This past week, several consumer, self-regulatory and regulatory actions made headlines:
Starbucks’ Glass Half Full: Coffee Purveyor Wins Underfilling Dismissal
On August 22, 2016, a U.S. District Court Judge in the Central District of California dismissed with prejudice class plaintiffs’ claims that Starbucks defrauded customers by overfilling its cold beverages with ice and underfilling with the ordered beverage. The Court found that the reasonable customer understands that ice displaces liquid and that some portion of a customers’ iced beverage would, indeed, contain ice. The Court defended Starbucks’ practice, saying that transparent cups plus the lack of advertising that the cold beverages would contain a specific number of ounces of actual liquid precluded class plaintiffs’ claims. Despite the dismissal, Starbucks still faces several similar underfilling class suits nationwide.
Racing Through the Maze: Sprint Reimburses Customers for Uncashed Checks
On August 22, 2016, Sprint Spectrum LP (“Sprint”) agreed to pay $2.3 million to settle claims brought by the Illinois State Treasurer that Sprint’s complicated rebate program for cell phone service products resulted in an endless stream of red tape and 32,000 uncashed checks to Illinois customers. Illinois sued Sprint and its incentive clearinghouse, Young America Corporation, alleging that the uncashed checks were to be treated as unclaimed property after five years, requiring that they be reported to the Treasurer’s office and returned to their owners. This is the largest such settlement to date, following a $140,000 settlement with RadioShack in April 2016.
Sprint’s Glass Half Empty: Cell Service Provider’s “Save 50%” Claims Referred to FCC
On August 19, 2016, the NAD referred Sprint’s “Save 50%” ad campaign claims to the Federal Communications Commission (“FCC”) after Sprint refused to modify its advertising in response to an earlier NAD recommendation. NAD found Sprint’s claim that customers could have the same plan for half the price by switching to Sprint was unsupported, and NAD recommended that Sprint stop the claims, modify its advertising to clarify the basis for the price comparisons and more adequately disclose its $36 per line activation fee. Sprint made some modifications in its advertising, but because it did not fully implement NAD’s recommendation, NAD referred the compliance issue to the FCC for further action.
Tough Pill to Swallow: NAD Refers “Cancer Curing Supplement” Ad Claims to FTC
On August 24, 2016, NAD referred claims made for “Verified Forskolin” to the FTC, including simply taking the supplement will increase your bone mass, alleviate your allergies, dispel glaucoma, and both reduce your chance of getting cancer and cure any cancer you already have without any side effects. NAD stated that it opened its investigation as part of its ongoing monitoring program in partnership with the Council for Responsible Nutrition to step up dietary supplement advertising review. The website’s owner failed to respond to NAD’s initial inquiries and, per its internal procedures, NAD referred the matter to the FTC for enforcement.
Lose Focus in This Game for One Second: Supplement Maker Gives Up Brain Boosting Ad Claims
Legacy Labs, LLC (“Legacy”) agreed to discontinue all of its challenged ad claims that its Cognitine dietary supplement was a complete brain support formula capable of increasing focus, improving mental health, stabilizing mood and supporting neurotransmission to boost learning, memory and concentration. After an initial inquiry, and before a full NAD review, Legacy confirmed to NAD that it had been defunct since March 2016 and it would work with websites unaffiliated with Legacy to take down any similar claims for its now-discontinued product that existed elsewhere on the Internet.