This past week, the following regulatory and consumer protection actions made headlines:
Outlet Retailers Sued over Allegedly Deceptive Pricing Practices
Class action lawsuits against several retailers, including Burberry and Dooney & Bourke, allege that outlet discount prices tags that compare the outlet price with purported retail prices deceive consumers into believing they are getting a bargain when, in fact, they are not. Reference pricing rules (e.g., the FTC’s Guides on Deceptive Pricing) prohibit sellers from offering fictitious bargains. In these cases, the plaintiffs allege that the retailers’ practice of offering for sale made-for-outlet goods that never were sold at the referenced price is deceptive.
Mercedes-Benz Accused of Dirty Diesel Emission Cheating
Mercedes-Benz is being accused of programming its BlueTEC Clean Diesel vehicles to shut off certain emissions reducing devices when ambient temperatures drop below 50 degrees Fahrenheit. The complaint, which alleges a similar defeat device purportedly used in Volkswagen “clean diesel” vehicles, claims that Mercedes-Benz never disclosed to consumers that the engine would disable the emissions cleaning devices when it was cold outside, while making claims that the BlueTEC Clean Diesels were earth friendly and the “world’s cleanest and most advanced diesel.”
Texas Judge Dismisses Claims Against Whole Foods Related to Yogurt Sugar Content
Claims against Whole Foods alleging that its yogurt contained more sugar than indicated on the yogurt’s nutritional label were dismissed because the allegations were based on insufficient testing. A Texas judge found that the claims against Whole Foods were based entirely on an article in Consumer Reports magazine, which based its conclusions on less stringent testing than that required by the U.S. Food and Drug Administration (“FDA”). The judge’s order states, “[B]y their own allegations, Plaintiffs seek to impose liability on the Defendants based on a testing methodology that is more burdensome than that provided under the [Food, Drug, and Cosmetic Act].”
California’s Meat and Poultry Packaging Rule Stricken by Federal Court
A California Fair Packaging and Labeling Act provision targeting meat and poultry products was struck down by the United States Court of Appeals for the Ninth Circuit. The court held that the California law, which regulates the practice of “non-functional slack fill” (the empty space between a product and its packaging that does not serve a specified purpose), was preempted by the Federal Meat Inspection Act and the Poultry Products Inspection Act. According to the Ninth Circuit’s unpublished memorandum, the legislative history of these federal packaging laws demonstrate Congress’ intent to create a uniform standard across all states. In addition, the court found that since Congress granted the Secretary of Agriculture the authority to establish packaging standards for meat and poultry products, it intended to allow these products to be subject to less specific, but uniform, regulation.
CVS to Pay $8 Million to Settle Civil Claims for Illegal Drug Sales
The Department of Justice announced that it reached an agreement with CVS Pharmacy, Inc. to settle civil allegations that its Maryland pharmacies illegally sold oxycodone and other controlled substances through prescriptions that were not issued for a legitimate medical purpose. In the announcement, U.S. Attorney for the District of Maryland Rod J. Rosenstein reiterated, “Pharmacies that dispense controlled substances have a duty to ensure that prescriptions they fill were issued for legitimate medical purposes. Doctors and pharmacists are the gatekeepers of the effort to prevent the abuse and diversion of pharmaceutical drugs for non-medical purposes.”
House of Representatives Votes to Loosen the Menu Labeling Rule
The U.S. House of Representative voted to pass The Common Sense Nutrition Disclosure Act (the “Act”), which, if signed into law, would provide more flexibility for restaurants and retailers in complying with upcoming nutrition labeling requirements. The Act relaxes a pending FDA rule that requires restaurants and certain retail chains to display nutrition information on menus. It would ease the FDA rule by allowing restaurants and retailers to comply with the FDA rule by designating a primary in-store menu containing all nutrition and calorie information. The Act also clarifies that advertisements are not menus and do not need to include the nutritional information required under the FDA rule.
Bitcoin Mining Operation Settle Charges With FTC
Butterfly Labs, Inc. and two of its operators settled charges with the Federal Trade Commission that it was deceiving customers by charging thousands of dollars for Bitcoin mining machines, then either delivering the machines after they were obsolete or not delivering the machines at all. Bitcoin, a virtual currency, is mined by consumers using computers to solve complex mathematical problems. In exchange for solving the problems, the Bitcoin network awards the machine user, or miner, with Bitcoins. As more miners have entered the market, the problems have become more complex requiring more sophisticated computers. The computers Butterfly Labs sold were allegedly useless for Bitcoin mining because they were unable to perform the more complex computations necessary to solve the problems.