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FTC Deceptive Advertising Health Claims Settlement – Scientific Proof Required

July 1, 2020

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“Treats Chronic Pain… Clinically Proven… Smart Device… Approved by the FDA…” These are all claims the Federal Trade Commission (FTC) says defendants made advertising the Willow Curve, a low-level light therapy device  (LLLT), and all of which the FTC says are false and deceptive. In a settlement announced June 25, 2020, the Willow Curve LLLT device defendants will be subject to a $22 million judgment which includes penalties being paid by two individual physicians who led the involved company LLCs. Defendants also will be prohibited from future allegedly deceptive refund and native advertising campaigns.

“’When LLLT sellers say their devices will relieve pain, they’d better have the scientific proof to back it up,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, in a June 25 press release. ‘People looking for drug-free pain relief deserve truthful information about these products.’”

FTC Complaint Causes of Action. The complaint asserts  the following six counts against defendants which target all aspects of the allegedly improper marketing and sales of the product.

  • False or Unsubstantiated Efficacy Claims
  • False Proof Claims
  • False Claims About FDA’s Review
  • Deceptively Formatter Advertisements
  • Defendants’ Provision of Means and Instrumentalities of Deception
  • False Refund and Risk-Free Claims
  • The complaint also contains substantial snapshots of advertising and marketing materials, including scripting of infomercials, native content “research” materials, and alleged testimonials.

    All of the claims are based on alleged violations of the Federal Trade Commission (FTC) act, specifically  Sections 5(a) and 12, 15 U.S.C. §§ 45(a) and 52,

    NAAG Polices COVID-19 Price Gouging, Demands Fair Pricing Policies and Actions

    April 6, 2020

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    The National Association of Attorneys General (NAAG) is actively monitoring consumer product prices and working to eliminate price gouging in the U.S. during the COVID-19 pandemic. At least 33 attorneys general signed on to letters issued recently to a number of major online retailers and online sales platforms.

    The letters indicate that while the AGs “appreciate reports of the efforts made by platforms and online retailers to crack down on price gouging,…we are calling on you to do more at a time that requires national unity.”

    Specifically, the letters ask for three concrete actions:

  • Set policies and enforce restrictions on unconscionable price gouging during emergencies.
  • Trigger price gouging protections independent of, or prior to an emergency declaration.
  • Create and maintain a ‘Fair Pricing’ Page/ Portal where consumers can report price gouging incidents to you directly.
  • In connection with these actions, the AGs are asking companies to proactively monitor consumer sales activity, to track spikes in pricing and stop or block such activity, with the goal to “prevent unconscionable and unjustified price increases.”

    The AGs hope to work with retailers to develop a system whereby the retailers will provide consumer’s complaints of price gouging to the AGs’ offices to “facilitate appropriate referrals for enforcement or prosecution.”

    On the NAAG consumer protection website consumers can find a link to submit a complaint to their AG. The site also highlights a number of specific enforcement actions various AGs have taken. These include:

    • Missouri AG obtaining a TRO to stop sales

    FTC Issues Guidance on Proper Disclosures for Social Media Influencers

    November 6, 2019

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    Many retailers and online businesses leverage social media to boost brand awareness and promote product sales. The FTC recently has issued guidance on what social media influencers need to do when endorsing products. The rules are common sense, but influencers may not adopt them completely, creating risk for themselves and potentially for businesses whose products they promote. Marketing teams responsible for sponsorships, partnerships and endorsements should review the FTC’s new guidance and ensure that their influencers are being clear and direct about sponsored product placements. While the FTC indicates that influencers have the obligation to ensure their promotions are truthful, plaintiffs, in the context of potential consumer class actions, may attempt to attribute risk back to your business.

    FTC’s Disclosures 101 for Social Media Influencers is an easy read (published  November  5, 2019), and according to the FTC’s press release of the same date, it updates the FTC Endorsements Guides and a related Frequently Asked Questions document.   A key overarching theme is that the “endorsement message should make it obvious when [the influencer has] a relationship (‘material connection’) with the brand.”  According to the FTC, good disclosure is “important because it keeps [the influencers] recommendations honest and truthful, and it allows people to weigh the value to [the] endorsement.”

    When to Disclose. In this section, the FTC highlights a number of important issues including:

    (a) Disclosure is required if the influencer has any “financial, employment, personal, or family relationship with a brand.”

    (b) Anything of value,

    National Consumer Protection Week: Consumers Join Forces With Agencies

    March 8, 2018

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    This week is National Consumer Protection Week. How does it impact your company? It’s an opportunity for you to understand today’s consumer protection environment and to hear what is concerning your customers and regulators and law enforcement. This is the 20th anniversary of NCPW. Click here for a link to the FTC webpage.

    Consumer businesses should understand the level of collaboration and coordination among consumers and federal and state agencies. It is also important to understand how many avenues there are for consumers to complain and for agencies to investigate. Your risk management efforts should include increasing understanding and awareness of these possibilities and planning for any adverse events.

    NCPW involves more than 100 partners. Partner efforts are led by a 16-entity Steering Committee, which includes, among others, AARP, Better Business Bureau, FCC, FTC, Federal Reserve System, OCC, National Association of Attorneys General (NAAG), and the US Postal Inspection Service. Impressive and powerful. The balance of partners is equally so, including virtually all the state AGs plus many state consumer protection divisions, federal agencies including law enforcement (FBI, Department of Homeland Security, IRS, FCC, and FTC), and consumer groups including NAACP, National Council of LaRaza, TruthinAdvertising.org among others.

