This past week, several consumer actions made headlines that affect the retail industry.
Federal Court in Florida Grants FTC a Win in Gastric Bypass Alternative Case
A U.S. district court in Florida has ruled in favor of the FTC in its longstanding litigation against Roca Labs, Inc., a seller of weight-loss powders advertised as an alternative to gastric bypass surgery. The court found that Roca Labs had made deceptive weight-loss claims and misrepresented that one of its promotional websites was an objective information site. The court also found that Roca Labs’ gag clause, which the company used to sue and threaten to sue customers who shared negative comments or complained about their dissatisfaction with the product, was unfair under the FTC Act. After additional briefing, the court will decide how much of the defendants’ $26.6 million in gross sales should be awarded in consumer redress.
FTC Brings Complaint Against Seller of Intravenous Therapy “Cocktails”
In the first action of its kind, the FTC brought a complaint against the seller and marketer of intravenously injected therapy products called “iV Cocktails.” According to the FTC’s complaint, marketer A&O Enterprises, Inc., doing business as iV Bars Inc., deceptively advertised and promoted its line of “Intravenous Micro-Nutrient Therapy” by claiming that the iV Cocktails can treat serious diseases and often are more effective than conventional medical therapies. The proposed settlement agreement prohibits iV Bars from making unsubstantiated health claims for their intravenous therapy and intramuscular injection products, including that they treat cancer, cardiovascular disease, MS or other diseases, and from misrepresenting that they employ medical experts to create, test or approve their products. The company also was required to notify consumers who previously purchased one of its intravenous products, the Myers Cocktail, indicating that studies have not shown that the product is an effective treatment for any disease, and encouraging consumers to engage in discussions with their health care providers. The proposed agreement is subject to public comment until October 22, 2018.
NAD Refers “Sea & Ski” Sun Care Claims to FTC and FDA
The NAD has referred advertising claims made by Cross Brands Manufacturing, LLC regarding its Sea & Ski sun care products to the FTC and FDA. Bayer Healthcare, LLC, the manufacturer of competing sun care products, challenged Cross Brands’ claims that Sea & Ski products provide infrared protection or protect skin from free radical damage caused by long term exposure to infrared waves. The NAD determined that Cross Brands had not produced sufficient evidence to substantiate its claims, which were based on a single, heavily redacted, product study. Although Cross Brands agreed during the course of the NAD proceedings to discontinue claims, it did not provide the NAD-required Advertiser’s Statement indicating its intent to comply. Accordingly, the NAD referred the claims to the FTC and FDA for further review.
Competing Makers of Electric Toothbrushes to Appeal NAD’s Recommendations
The NAD has recommended that Philips Oral Healthcare, Inc., modify certain advertising claims made about its Sonicare DiamondClean toothbrush following a challenge by Proctor & Gamble, maker of the Oral-B 7000. Philips claimed that its Sonicare DiamondClean gives up to 82 percent more plaque removal and up to 70 percent better gum health than Oral-B’s best brush head. The NAD found that Philips’ submitted study was methodologically sound, but had focused specifically on subjects experiencing moderate gingivitis. The NAD recommended that Philips’ claims be modified to clarify this information, and also specify which brush head, model and modes were being compared. Philips stated that it would appeal the NAD’s ruling to the National Advertising Review Board. P&G intends to cross-appeal the NAD’s finding that P&G’s study constitutes competent and reliable evidence for superiority claims.
ERSP Recommends Green Chef Modify Certain Claims Its Meal Kits Are Organic
In response to an anonymous challenge, the Electronic Retailing Self-Regulation Program (“ERSP”) has determined that Green Chef, Inc. could not support claims that its meal delivery service delivers the most organic ingredients compared to other meal delivery kit companies. Green Chef also voluntarily discontinued claims that its meals always contain 90 percent or more organic ingredients. To reduce consumer confusion, ERSP recommended that Green Chef include clear and conspicuous language regarding which of its ingredients are organic or explaining the sourcing of the organic ingredients.
NY Attorney General Files Lawsuit Alleging Student Loan Scam
The New York Attorney General is suing nine student loan debt relief companies alleging that they fraudulently and deceptively marketed and sold student debt relief services to thousands of borrowers nationwide. The complaint asserts that defendants have falsely claimed affiliation with the federal government, misrepresented information to induce borrowers to enroll in their services, and charged borrowers illegal fees and interest rates. The companies include Debt Resolve, Inc., Hutton Ventures, LLC, Progress Advocates, LLC, Student Advocates, LLC and others. The suit alleges that defendants charged more than $1,000 for defendants’ services and misled borrowers into thinking they could not enroll in debt-relief services on their own. The lawsuit seeks to enjoin the unlawful conduct, void the defendants’ contracts with borrowers and award damages and costs.