Interactive Counsel

Arent Fox's interactive media law blog - latest news and trends in advertising, data security & privacy, and IP.

Interactive Counsel

Blog Posts by Georgia C. Ravitz

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Door Remains Open on “Closing Letters” – FTC Issues 7 Closing Letters on Made in USA

March and April were very busy months for the Federal Trade Commission’s Office of Consumer Protection staff who focus on “Made in USA” enforcement. Indeed, FTC issued seven “closing letters” to companies during a three-week period, in which FTC closed out its investigations involving allegations that each company “overstated the extent to which” the products in each case were made in the United States. In each case, the FTC closed out the investigation based on the company’s agreement to implement a remedial action plan, including but not limited to such actions as removing unqualified US-origin claims from websites and social media and providing corrected qualified claims to third-party resellers and distributors. This flurry of activity began on March 14, 2017 and ended on April 5, 2017, as follows:

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Advertising, Promotions, Sweepstakes & Contests
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Walgreens Settles Pricing Dispute After New York’s Years Long Investigation

What’s the News?

Walgreens recently settled with the state of New York over allegations that the drug retail chain misled consumers with its pricing, including value and clearance prices. According to the New York attorney general’s office, an undercover investigation showed that Walgreens was overcharging customers compared to the prices displayed in print advertising and on-shelf tags. Walgreens agreed to pay $500,000 to settle the dispute and has agreed to review and correct the allegedly misleading pricing practices. This should serve as a reminder to retailers in all industries of the need to exercise care in product pricing, as this area has become a common target for regulators and the plaintiff’s bar.

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Advertising
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Cosmetic Companies Agree to FTC Settlement After Promoting Products as “All Natural”

The Federal Trade Commission announced on April 12 that it reached settlement agreements with four companies that market skin care products, shampoos, and sunscreens online over charges that they falsely claimed that their products are “ALL NATURAL” or “100% NATURAL,” despite the fact that they contain synthetic ingredients. 

The Commission voted unanimously to issue each administrative complaint and to accept the four proposed settlement agreements. The Commission has also issued a complaint against a fifth company, California Naturel, for making similar claims. A copy of the FTC’s press release announcing the settlement agreements can be found here.

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Health Privacy & Security, Advertising
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Lumos Labs Settles With FTC Over Brain Training Program Claims

The Federal Trade Commission announced this week that Lumos Labs had agreed to settle false and deceptive advertising claims related to the company’s promotion of its “Lumosity” cognitive training programs (commonly referred to as “brain training”). Under the FTC’s Settlement Order, Lumos Labs will pay $2 million in consumer redress and notify its on-line subscribers of the FTC settlement, as well as provide them with directions on how to cancel their Lumosity auto-renewal subscriptions.

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Advertising
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Nordstrom and Jeans Company Pay $4M to Settle “Made in USA” Claim

On Monday, November 30, 2015, Nordstrom and denim manufacturer AG Adriano Goldschmied filed a motion to approve a settlement in California federal court, agreeing to pay more than $4 million to settle a consumer class action suit that accused them of falsely labeling jeans as “Made in USA.” The settlement was agreed upon in October 2015 after over a year of intense litigation.
 
Plaintiffs brought the case against both the manufacturer, AG, and the retailer that sold AG jeans, Nordstrom, and alleged various claims under the California consumer protection laws and business and professions code. The class action claimed that AG jeans’ fabric, thread, buttons, rivets, and certain subcomponents of the zipper assembly were manufactured outside of the United States.
 

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Health Privacy & Security, Advertising
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FuelBand Advertising Claims Spark Settlement Agreement

Nike Inc. (Nike) recently agreed to pay more than $2.4 million to settle a class action lawsuit related to the Nike FuelBand activity tracker. The lawsuit, Levin v. Nike, was filed May 17, 2013, in California Superior Court in Los Angeles County. The Plaintiffs alleged violations of California unfair competition and false advertising laws, as well as breach of warranty.
 
The FuelBand Advertising Claims

The Plaintiffs’ allegations center around claims made in connection with the Nike FuelBand, which is a wristband activity tracker. Specifically, advertising for the FuelBand suggests that the product is capable of tracking every calorie burned and step taken by a FuelBand user. The complaint singles out the following claims:

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Promotions, Sweepstakes & Contests
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FTC Stops Deceptive Risk-Free Promotions of Skincare Products

On June 25, 2015, the FTC announced that it had taken action to stop a group of approximately 15 companies and 7 individuals from using allegedly deceptive “risk-free trial” offers to sell skincare products online. At the FTC’s request, the U.S. Federal District Court, Central District of California, issued a temporary restraining order against the defendants, halting their marketing practices, freezing their assets, and appointing a receiver over their business.
 

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Advertising
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FTC Springs into Action Against National Advertisers

The Federal Trade Commission (FTC) announced on September 23, 2014 that it recently completed a nationwide advertising review that resulted in warning letters to more than 60 advertisers. The review, termed “Operation Full Disclosure” by the FTC, targeted companies that failed to make proper disclosures in their television and print advertisements. In particular, the FTC sought out ads where important information needed to prevent consumers from being mislead was either contained in the fine print or otherwise hard to locate.

The FTC has consistently stated that advertisements must clearly and conspicuously disclose material information to consumers. Simply put, “consumers should be able to notice disclosures easily; they should not have to look for them.”

The FTC provided some examples of targeted conduct:

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