Hunton Retail Law Resource

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

NAD Actions

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

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

CARU Recommends Crafting Manufacturer State How Much Product is Depicted in Advertisement

The Children’s Advertising Review Unit of the Advertising Self-Regulatory Council (“CARU”) has recommended that the manufacturer of a children’s crafting product change its advertisements to clarify what comes in the product.

Moose Toys makes the Beados Gem Designer Studio, comprised of pieces of plastic that stick together when sprayed with water. Beado’s 30-second commercial featured children wearing a host of Beado jewelry surrounded by additional finished products. The ad included an audio statement that the products are sold separately, but no disclosure that multiple sets would be required to make the all of the jewelry depicted in the commercial.

CARU recommended that Moose Toys include a separate audio disclosure to inform children that multiple Beado sets were used in the commercial. CARU also recommended a disclosure that the product takes time to dry. Moose Toys has accepted CARU’s decision.

NAD Hands off New Nordic Claims to FTC for Review

The NAD has referred a compliance investigation of advertising for New Nordic’s “Skin Care Collagen Filler” dietary supplement to the Federal Trade Commission, after the advertiser failed to adhere to an earlier decision.

In 2015, the NAD recommended that New Nordic discontinue a variety of product claims, including that the Collagen Filler “reduces the formation of wrinkles,” based on the insufficiency of the advertiser’s ingredients studies and its failure to submit human clinical studies. Subsequently, NAD reviewed additional New Nordic advertising featuring claims similar to the claims at issue in the underlying case, including “skin care in a tablet.” In response, New Nordic stated that it is reformulating the product to more closely reflect the results of ingredient studies. Nevertheless, the NAD referred this matter to the FTC, based on the advertiser’s failure to make a bona fide effort to comply with NAD’s initial recommendation.

This is not the first time the NAD has had to refer New Nordic advertising claims to the FTC. The NAD has also referred claims about New Nordic’s “Hair Volume” dietary supplement to the FTC in September 2015.

FTC Actions

FTC Issues Final Order Regarding “Influencer” Campaigns

The Federal Trade Commission has approved a final order regarding Machinima, Inc.’s failure to disclose its use of paid influencers in online reviews. Machinima paid influencers to post positive YouTube reviews of Microsoft’s Xbox One system and several games. Under the terms of the order, Machinima is prohibited from misrepresenting that influencer reviews are independent. Machinima also has an affirmative duty to ensure that its influencers make appropriate disclosures, and to not pay influencers who fail to make such disclosures.

FTC Warns App Developers about Silverpush Code Privacy Issues

The FTC has begun issuing warning letters to app developers who use the software development kit (“SDK”) made by Silverpush. Silverpush’s SDK allows developers to access “Unique Audio Beacon” technology, which can identify what shows or ads are playing on nearby televisions using sounds picked up by a device’s microphone. The FTC’s warning letters point out that although Silverpush has represented that its audio beacons are not currently embedded into any television programming aimed at U.S. households, none of the apps disclosed that the technology is included in the apps’ code. Additionally, the apps fail to explain why they have sought access to devices’ microphones despite the fact that the apps in question have no obvious functionality which would require such access.