This past week, several consumer and regulatory actions made headlines:
FTC Warns Marketers of Zika-Prevention Products: Claims Must Be Substantiated
The Federal Trade Commission has issued warning letters to 10 marketers of products that purport to protect users from Zika infection. The letters remind marketers that health-related claims must be supported by competent, reliable scientific evidence. Specifically, the FTC warned that claims as to the efficacy of the various products must be supported by “well-controlled human clinical testing using the species of mosquitos that carry the disease in question, and must demonstrate that the effects last as long as advertised.” Additionally, claims that a product applied to a specific part of the body will confer full-body protection must be supported by scientific evidence. The FTC has urged the marketers to review their ads and to alter or remove any unsupported claims.
FTC Extends Comment Period for Fuel Economy Guide
The FTC has extended its comment period for the Guide Concerning Fuel Economy for New Automobiles (“Fuel Guides”). This past spring, the FTC proposed changes to the Fuel Guides, originally adopted in 1975. The FTC requested public comments on May 27, 2016, and has extended the comment period through September 7, 2016.
FTC and USDA to Co-Host Roundtable on “Organic” Claims for Non-Agricultural Products
The FTC and the U.S. Department of Agriculture will co-host a roundtable on October 20, 2016, regarding consumers’ understanding of certain “organic” claims about non-agricultural products. Roundtable panelists will discuss how consumers interpret organic claims for products generally not under the jurisdiction of the USDA’s National Organic Program, a recent FTC-USDA study regarding organic claims, and ways to address potential deception. The roundtable will be open to the public and the FTC will accept comments until December 1, 2016.
Fiat Chrysler Faces Class Action Over Defective Gear Shifters
Fiat Chrysler Automobiles (“FCA”) has been named in a proposed class-action regarding the use of faulty electronic gear shifters. According to the complaint, FCA started selling vehicles with faulty gear shift systems in 2011. The National Highway Traffic Safety Administration received numerous complaints about the gear shifters by 2013. The gear shifter system, made by ZF Friedrichshafen AG, is “monostable,” meaning it returns to its resting position after the user initiates a change in gear as opposed to staying in place. As a result, it can be difficult to determine what gear the vehicle is in, or whether the vehicle has been put in Park safely.
Although FCA started phasing out the gear shifting system in 2014, it did not issue a recall until April 2016. This gear shifting system has been implicated in the June 2016 death of Star Trek actor Anton Yelchin. FCA did not propose a solution to the problem until several days after Yelchin’s death, when FCA announced an “auto park” function to prevent unintended rolling.
The complaint alleges that FCA’s software fix for the gear shifter system was inadequate and did not address all gear shifter issues, including attempts to shift the car between Drive and Reverse, which is problematic when a driver attempts a three-point turn. The complaint seeks compensatory damages, treble damages and statutory damages under the Magnusson-Moss Warranty Act, the New York Deceptive Practices Act and the New York False Advertising Act, as well as claims in common law.
NY AG Reaches Settlement with NYC-Area Fitness Clubs for Deceptive Billing and Cancellation Policies
The New York Attorney General’s office has reached a settlement with Synergy Fitness Clubs after it received complaints over Synergy’s billing and cancellation policies. According to consumer complaints, Synergy engaged in a number of deceptive practices, including:
- billing consumers without their consent after the cancellation or expiration of gym memberships;
- using a collection agent to harass former customers over years-old cancelled contracts;
- misrepresenting cancellation policies;
- failure to honor requests to cancel gym memberships;
- adding fees not described in the Membership Agreement;
- including provisions in the Membership Agreement allowing Synergy to automatically renew customer memberships; and
- failing to include mandatory language under New York’s Health Club law.
Under the settlement, Synergy has agreed to stop the above-described deceptive practices, provide restitution to consumers who paid for health services after trying to cancel their memberships and pay $60,000 in penalties and fines.