Hunton Retail Law Resource

On December 11, 2017, the SEC issued a cease-and-desist order against Munchee Inc. after finding that the company’s initial coin offering (“ICO”) constituted unregistered offers and sales of securities. Munchee sought to raise $15 million for its blockchain-based food review and social platform by selling digital tokens to users that could be used to buy and sell goods and services through an iPhone app. Munchee and others promoting the ICO told investors that the tokens could be expected to increase in value as the company implemented improvements to the app and said that the company would work to support a secondary market for the tokens. 

This past week, several consumer actions made headlines that affect the retail industry.

Weight-Loss Drug Maker Settles Claims and Sheds $3.7 Million

Makers of BioTherapex and NeuroPlus agreed to refrain from engaging in numerous business practices, including making marketing claims that are not substantiated by scientific evidence. Specifically, they are banned from making any of the seven “gut check” weight-loss claims that the FTC has warned are always false for over-the-counter dietary supplements, like BioTherapex. Additionally, they are banned from making unsubstantiated or false claims about the benefits of NeuroPlus in protecting against Alzheimer’s and dementia. Defendants are also ordered to pay $3.7 million, which will be suspended upon payment of $800,000.

The retail industry has seen a rapid adoption of chat robots, or “chatbots,” by retailers looking to deploy new technologies to more effectively engage consumers and drive sales on their e-commerce platforms. So what exactly are chatbots? Chatbots are interactive software that can converse and interact with end users, much like a customer service representative would, by leveraging the power of artificial intelligence.

Equal pay issues continue to be a focus for new state legislation and of the private plaintiff’s bar. Labor and Employment partner Emily Burkhardt Vicente and counsel Christy Kiely at Hunton & Williams LLP discuss how employers can best position themselves to defend against claims of compensation discrimination.

View the 5-minute video.

There is plenty of recall activity to report but no civil penalty news to report for November. Perhaps the holiday spirit prevails at the CPSC in this holiday season.

Hoverboards were last year’s hottest toy during the holiday season, but they also caused alarm due to the tendency of their lithium-ion battery packs to overheat while charging, causing the hoverboards to catch fire or explode. This year, the CPSC is taking a proactive approach to hoverboards. In May and again this month, hoverboards by the same manufacturer caused house fires and prompted the CPSC to warn consumers to stop using those hoverboards altogether. Further, a hoverboard by a different manufacturer recently caught fire and caused $40,000 of property damage to a consumer’s home. These serious reports culminated in the CPSC issuing seven recalls this month for hoverboards by different manufacturers due to their potential fire and explosion hazards.

These past two weeks, several consumer actions made headlines that affect the retail industry.

Competitor Pacified After Infant Cereal Maker Discontinues Advertising Claims

Beech-Nut Nutrition Company said it will stop advertising claims connected to infant cereal products that a competitor challenged before the NAD. The challenged claims include “0” grams of sugar, “natural,” “complete” nutrition, and “formulated to be gentle on baby’s tummy,” among others. The NAD will treat the discontinued claims as if it had recommended they be discontinued and Beech-Nut complied.

On November 10, 2017, the New York Department of Labor released a set of proposed regulations affecting the Minimum Wage Order for Miscellaneous Industries and Occupations, which applies to most employers, except hotels and restaurants.

The Westside Pavilion—the 755,000 square foot, 1970s fortress-style mall located in West Los Angeles—has been put up for sale by its owner, Santa Monica-based REIT Macerich Co. Tom O’Hern, Macerich’s CFO, predicted that the property would likely sell within a year. And although the Westside Pavilion is facing many of the same systemic pressures that other malls are facing nationwide, those are not the only reasons the mall is up for sale.

This past week, several consumer actions made headlines that affect the retail industry.

FTC Seeks Public Comment on Sears’ Petition to Modify Prior Order

Sears Holding Management Corporation has requested that the FTC reopen and modify a 2009 Commission Order settling charges that Sears inadequately disclosed the scope of consumer data collected through the company’s software application. The initial FTC complaint alleged that Sears represented to consumers that its downloadable software application would track users’ “online browsing,” but in fact tracked nearly all of the users’ Internet behavior. Sears petitioned the FTC to modify the Order’s definition of “tracking system,” which the company contends is overbroad and impracticable. The FTC is seeking public comment on Sears’ petition, which it will receive until December 8, 2017.

On November 1, 2017, the staff of the Securities and Exchange Commission (“SEC”) issued Staff Legal Bulletin No. 14I, which provides additional guidance for public companies (including retailers) seeking to exclude certain shareholder proposals from their proxy materials. Under this bulletin, the SEC staff now expects boards of directors to analyze shareholder proposals before companies make no-action requests to exclude such proposals from proxy materials under Rule 14a-8(i)(7) (the ordinary business exception) or Rule 14a-8(i)(5) (the economic relevance ...