This past week, several consumer actions made headlines that affect the retail industry.
FTC v. AT&T Mobility: “Good News for Consumers” Per FTC Chairman
The Ninth Circuit Court of Appeals rules en banc in FTC v. AT&T Mobility, LLC, that the FTC could challenge AT&T’s broadband data throttling practices, despite the fact that AT&T is a “common carrier” subject to exemption under the FTC Act. The court ruled that the common carrier exemption was activity-based rather than status-based. Therefore, the FTC may challenge a carrier’s non-carriage unfair or deceptive acts or practices. Simply put, “a phone company is no longer just a phone company. The transformation of information services and the ubiquity of digital technology means that telecommunications operators have expanded into website operation, video distribution, news and entertainment production, interactive entertainment services and devices, home security and more.” Acting FTC Chairman Maureen K. Ohlhausen issued a statement praising the Ninth Circuit’s decision as “good news for consumers.”
More Money, More Problems for Venmo
On February 27, 2018, Paypal, Inc., owner of Venmo, reached a settlement with the FTC over multiple claims stemming from Venmo’s practices and disclosures. The FTC claimed that Venmo misled consumers about the speed with which money transferred was available to consumers. It also alleged that Venmo misrepresented the extent to which consumers could control the privacy of their transactions, and the level of protection Venmo offered to consumers’ financial accounts. The settlement requires Venmo to clear up its disclosures, boost compliance with Gramm-Leach-Bliley Act Rules, and obtain biennial third-party assessments of its compliance for 10 years.
Diet Coke Dodges False Advertising Class Action
On February 27, 2018, the Northern District of California dismissed a false advertising class action against The Coca-Cola Company with leave to amend. The plaintiffs alleged that Diet Coke causes weight gain, but the court found that the studies cited by the plaintiffs were not sufficient to show causation, and also found that the reasonable consumer would understand that Diet Coke could only lead to weight loss “as part of an overall sensible diet and exercise regimen dependent on individual metabolism.”
NAD Worries About DirecTV Advertising Claims
On February 22, 2018, the NAD recommended that DirecTV discontinue several advertising claims, including those that stated that DirecTV has a “99% worry-free signal reliability” and that DirecTV signal would never go out. The NAD distinguished these claims from the NAD’s previous finding that DirecTV’s “99% signal reliability” claim was supported. According to the NAD, the “worry-free” claim conveyed not the reliability of the signal, but the percentage of customers that worried about their signal reliability. DirecTV said it will appeal the NAD’s decision to the National Advertising Review Board.
“Number One” Paint Claims Brushed Aside by the NAD
On March 5, 2018, the NAD recommended that Behr Process Corporation discontinue several advertising claims, including claims that Behr products are “number one,” “the best you can buy,” “best paints,” “unbeatable prices,” “dare to compare” and the like. Though Behr relied on a Consumer Reports ranking as support for its “number one” claims, the NAD found that the ranking did not support a claim that all Behr products were number one. Behr has agreed to comply with the NAD’s recommendations.