This week, the following consumer protection actions made headlines:
Claims Dismissed in San Francisco Soda Suit
A federal judge dismissed several constitutional claims in a suit against the city of San Francisco over its ban on ads for sugary drinks, because the ordinance has since been repealed. Both San Francisco and the plaintiffs, including the American Beverage Association and other trade groups, asked the judge to dismiss the free speech and due process violation claims from the original complaint. Although the advertising component of the ordinance was repealed in December, the suit continues over a new ordinance, set to take effect on July 25, 2016, that requires ads for soda and other sugary drinks to display a mandatory health warning. The judge previously declined to enjoin the ordinance, saying that it was not likely for the plaintiffs to succeed on their First Amendment claim under the rational basis test for commercial speech.
Motion to Dismiss Granted in BBQ Sauce Class Action
A Massachusetts federal judge sided with ACH Food Co., the maker of Weber BBQ sauces, and granted a motion to dismiss on a proposed consumer class action. The plaintiff had alleged that the sauces were misleading because they displayed the words “all natural.” The judge ruled that a rebate of $75, which the plaintiff refused, meant that there was no live case or controversy as required under Article III of the Constitution.
FTC Shuts Down Spam Weight Loss Ads
The Federal Trade Commission charged a marketing operation with deceptively advertising unproven weight-loss products by sending spam emails to consumers. Companies paid the marketers to send emails from hacked email accounts, making it appear that contacts of the consumer had sent an email linking to a fake news website praising the weight loss product. The sites also falsely represented that celebrities, such as Oprah Winfrey, endorsed the products, including “Original Pure Forskolin” and “Original White Kidney Bean.” The FTC’s complaint was filed in the U.S. District Court for the Middle District of Florida.
Mr. Coffee Maker in Hot Water With CPSC
Sunbeam Products Inc., the maker of Mr. Coffee Single Cup Brewing System, settled with the Consumer Product Safety Commission (“CPSC”) for $4.5 million over allegations that the company hid a dangerous defect with the product. The CPSC said that in some appliances, a defect allowed steam to build up and potentially shoot hot water towards users. More than thirty users reported being burned, and the CPSC said that the company delayed in reporting the defect. The settlement does not constitute an admission of guilt, and will take effect after a 15 day comment period. Similarly last week, the CPSC fined tea retailer Teavana Corp. for failing to report exploding tea tumblers.
CFPB Proposes New Short-Term Credit Industry Reform
The Consumer Financial Protection Bureau (“CFPB”) released a proposal to protect consumers who use payday lenders, auto title lenders and other purveyors of short-term credit. The CFPB said in a statement that borrowers are often saddled with loans they cannot afford and rack up fees when trying to pay off their initial loan. Among many requirements, the proposal requires short-term credit providers to conduct a comprehensive review of a customer’s ability to repay a loan, including taking into account expenses like rent and child care. The CFPB will accept comments on the proposal until September 14, 2016.
National Advertising Division
ionDEFENDER to Discontinue Claims for Radiation Protection
NAD recommended that the maker of a dietary supplement purporting to protect the body against radiation discontinue claims. Advanced Nutritional Innovation, Inc. made a dietary supplement called ionDEFENDER, and advertised that the supplement “dramatically boost[ed] the body’s powerful natural protection” against microwave radiation, including for “people living in areas contaminated by nuclear disasters, meltdowns, and leaks.” NAD said that the advertiser did not provide sufficient competent and reliable scientific evidence to support these claims. The company agreed to comply with the recommendations.
Procter & Gamble to Pare Competitive Claims for Charmin Ultra Mega Rolls
NAD also recommended that The Procter & Gamble Company (“P&G”) discontinue certain claims regarding its Charmin products. The advertisements, which were challenged by competitor Kimberly-Clark Corporation, claimed that Charmin Ultra Mega Rolls “last longer and provide “more ‘gos’ per roll,” which NAD determined were not sufficiently substantiated. However, NAD did determine that another challenged claim – that consumers would use “up to 4x less” toilet paper than the leading brand – was sufficiently substantiated by two consumer utility studies. P&G agreed to comply with NAD’s recommendations.