Hunton Retail Law Resource

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.Epson stated that while it disagrees with the NAD’s findings, it had already phased out most of its  “loaded and ready” claims and would discontinue any remaining materials.

Rust-Oleum Agrees to Pay $9 million in Paint Peeling Settlement

Rust-Oleum Corp., the makers of protective deck paint, has agreed to pay $9.3 million to settle a class action lawsuit over allegations that its paint peeled off and damaged plaintiffs’ property. The settlement comes after an earlier finding that the class had adequately alleged the company’s liability and permitted discovery to move forward.

At issue were allegations brought in 2014 that Rust-Oleum’s Deck & Concrete Restore and Restore 10X products were falsely marketed as long-lasting and beneficial to deck surfaces. Plaintiffs alleged they purchased the Rust-Oleum products after extensive marketing claiming the paint would prolong the life of the deck, only to find the paint chipped off quickly and left the deck or patio in need of repair or replacement. While the Rust-Oleum products came with a lifetime warranty offering a replacement of the purchased product or a refund under some instances, the warranty attempted to block customers from suing the company for damage that occurred as a result of the product’s application.

T-Mobile Agrees to $48 million Settlement Over Alleged Misleading “Unlimited” Data Plan

T-Mobile USA Inc. has reached a settlement with the FCC to pay $48 million to resolve claims that the company failed to sufficiently disclose that its unlimited data plans included constraints on data speed. In its findings, the FCC found T-Mobile slowed data speeds once customers surpassed 17 GB of data in a month on unlimited plans. These slower speeds were not disclosed to customers who were led to believe they were actually receiving faster and better service.

The agreement is divided into three separate penalties including: (1) a $7.5 million fine; (2) $35.5 million towards consumer benefits, including giving subscribers up to 20 percent off in-stock accessories and 4 GB of data if they have a mobile internet data plan; and (3) $5 million allocated to help connect low-income students by providing free devices and discounted mobile broadband.

In addition, T-Mobile is required to make additional changes, including disclosing details on its policy for high-data users, who it affects, the impact on speeds, as well as notifying customers if they are nearing the limit that would lead to throttling.

McCormick & Co. to Face False Advertising Lawsuit Filed by Watkins Inc.

A D.C. federal court has ruled that McCormick & Co. will have to face a false advertising suit filed by competitor Watkins Inc. over the alleged under-filling of its pepper containers.

At issue is whether the size of McCormick’s packaging can mislead consumers about product. According to the court, “the size of McCormick’s containers is exactly what makes them misleading, because consumers cannot see the amount of their contents.” Watkins alleges that its sales were hurt by McCormick’s misleading packaging.

McCormick sought to dismiss the case earlier this year, claiming that selling the seasoning in a slack-filled container does not constitute a false statement subject to the Lanham Act, which applies only to commercial speech. The court rejected this argument, finding that a container that does not allow a consumer to see its contents can be considered full.

This is one of a number of similar cases against McCormicks that the Judicial Panel on Multidistrict Litigation has sent to Judge Huvelle in the D.C. District Court.