This past week, several consumer actions made headlines that affect the retail industry.
FTC Jumps to Consumers’ Defense in Trampoline Marketing Deception
On May 31, 2017, brothers Son Le and Bao Le agreed to settle FTC charges that their trampoline marketing deceived consumers by directing them to review websites that were not, but claimed to be, independent, and by failing to disclose financial interests when posting online product endorsements. The Le brothers created fictitious trampoline experts, including “Trampoline Safety of America” and the “Bureau of Trampoline Review,” and built fake websites with fake expert reviews to induce customers to buy their trampolines. The administrative consent order prevents the Le brothers from engaging in such deceptive behavior and requires clear and conspicuous disclosure of any material connections between the reviewer and the product.
NAD Cleans Up Persil Advertising Claims
On May 25, 2017, Henkel Consumer Goods, Inc. (“Henkel”) voluntarily discontinued claims that its Persil ProClean Original laundry detergent won some type of competition and beat every other detergent, including Tide Original, after a competitor’s complaint to the NAD. The two claims at issue stated: “Last year’s champion won again, this time with USA Today,” and “Persil Original didn’t only beat Tide Original, it beat every detergent tested.” Henkel stated that it would discontinue the claims, despite its belief that the claims were truthful, accurate and not misleading, particularly because they were supported by sufficient data. Henkel’s decision to voluntarily discontinue the claims ended the NAD’s inquiry before reaching a decision on the merits.
Johnson & Johnson Settles Aveeno Labeling Suit for $6.75 million
On May 26, 2017, Johnson & Johnson agreed to provide $6.75 million for a settlement fund for Aveeno Active Naturals purchasers and to remove “active naturals” from the front label of all relevant products. The settlement shuts down litigation alleging Johnson & Johnson claimed their Aveeno Active Natural product was “natural,” despite containing several synthetic ingredients. Plaintiffs alleged that the Active Naturals label induced customers to buy a product at a premium price that they believed to be entirely natural, while Johnson & Johnson argued that the label meant that select ingredients with proven health benefits were natural and there was no implication that all ingredients were natural. In October, Judge Nelson R. Roman of the Southern District of New York certified statewide classes of consumers for New York, California and Florida based on the residences of the three named plaintiffs and the products they actually purchased. As part of the settlement, class members with valid claims will receive $2.50 for each product up to 20 products without proof of purchase. The court is currently reviewing the settlement.
NAD Recommends Changes to Momentum Ventures’ Ad Claims
On May 31, 2017, after a demand by the NAD for substantiation, Momentum Ventures voluntarily discontinued certain advertising claims that its travel sites, JustFly.com and FlightHub.com, had “80% off Cheap Flights,” “more cheap flights than anywhere” and “Free Cancellations.” The NAD’s investigation noted that Momentum had been separating airline fuel surcharges from the base fare and instead categorizing it as taxes, thus depressing the true cost of the base fare on its sites – Momentum agreed to change this calculation and include the fuel surcharges in the base fares. The NAD also took issue with the “Free 4H Cancellations” and the “Extended Cancellation Policy” on two grounds: (1) the “4H” was not clear that it stood for “four hours” and (2) the Department of Transportation (“DOT”) has a rule allowing reservations to be cancelled within 24 hours at no cost. Ultimately, NAD noted its role was not to assess compliance with DOT regulations, particularly when it was unclear whether the regulation related to both the airlines and third-party ticketing vendors. Momentum agreed to make the recommended changes.