Hunton Retail Law Resource

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. The workshop will be held in Washington, D.C., and will focus on the consumer privacy and security issues posed by automated and connected vehicles, including:

• the data vehicles with wireless interfaces collect/store/transmit, and how it is used and shared;
• how vehicles integrate data into their functionality and how consumers benefit from the collection and use of their information;
• the current roles of manufacturers, parts suppliers, technology companies and other stakeholders in collecting data and ensuring security and how these roles are expected to evolve;
• manufacturers’ privacy and security policies and practices and how they are communicated to consumers;
• who owns the data collected;
• the privacy and security harms that might arise from the collection and use of such data;
• the evidence that exists regarding consumer perceptions of connected vehicles and their data collection and use practices;
• the roles of the FTC, NHTSA and other federal government agencies; and
• the self-regulatory standards that might apply to privacy and security issues relating to connected vehicles.

FTC and Marketers of ‘NutriMost Ultimate Fat Loss System’ Reach Settlement

The marketers of the NutriMost Ultimate Fat Loss System reached a settlement with the FTC over allegations the program did not produce the promised results, was not supported by scientific evidence, and was otherwise deceptively marketed. NutriMost was advertised as allowing users to lose 20 to 40 pounds or more in 40 days. According to the marketers, the system used “breakthrough technology” and “personalized supplements” to aid in weight loss without significantly cutting calories.

According to the FTC, only upon payment of $1,895 for the program did consumers learn they would need to follow a highly restrictive diet of about 500 calories per day. Further, the FTC alleges that the defendants unfairly required consumers to agree in writing not to make any disparaging comments about NutriMost, with a $35,999 penalty threat. The defendants were also alleged to have disseminated false consumer testimonials and to have failed to disclose in ads that certain consumer reviewers were franchisees or materially connected to franchise owners.

The settlement agreement prohibits NutriMost from making misleading or unsubstantiated weight loss claims, from using deceptive endorsements and from including non-disparagement clauses in their contracts. The defendants also agreed to a $32 million judgement, suspended upon payment of $2 million.

NAD Recommends Beech-Nut Discontinue Several Baby Food Claims

The NAD reviewed a challenge over Beech-Nut Nutrition Company’s “Real Food for Real Babies” ad campaign. After its review, the NAD recommended that Beech-Nut discontinue some of the challenged claims, but found some of the claims were supported.

The NAD rejected the challenger’s claim that Beech-Nut’s commercial misled consumers to think the baby food was fresh, rather than thermally processed. The NAD found that the claim “why puree today when you can open a jar tomorrow?” and visuals of Beech-Nut jars did not convey an implied message that the baby food is fresh. The NAD did recommend that Beech-Nut discontinue its “COLDPUREE” claim, or modify it to clearly and conspicuously indicate that it refers to the fact that the food is blended cold to protect the flavor and nutrients before it is cooked.

The NAD determined that Beech-Nut's social media ads depicting peas in a pod and asking “why puree today when you can open a jar tomorrow?” did not improperly mislead consumers to believe that the ingredients were fresh, noting no overt freshness messaging and the reasonable suggestion that Beech-Nut is one alternative to homemade food. The NAD did recommend that Beech-Nut discontinue use of certain phrases including, “just real whole fruits and vegetables…And nothing else,” “no one but us makes food for babies this way,” “glass is the ultimate in sustainability” and “glass is nature's safest container,” to avoid any confusion.

The NAD rejected Beech-Nut’s claim that self-regulatory bodies lacked jurisdiction over ads that had not run in 18 months, stating that the NAD procedures provide for administrative closure only where an advertiser has permanently discontinued claims. In this instance, Beech-Nut was still using the challenged claims on its website and on product packaging.