This past week, several consumer actions made headlines that affect the retail industry.
District Judge Boots Putative Class Action Against L.L. Bean
A federal district judge has dismissed an attempted class action against L.L. Bean involving the company’s long-standing no-questions-asked warranty policy. In February 2018, L.L. Bean announced that it was changing its policy to limit customers’ return period to one year, while committing to “work with our customers to reach a fair solution” if a problem arises more than a year after purchase. The plaintiff alleged that changing the warranty violated both the Magnusson-Moss Act and Illinois state law as an anticipatory repudiation of the guarantee. But the District Judge ruled that plaintiff neither alleged an injury nor had he stated a claim for which relief could be granted.
FTC Halts “Free Trial” Scammers
A federal court has issued a temporary restraining order against the marketers of skincare products, electronic cigarettes and dietary supplements online. According to the complaint brought by the Federal Trade Commission, defendants Triangle Media Corporation, Jasper Rain Marketing LLC, Hardware Interactive Inc., and Brian Philips engaged in unfair business practices by promoting “free trials” of various products, but instead charging consumers the full value of the products and signing up consumers for recurring shipments and charges. The FTC is seeking a permanent injunction. In addition to temporarily enjoining the defendants from this behavior, the district court froze defendants’ assets and halted their business operations.
CFPB Reaches $335 Million Settlement with Citibank for TILA Violations
The Consumer Financial Protection Bureau (“CFPB”) has reached a settlement with Citibank over allegations that it violated the Truth In Lending Act. According to the CFPB, Citibank failed to reevaluate and reduce the annual percentage rate it charged approximately 1.75 million customers. Citibank determined that it was out of compliance with the regulations and self-reported to the CFPB. The settlement requires that Citibank pay $335 million in restitution to its affected customers, but does not assess monetary fines.
NAD Recommends Dyson Modify Air Purifier Claims
In response to a challenge from rival air purifier manufacturer Guardian Technologies, LLC, the NAD has recommended that Dyson, Inc., modify or discontinue certain claims the company made for its Pure Hot + Cool Link and Pure Cool Link Air Purifiers. Dyson’s air purifiers feature a bladeless fan on top of a cylindrical base; the base contains a filter and air enters the purifier through both the fan and base. Guardian argued that Dyson made express and implied claims about the efficacy of its air purifiers, including that they met High Efficiency Particular Air (“HEPA”) standards.
The NAD found that although the base of the purifiers does have a HEPA filter, it was misleading to claim that the purifiers were “HEPA Air Purifiers” because only the air that is circulated through the base was purified. The NAD recommended that Dyson modify its advertising to indicate that the units are air purifiers with HEPA filters, rather than HEPA Air Purifiers.
Dyson has indicated that it intends to appeal the NAD’s findings to the National Advertising Review Board.
Maker of Probiotic Supplements to Discontinue “#1 Proven Effective” Advertising Claims
In response to a challenge from Procter & Gamble, the NAD has recommended that i-Health Inc. cease advertising claims about its Culturelle probiotic supplements. Culturelle advertising made numerous claims that one particular strain of probiotic bacteria, LGG, was a “#1 Proven Effective Probiotic” and “the most clinically proven effective strain.” i-Health argued that this statement was about the number of studies regarding LGG’s efficacy, but Procter & Gamble alleged that the claims were more akin to comparative statements. The NAD agreed that the claims were confusing and seemed to convey a comparative statement rather than a statement on the number of studies conducted on a given strain of bacteria. Because there were no studies to compare the efficacy of LGG against other probiotic strains, the NAD recommended that i-Health discontinue these claims; i-Health has agreed to comply.
TriDrive Dietary Supplement Claims to Cease
After an investigation in association with the Council for Responsible Nutrition, the NAD recommended that VH Nutrition, LLC, cease advertising claims about its TriDrive dietary supplement.
The NAD asked VH Nutrition to provide substantiation for the claim that “TriDrive is a triathlon supplement that helps to give a Vo2 Max boost. It uses a complex formula of adaptogen supplements that help boost endurance, improve circulation, and support the respiratory system.” Although VH Nutrition submitted a study regarding the efficacy of the ingredients in TriDrive, it did not submit any studies about the actual supplement. Additionally, the ingredient studies VH Nutrition submitted did not support the claims it made in its TriDrive advertising.
Due to the lack of substantiation, the NAD recommended that VH Nutrition discontinue the investigated advertising claims. VH Nutrition no longer sells TriDrive, but it has agreed to discontinue the claims if it ever markets TriDrive again.