Each week, we will present a summary of key consumer protection developments affecting the retail industry. This past week, the following regulatory and consumer actions made headlines:
FTC Continues Focus on False Weight Loss Claims, Settles with Sale Slash for $43 million
After a nearly year-long litigation, California company Sale Slash LLC has agreed to pay $43 million to settle Federal Trade Commission charges that the company deceptively sold “bogus” weight loss pills, including through unauthorized celebrity endorsements. As part of the settlement, Sale Slash may not represent that its products are endorsed by any specific individual, or claim that its products aid in weight loss or are safe for consumers unless the claims are supported by “competent and reliable scientific evidence.”
FTC and Maine Attorney General Settle with Weight-Loss Supplement Sellers
The Federal Trade Commission and the Maine Office of the Attorney General reached a settlement with two companies, Direct Alternatives and Original Organics LLC, for alleged violations of the FTC Act and Maine consumer protection laws over the fraudulent promotion and sale of weight loss supplements, AF Plus and Final Trim. According to the agencies’ complaint, defendants’ claims of significant and rapid weight loss and reduced waist size lacked any scientific support, despite additional claims that the products in question were scientifically “proven.” Among a slew of consumer complaints, the defendants were charged with deceptively promising retailers’ gift cards to consumers who agreed to “risk-free trial” memberships in buying clubs.
As part of the parties’ settlement agreement, defendants are prohibited from making any health claims unless the claims are supported by “competent and reliable scientific evidence” that “consist of human clinical testing…that is sufficient in quality and quantity based on standards generally accepted by experts in the relevant field.” Defendants were ordered to pay $16 million, to be suspended if a number of conditions are met.
FTC Files Suit Against Chemence, Inc. over Alleged False ‘Made in the USA’ Claims
The Federal Trade Commission filed suit against Chemence, Inc., the maker of fast-acting glues Kwik Frame, Kwik Fix and Krylex, alleging the company had deceptively claimed its products were Made in the USA, despite the fact that approximately 55 percent of the costs of the chemical put into the glues were attributable to imported chemicals. The FTC’s lawsuit seeks monetary relief and a permanent injunction precluding Chemence from making unsubstantiated Made in the USA claims.
Class Action over Chipotle False Advertising Claims Dismissed
A California federal judge has dismissed a proposed class action suit against Chipotle over alleged false advertising relating to claims that its menu is “GMO free.” While the judge granted leave for the plaintiff to re-file, the plaintiff would need to establish standing by alleging she suffered economic loss and that she would go back to Chipotle in order to have standing. If the plaintiff did not allege her willingness to return to Chipotle, it would undermine her claim for standing as any changes made by Chipotle would not be to her benefit.
While the court dismissed the plaintiff’s claim without prejudice, the court was skeptical of the underlying claims, noting the plaintiff seemingly intermixed the terms “organic” and “non-GMO.” The court further noted that the “plaintiff contends that the reasonable consumer would interpret ‘non-GMO ingredients’ to mean meat and dairy ingredients produced from animals that never consumed any genetically modified substances. The court questions whether the complaint, as currently pled, plausibly supports such an interpretation.”