi-state data breach settlement achieved to date. 

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.

A year ago, the United States Supreme Court held in Spokeo, Inc. v. Robins that a plaintiff must do more than plead a mere statutory procedural violation to establish standing; to plead an injury in fact, a plaintiff also must allege a harm that is both “concrete” and “particularized.” Two recent decisions by the U.S. Court of Appeals for the Eleventh Circuit—one involving a rare written dissent from the denial of a petition for rehearing en banc—demonstrate the continuing difficulties courts are facing in determining what constitutes a concrete injury under Spokeo. They suggest that the Eleventh Circuit is most likely to find standing for violations of statutes that are intended to protect personal privacy or create a right to information, although judges do not always agree as to which statutes fall within these categories.

On May 12, 2017, a massive ransomware attack began affecting tens of thousands of computer systems in over 100 countries. The ransomware, known as “WannaCry,” leverages a Windows vulnerability and encrypts files on infected systems and demands payment for their release. If payment is not received within a specified time frame, the ransomware automatically deletes the files. A wide range of industries have been impacted by the attack, including retailers and other businesses, hospitals, utilities and government entities around the world.

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.

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.

The FDA has announced that it will officially delay the compliance date for its Menu Labeling Rule (the “Rule”) to May 7, 2018, in order to consider how to further reduce the regulatory burden or increase flexibility while continuing to achieve regulatory objectives. Among other concerns, the FDA notes that retailers have raised concerns that the Rule lacks flexibility to permit the provision of meaningful nutrition information to consumers in innovative formats.

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.

Product recalls are on the rise in many industries. As regulatory and consumer protection standards get tougher, product supply chains are becoming more complex. This increases the risk of errors, defects and contamination at all levels of operation. Too often, these problems do not manifest themselves until after a product hits the market. All of this can lead to staggering expenses for food and product manufacturers facing the risks and realities of product recalls.

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.

As posted on the Hunton Privacy and Information Security Law blog, recently, Virginia passed an amendment to its data breach notification law that adds state income tax information to the types of data that require notification to the Virginia Office of the Attorney General in the event of unauthorized access and acquisition of such data. Under the amended law, an employer or payroll service provider must notify the Virginia Office of the Attorney General after the discovery or notification of unauthorized access and acquisition of unencrypted and unredacted computerized data containing a Virginia resident’s taxpayer identification number in combination with the income tax withheld for that taxpayer.

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.

On March 17, 2017, retailer Neiman Marcus agreed to pay $1.6 million as part of a proposed settlement (the “Settlement”) to a consumer class action lawsuit stemming from a 2013 data breach that allegedly compromised the credit card data of approximately 350,000 customers.

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. 

On March 9, 2017, Home Depot Inc. (“Home Depot”) reached an agreement that includes the payment of $25 million and the implementation of new data security measures to resolve a putative class action brought by financial institutions impacted by the company’s 2014 data breach.

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.

As reported on the Privacy and Information Security Law blog, on January 23, 2017, the FTC released a Staff Report (the “Report”) on cross-device tracking technology that can link multiple Internet-connected devices to the same person and track that person’s activity across those devices. The Report follows a November 2015 workshop on the same subject and is based on information and comments gathered during that workshop.

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.

On January 3, 2017, a Ninth Circuit panel (the “panel”) weighed in on a growing split among circuits over Rule 23’s ascertainability requirement—in particular, the extent to which a plaintiff must prove there is an “administratively feasible” means of identifying class members.

The American Tort Reform Association recently released the 2016–2017 edition of its “Judicial Hellholes” report. This annual report identifies venues it deems least favorable for civil defendants based on recent decisions and verdicts, as well as state laws and policies.

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. 

As with other areas of the law, the recent presidential election will present both challenges and opportunities for retailers concerned with financial and securities regulation. While President-elect Trump did not articulate his views on financial services regulation on the campaign trail in any detailed manner, he did suggest that the Dodd-Frank Act should be repealed as it has increased costs for businesses, impeded economic growth and severely reduced lending without any clear benefits to investors or consumers.

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 17, 2016, the Federal Trade Commission released a staff report assessing the issues confronting consumers and regulators stemming from the rise of peer-to-peer platforms such as Uber and Airbnb. The report, The ‘Sharing’ Economy: Issues Facing Platforms, Participants, and Regulators, describes how the Internet has allowed sellers and consumers to connect in order to provide services between individuals. For example, apps such as Uber and Lyft allow passengers to bypass traditional taxi services in favor of matching with an individual drivers. These services have had major disruptive effects on traditional industries.

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.