    NCPW activities include local community action events, educational webcasts and social media awareness campaigns. The overall goal is to empower consumers. A quote on the NCPW website from Acting Chairman Maureen K. Ohlhausen clarifies the mission: “The NCPW.gov website is a fantastic resource to help consumers understand their rights, spot and avoid

    Don’t Get TARRed: FTC Continues to Scrutinize Misleading Marketing and Sales Methods

    November 22, 2017

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    The Federal Trade Commission has taken Tarr, Inc. and 18 other entities to task for fake news, unsubstantiated advertising claims, and fake celebrity endorsements.

    A stipulated order for permanent injunction and monetary judgment announced on November 15, 2017 imposes a $179 million penalty against the online marketer on charges it sold weight-loss, muscle-building, and wrinkle-reduction products to consumers using unsubstantiated health claims, fake magazine and news sites, bogus celebrity endorsements, and phony consumer testimonials.

    The injunction includes, among other things:

    • A permanent ban on the use of negative option features to sell dietary supplements, cosmetics, foods or drugs, products sold on a trial or sample basis, or products that are sold as add-ons when consumers purchase other products. Negative options occur when a customer accepts a supposedly free trial offer, but is enrolled in a continuity program, through which they are charged for the initial supply of products if they do not cancel within a short time.
    • In order to use negative option programs for other products, the order requires defendants to provide enhanced disclosures, secure consumers’ express informed consent before purchase, and provide a simple mechanism to stop recurring charges, using the same medium that the consumer used to purchase the product.
    • The order also prohibits misrepresenting the terms and conditions of any offer, or the health benefits or efficacy of any product; requires improved supervision of affiliate marketers, including advance review of materials and hyperlinks being used in websites and email marketing campaigns; and mandates proper substantiation of health

    Think Your Market Is Global? Then Global Consumer Regulators Likely Are Watching Your Business

    April 14, 2017

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    Advances in internet technologies, global social media platforms, and inventory order management and shipping delivery systems have revolutionized our businesses. Shopping-at-home and catalog sales, markets most retailers never would have considered as recently as 20 years ago, are now vibrant. Your business now may have customers in many different countries. You should be aware of the growing collaboration among the consumer watchdogs across the world, because those regulators may well be aware of your business through consumer complaints.

    econsumer.gov is a site sponsored by the International Consumer Protection and Enforcement Network (ICPEN) and supported by the U.S. Federal Trade Commission (FTC) as well as approximately 35 other countries’ consumer regulators. The site provides consumer education and publishes trends regarding consumer fraud complaints. As the tag line of the site reveals, it also is a portal for the collection of global consumer fraud complaints: “Report international scams online.” Among the tips the site offers consumers is to use social media to publicize complaints about business practices.

    ICPEN suggests that companies have personnel monitoring social media and consider taking prompt action regarding complaints. Your PR and customer experience teams should be aware of this ICPEN recommendation. You should consider training and policies to address handling both on-line and social media complaints. Doing so will help keep customers returning to your business, will protect your brand reputation, and may help lower the risk of intervention by global regulators. For more detailed information about the types of information ICPEN and

    Mitigate Consumer Litigation Risk by Watching the FTC: Five Good Reasons

    March 8, 2017

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    2017 already has been, and surely will continue to be, a year of great change. Regulatory agencies are re-envisioning their mandates. Many have or soon will have new leadership. And advocacy groups for consumers are mobilized.

    Some of the regulatory changes may favor retail businesses. But others may continue to bring increased scrutiny and require more transparency with consumers. What can retail businesses do to help mitigate their risk and understand the headwinds they may be facing?  One thing that may be helpful would be to monitor the Federal Trade Commission (FTC)’s website. Why? Five good reasons.

  • Consumers are going to the FTC website. You should know what your customers are learning.
  • The Consumer Information section of the site offers a breadth of information, including tabs for Money & Credit, Homes & Mortgages, Health & Fitness, Jobs & Making Money, and Privacy, Identity & Online Security. In addition, the website offers certain targeted at risk populations detailed information tailored to address their respective concerns. Older Adults and Military Families have their own tabs. As do advocate groups like Financial Educators, Consumer Advocates, and the NAACP.

    If the FTC is highlighting your business products, you should know. You should consider whether the FTC is indicating your products present consumers heightened risk. Even if, however, your business products are not specifically mentioned, there is benefit in seeing the consumer marketplace and your products through the regulators’ lens. Most important, by understanding that lens, you may be able to refine your

    No Common Sense – Today’s Cost of Doing Business

    May 23, 2016

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    What is a retailer to do? The world today is filled with people assuming they are being disrespected and believing they are being defrauded. It’s not just that some customers can be surly and demanding when they are in your store, they often seek to sue you on behalf of all your customers, wreaking havoc on your business operations and driving up your legal expenses. Common sense, courtesy, and consideration may be the retailers’ best tools both at the point of sales and in court.  Remember even when they sue, people are your customers.

    Over the past several years, there has been a rash across the country in “consumer protection” class actions. Not health and safety challenges; those obviously should be first order of priority both from the standpoint of risk to the company and from the standpoint of reputation and “doing the right thing.” For example, labeling class action claims have been increasing dramatically in the past several years and have hit a number of industries including food, heath, cosmetics, pet care and others.  The challenges run the gamut from trade dress to challenges about specific product content or potential scientific benefits.

    Real Risk Exposure? This other variety of suits challenge nitpicky “common sense” product issues yet are wrapped (no pun intended) in theories of marketing fraud or other unfair practices allegations. Recent class action case topics have included: is my sandwich long enough, is there too much ice in my drink, etc. Unfortunately, many of these suits allege

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