Hunton Retail Law Resource

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.

The order bars the defendants from engaging in unlawful conduct related to cancelled transactions and prohibits the defendants from violating the Truth in Lending Act or the Consumer Leasing Act.

Upromise Pays $500,000 for Violating FTC Order

The FTC levied a $500,000 civil penalty against membership reward service Upromise for violating a 2012 FTC order. According to the FTC’s complaint, Upromise failed to make clear and prominent disclosures about the fact that its “RewardU” online toolbar collected customers’ personal information, in violation of the earlier FTC order. The FTC also alleged that Upromise failed to obtain required third-party assessments of the toolbar’s security features.

Under the new stipulated order, Upromise must pay a $500,000 penalty and is prohibited from violating the original 2012 order. Additionally, in connection with the launch of any future toolbar, Upromise must obtain (1) third-party certification of adherence to the order’s disclosure and consent requirements, (2) advance written approval from the FTC of any required assessment’s scope and design, and (3) must permanently expire RewardU-related cookies from consumers’ computers and notify those consumers how to uninstall the toolbar and any associated cookies.

Diet Pill Marketers Pay $500,000; Barred from Spam Email Marketing and Making Baseless Claims

The FTC has settled litigation against affiliate marketers who were charged with using illegal spam e-mail, false weight-loss claims and phony celebrity endorsements to market weight-loss products. According to the FTC’s complaint, the defendants allegedly paid marketers to send millions of illegal spam emails from hacked email accounts. The emails directed consumers to websites that included falsified celebrity endorsements, including from Oprah Winfrey. Under the terms of the settlement, the defendants may not misrepresent the efficacy of their products or claim that they have been scientifically proven to promote weight loss. They also are barred from misrepresenting (1) celebrity endorsements, (2) that their testimonials reflect the typical consumer experience, (3) that any publication is an objective news report when it is actually an ad, and (4) that independent tests demonstrate a product’s effectiveness.

Class Cert Granted Against Johnson & Johnson in Baby Wash Case

A judge has granted class certification in Connecticut federal court against Johnson & Johnson, the maker of Aveeno products. Plaintiffs sought certification for two purported classes of consumers: purchasers of Aveeno sunscreen (the “Sun Case”) and purchasers of Aveeno baby washes (the “Bath Case”). The court granted class certification for the Bath Case but denied certification for the Sun Case. Both cases alleged that Johnson & Johnson overstated the “natural” content of ingredients in the respective Aveeno products.

The court granted plaintiffs’ motion to certify a class of consumers who purchased the bath products from 16 states and the District of Columbia from 2003 to 2013, but denied certification for the proposed Sun Case class because that case only sought injunctive relief and would not redress the proposed class’ injuries. Additionally, the court denied both sides’ motions for summary judgment and admitted the expert reports for trial.

Iowa AG Sues Marketer of “Drinkable” Sunscreen and Mosquito Repellant

The Iowa Attorney General has accused Benjamin Johnson and his companies, Harmonized Water LLC and Osmosis LLC, of engaging in unfair, misleading and deceptive business practices. According to the AG’s complaint, the defendants claim to have treated water to imbue it with medical and cosmetic properties, including as a sunscreen, mosquito repellent and hair growth treatment. The Iowa AG’s office is seeking: (1) to enjoin defendants behavior, (2) restitution to all Iowans who spent money on defendants’ products and (3) civil fines of $45,000 for each violation of the Iowa Consumer Fraud Act.