This past week, several consumer actions made headlines that affect the retail industry.
The Federal Trade Commission Announced Class Action Settlement of VW 3.0-Liter Claims
The FTC announced a settlement with Volkswagen Group of America (“VW”) requiring VW to fully compensate consumers who purchased its 3.0-liter TDI diesel vehicles. The settlement stems from VW’s installation of emissions defeat devices in its diesel TDI vehicles that deceived consumers and emissions testers. The settlement package requires a combination of repairs, monetary compensation and buyback of certain models. It is estimated that VW will pay at least $1 billion under the settlement but could pay as much as $4 billion if it is unable to provide consumers with an adequate emissions repair. The FTC previously obtained a separate $10 billion judgment against VW to compensate consumer who purchased 2.0-liter TDI diesel vehicles with the defeat device.
Water Filtration Company Agrees to Drop Misleading “Made in USA” Claims
iSpring Water Systems, LLC, settled claims and agreed to stop making unqualified claims that its water filtration systems are “Made in the USA” or “Built in the USA.” According to the FTC, iSpring’s “Made in the USA” claims were false, misleading and unsupported because its products were either wholly imported or made with a significant amount of foreign inputs. Under the settlement, iSpring is prohibited from making “Made in USA” claims without being able to show “that the product’s final assembly or processing—and all significant processing—take place in the United States, and that all or virtually all ingredients or components of the product are made and sourced in the United States.”
Acting FTC Chair Maureen Ohlhausen stated, “Supporting American manufacturing is important to many consumers. If a product is advertised or labelled as ‘made’ or ‘built’ in the USA, consumers rightly expect that to be the case when they part with their hard-earned money.” She added, “This is an important issue for American business and their customers, and the FTC will remain vigilant in this area.”
Stratford Career Institute Settles FTC Claims That It Misled Consumers About Its High School Equivalency Programs
In a settlement with the FTC, Stratford Career Institute has agreed to stop making allegedly deceptive claims about its educational and high school equivalency programs. According to the FTC, Stratford misled consumers about its high school “diploma” programs, which did not meet basic educational requirements set by most states. Consumers who used the Stratford “diplomas” in employment and college admission applications found that it was not accepted by some as an equivalent to a traditional high school diploma. Under the settlement, Stratford must not make false advertising claims about its educational programs and must disclose that some employers and schools may not recognize the diploma as satisfying high school education requirements.
DeVry Settles Misleading Advertising Suit with NY Attorney General
DeVry Educational Group will settle claims with the NY AG that it misled consumers by exaggerating job search and salary success to potential students. The settlement requires DeVry to pay a total of $2.75 million. The NY AG stated that, “DeVry used misleading claims to lure in students who were simply seeking a college degree, greatly exaggerating job and salary prospects for graduates.”
The settlement comes after an earlier FTC settlement for $100 million based on similar claims and a separate settlement with the Department of Education requiring DeVry to post a notice on its website for two years stating its claim that 90 percent of its graduates were employed within their field within six months was unsubstantiated.
Wal-Mart Settles Claims That It Mislabeled Plastic Products as “Biodegradable” or “Compostable”
Wal-Mart Stores Inc. settled claims brought by multiple California district attorneys that the superstore marketed plastic products online and in stores as “biodegradable” or “compostable.” Under California law, labeling plastic products as such is prohibited because it misleads consumers as to how long it takes for the plastic to break down. Under the settlement, Wal-Mart will pay $875,000 in civil penalties and $50,000 to CalRecycle to fund the testing of products marketed as compostable.
Consumers’ Claims Against SeaWorld Survive Motion to Dismiss
A California federal judge ruled that claims brought by consumers, which accuse SeaWorld of lying about the health and treatment of its orca whales to induce the purchase of admission tickets and merchandise, were adequately plead under the California Consumers Legal Remedies Act and the state’s Unfair Competition Law. Although the ruling does not address the veracity of the consumers’ claims, the facts they allege, if true, could provide the basis for relief.