On November 9, 2016, Hunton & Williams LLP lawyers on the Retail and Consumer Products, Insurance and Corporate Litigation teams, Syed Ahmad, Shawn Regan and Shannon Shaw, published an article in Corporate Counsel discussing a recent decision from New York's highest court that may impact the exchange of information between retailers and third parties, such as vendors, that are engaged in a variety of transactions where privileged information may need to be shared. The article addresses the impact of Ambac Assurance v. Countrywide Home Loans, in which the New York Court of Appeals ...

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.

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.

The first blow to the recent expansive application of the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”) was struck by a federal court in California last month. In Candelario v. Rip Curl, Inc., the Central District of California granted a motion to dismiss a complaint alleging a TCCWNA violation of website terms and conditions because the plaintiff lacked Article III standing. The plaintiff has appealed the decision to the Ninth Circuit.

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.

On September 12, 2016, the House of Representatives passed the Consumer Review Fairness Act (the “Fairness Act”), aimed at preventing companies from penalizing consumers who post negative reviews online. The law is a response to non-disparagement clauses such as the one challenged by the FTC in litigation filed last year against Roca Labs, Inc.

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.

Hunton & Williams LLP focuses on product issues ranging from compliance, recall issues, investigations and products-related litigation in state and federal courts and in various administrative forums. Our lawyers have managed and consulted on recall or potential recall issues for a number of clients requiring involvement with the Consumer Product Safety Commission, the Federal Trade Commission, the Food and Drug Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the state attorneys general. Our lawyers have conducted broad-based federal and 50-state research to identify applicable regulatory schemes, consulted with clients regarding compliance strategy and litigation risk management issues, and litigated numerous products liability claims (gas controls, valves, water heaters, tires) in state and federal courts.

As reported on the Privacy & Information Security Law blog, on September 15, 2016, the New Jersey Senate unanimously approved a bill that seeks to limit retailers’ ability to collect and use personal data contained on consumers’ driver and non-driver identification cards. The bill, known as the Personal Information and Privacy Protection Act, must now be approved by the New Jersey Assembly.

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.

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.

On August 8, 2016, the Federal Trade Commission sued 1-800 Contacts, alleging that it entered into anticompetitive bidding agreements with 14 of its rivals. According to the administrative complaint, these bidding agreements are an unfair method of competition because they unreasonably restrain competition for bidding on online search advertising auctions and restrict truthful, non-misleading ads. Previously, 1-800 Contacts alleged that its rivals had engaged in trademark infringement by purchasing advertising space from online search engines when consumers searched for “1-800 Contacts.” Most of 1-800 Contacts’ rivals agreed to settle or avoid lawsuits by entering into the allegedly anticompetitive bidding agreements, which prohibit parties from bidding on their rivals’ trademarked terms. Additionally, all but one of the contracts also require the use of “negative keywords,” which will prevent an advertiser’s name from appearing if a rival’s name is used as a search term.

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.

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

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

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.

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.

Consumer class actions are on the minds of virtually all consumer product manufacturers and service providers. Class actions based on privacy and consumer protection statutes are increasing at a remarkable rate, and can be a challenge to predict, budget and defend, given the difficulty in valuing consumer privacy rights. In an article, “Second Circuit Reminds Consumer Product Companies That Insurance Options Exist for Big Data Blunders and Privacy Faux Pas,” published in FC&S Legal’s Eye on the Experts column, Hunton lawyers Syed S. Ahmad, Neil K. Gilman and Paul T. Moura ...

The tidal wave of New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”) claims just swept up a novel argument: a class complaint against Facebook, Inc. argues that the popular social media site’s terms of use is subject to TCCWNA because Facebook profits from users’ personal information and intellectual property.

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

Technology

Volkswagen to Pay an Additional $86 Million to California

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TCCWNA. The very acronym evokes head scratches and sighs of angst and frustration amongst many lawyers in the retail industry. You have probably heard about it. You may have even been warned about it. And you may currently be trying to figure out how best to minimize your risk and exposure this very moment. But what is it and why has virtually every retailer been hit with a TCCWNA class action demand letter or lawsuit in the past few months? And why are most retailers scrambling to update the terms and conditions of their websites?

As reported on the Hunton Insurance Recovery blog, in a June 1, 2016 decision, the Second Circuit Court of Appeals reminded retailers and product manufacturers to look to their insurance coverages when defending against consumer class actions. In National Fire Insurance Co. of Hartford et al. v. E. Mishan & Sons Inc., the Second Circuit required CNA Financial Corporation to defend E. Mishan & Sons, Inc.(“Emson”) – best known for its “As Seen on TV” products – in two class actions alleging a conspiracy to trap customers into recurring credit card charges and that Emson sold private consumer information that it obtained through its product sales.