Hunton Retail Law Resource

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.

(Almost) All Natural: FTC Approves Consent Orders Against Personal Care Product Companies

On July 13, 2016, the FTC approved four final consent orders against companies that the FTC claims misrepresented their products as “All-Natural” or “100% Natural.” The FTC claimed that these companies, including Trans-India Products, Inc., doing business as ShiKai; Erickson Marketing Group, doing business as Rocky Mountain Sunscreen; ABS Consumer Products, LLC, doing business as EDEN BodyWorks; and Beyond Coastal, made deceptive all-natural claims for personal care products like sunscreen and shampoo. Each company is barred from making these kind of claims in the future.

Industry Self-Regulation

Computer Troubles: NAD Recommends Company Discontinue Claims for Computer for Seniors

The NAD recommended that MyGait, LLC, discontinue certain claims for the company’s MyGait Elite II Computer after the product was featured in the American Association for Retired Persons' Bulletin. The company advertised that the computer comes with a support network and the opportunity to replace a malfunctioning computer, without mentioning that the benefits are only available with a $19.95 monthly service program that requires a separate purchase. The NAD recommended that the company discontinue those claims, but found that the advertiser supported the claim that the computer was “designed for seniors.” MyGait agreed to comply with the NAD’s recommendations.

NARB Recommended Lysol Come Clean About Advertising Claims

After the maker of Lysol Disinfecting Wipes and Spray products challenged the NAD’s opinion, the National Advertising Review Board (“NARB”) recommended that Reckitt Benckiser, Inc., discontinue certain advertisements for the products. The claims, originally challenged by competitor Clorox, said that their products were “[a]pproved to kill 45% more types of germs vs. leading brand of wipes,” with a disclaimer that the claims are based on the Environmental Protection Agency approved Master Labels. Both the NAD and NARB found that the advertisements conveyed the net impression that Lysol products kill more germs and will keep families healthier, without explaining that manufacturers do not have to apply for EPA approval with respect to all germs and therefore, just because a product does not have EPA approval to kill a type of germ does not mean that the product will not kill that germ. Reckitt Benckiser agreed to discontinue the challenged advertisements.

Litigation

California courts have been busy with consumer protection litigation this week.

On July 12, a district court judge in the Eastern District of California preliminarily certified a settlement class and approved a deal to resolve litigation over a consumer goods company’s shampoo and conditioner products. The company had labeled the products as natural, even though they contained man-made ingredients. Under the settlement deal, class members can recover up to five dollars per bottle of the products, for up to 10 bottles per household without proof of purchase or more than the maximum if they can provide adequate evidence of purchase.

That same day, in the U.S. District Court of the Central District of California, a federal judge dismissed a lawsuit against IronMag Research. The lawsuit, brought by a competitor sports supplement company, alleged that IronMag markets drugs to bodybuilders that should be sold as pharmaceuticals, not sold over the counter. The judge found that the plaintiff, Nutrition Distribution LLC, has not suffered any injury and therefore does not have standing to sue.

On July 13, a judge in Los Angeles County Superior Court ruled that Dunkin’ Donuts could be brought back in a long-running lawsuit against coffee sellers alleging that the companies failed to warn consumers about carcinogens. In September 2011, Dunkin’ Donuts exited the lawsuit, which was originally filed in 2010, because at the time it was not selling coffee in California. The plaintiff, the nonprofit Council for Education and Research on Toxics, noticed that Dunkin’ Donuts had opened a shop in California. Though the first phase of the two-phase trial took place in 2014, the judge ruled that Dunkin’ Donuts would not suffer prejudice by being brought back into the suit at this stage.