Blog Posts by James R. Ravitz
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.
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.
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.
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:
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.
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:
The US Supreme Court has agreed to consider a dispute between Pom Wonderful (Pom) and The Coca-Cola Company related to whether a drink label can be considered deceptive under federal false advertising laws, but permissible under regulations of the Food & Drug Administration (FDA). A decision in the case could have a significant impact on federal false advertising litigation and potentially force some companies to reexamine their food labeling practices.
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