These past two weeks, several consumer actions made headlines that affect the retail industry.
Competitor Pacified After Infant Cereal Maker Discontinues Advertising Claims
Beech-Nut Nutrition Company said it will stop advertising claims connected to infant cereal products that a competitor challenged before the NAD. The challenged claims include “0” grams of sugar, “natural,” “complete” nutrition, and “formulated to be gentle on baby’s tummy,” among others. The NAD will treat the discontinued claims as if it had recommended they be discontinued and Beech-Nut complied.
Internet Marketing Companies Using Fake Sites Settle FTC Claim for $179 Million
On November 13, 2017, a network of internet marketers operating sites that mimicked legitimate media organizations like Good Housekeeping and Men’s Health settled with the FTC for a judgment of $179 million, along with an injunction prohibiting certain marketing tactics. The FTC brought claims under the FTC Act, the Restore Online Shoppers’ Confidence Act and the Electronic Funds Act for alleged conduct running the gamut from misleading “risk free trials” to negative option programs, fake endorsements, unsubstantiated claims, decoy websites and inadequate or no disclosures.
AdoreMe Agrees to Pay $1.3 Million, Opting Out of FTC Negative-Option Case
On November 20, 2017, the FTC and online lingerie marketer AdoreMe Inc. agreed to a stipulated order for alleged deceptive negative-option marketing. According to the FTC, AdoreMe’s VIP program charged members each month for “store credit” that the member could use “anytime” in the future unless they opted out. The company allegedly made it difficult to stop recurring charges and did not give store credit to members who managed to cancel. AdoreMe agreed to pay $1.3 million to refund eligible consumers alongside an injunction on misleading marketing.
After Gut-Check, Dietary Supplement Companies Agree to Injunction
On November 21, 2017, three dietary supplement companies and the FTC agreed to a stipulated order in a case alleging unsubstantiated and false claims for five dietary supplements. Ads claimed that the products could lead to 1-2 pounds of weight loss per day, lead to 100 pounds of weight loss in six months, fight cancer, stop the spread of HIV/AIDS, defeat the common cold and lower blood pressure “now.” The companies agreed to an injunction prohibiting them from making certain weight loss claims and from misrepresenting ingredients, test results, certifications or seals in the future.