This past week, several regulatory, self-regulatory and consumer actions made headlines that affect the retail industry.
Regulatory Actions: FTC
FTC Drives Home Privacy and Security Point in Comment to NHTSA
On November 21, 2016, the FTC’s Director of the Bureau of Consumer Protection filed a comment with the National Highway Traffic Safety Administration (“NHTSA”) in support of including consumer privacy and cybersecurity guidance in NHTSA’s Federal Automated Vehicles Policy. The guidance governs the collection, transmission and sharing of personal data, and how to protect that data, as cars become smarter and add Apple CarPlay, Google Android Auto and Windows Embedded Automotive, among other Internet-connected software options. The FTC applauded NHTSA’s efforts to embed consumer privacy protections and cybersecurity into the software, expressing wholesale support of NHTSA’s efforts while emphasizing the FTC’s expertise in this area, including the Consumer Privacy Bill of Rights, to offer further guidance.
Self-Regulatory Actions: NAD and ERSP
NAD and Nail Polish: Revlon Voluntarily Discontinues Gel Envy Claims
On November 22, 2016, the National Advertising Division (“NAD”) recommended that Revlon discontinue its claims that its Gel Envy Longwear Nail Enamel does not visibly crack while its top competitor, Coty’s Sally Hansen Miracle Gel, cracks under normal wear and tear. Revlon’s advertising claimed that, after extensive comparison testing, Gel Envy held up to the stress of three days of testing, while Miracle Gel peeled, cracked and faded. Revlon said reliable testing demonstrated these results. Coty challenged the photographs, saying they were heavily manipulated and the tests were unsubstantiated. Revlon, as the proceedings progressed, voluntarily discontinued the advertising.
Hair Vitality’s Advertising Claims Fall Out of Favor with ERSP
On November 23, 2016, the Electronic Retailing Self-Regulation Program (“ERSP”) recommended that Hair Vitality modify and discontinue certain advertising claims that its dietary supplements stop hair loss and actively promotes hair growth. Hair Vitality claimed that its supplements “support lustrous and healthy hair” and “reverse[s] the signs of hair loss and thinning” through increased vitamins B, C and D, amino acid complexes and biotin. ESRP reviewed Hair Vitality’s evidence and found that all of the performance claims should be discontinued. Hair Vitality agreed to abide by the recommendations.
NAD Shuts Down Dyson’s Dirty Fight Against Paper Towels
On November 28, 2016, NAD recommended that Dyson B2B, Inc., discontinue its video advertising that its Airblade hand dryer is a “cleaner way” to dry your hands because its HEPA filter captures 99.97 percent of bacteria, and using paper towels only accelerates the spread of pathogenic bacteria. Paper product manufacturer Kimberly-Clark challenged the claims that paper towels harbor and transfer harmful bacteria, in particular Dyson’s phrasing that paper towels hide a “dirty secret” and contain “large communities of culturable bacteria.” Dyson responded that the advertising does not compare rates of disease or infection, or compare amounts of bacteria left on hands by different drying methods. The NAD agreed with Kimberly-Clark, recommending that Dyson discontinue its cleanliness and bacteria comparisons, but permitted Dyson to continue making stand-alone claims that its HEPA filter technology reduces bacteria and does not transfer it to a person’s hands.
NAD Learns the Nest Wasn’t Kidding: Energy Savings Claims Upheld
On December 1, 2016, the NAD determined that Nest Labs, Inc.’s claims in a NY Times print ad that its Nest Learning Thermostat has significant energy-savings benefits and a general environmental benefit was supported by relevant empirical evidence. Nest’s ad claimed that: (1) the thermostat had saved 7.3 billion kilowatt-hours since its inception in 2012, (2) if everyone in the U.S. owned a Nest it would save enough energy to light every house in the country for a year, and (3) the green leaf icon indicates energy savings. NAD reviewed the claims and Nest’s data from three empirical studies, finding that Nest had a reasonable basis upon which to make its claims. NAD also found that the ad did not convey an unqualified general environmental benefit message. Ultimately, NAD allowed Nest to continue making the claims.
NAD Sees Clearly: Bausch & Lomb Must Discontinue Contact Lens Comfort Claims
On December 2, 2016, the NAD recommended that Bausch & Lomb, Inc., discontinue claims that’s its PeroxiClear Contact Lens Peroxide Solution leave lenses feeling more comfortable than Alcon Laboratories, Inc.’s Clear Care product. Despite a randomized clinical trial and a customer preference study, the NAD found the data was not reliable enough to support the “superior all-day comfort,” “superior comfort upon insertion” and “superior comfort at end of day” claims. Bausch & Lomb disagreed on the veracity of the trial and survey, and reluctantly agreed to comply with NAD’s recommendations. The NAD did find that Bausch & Lomb’s claims that PeroxiClear “keeps lenses moister for longer” was adequately supported.
Mattress Manufacturer Flattens Tag-Tearing Class
On November 30, 2016, Judge Freda Wolfson of the U.S. District Court for the District of New Jersey held that a putative class action of Raymour & Flanigan mattress buyers had failed to state a claim that their warranties were improperly voided because they tore the tags from their mattresses. The court held that plaintiffs did not identify an actual defect with the mattress – no indication of stains, sagging, tears or other concerns – and, as a result, there was no allegation that could show the sales agent made a misrepresentation about the warranty claim. Plaintiffs also claimed that the sales invoice had inherently contradictory language stating that sales were final but that the buyer could cancel the order if delivery was late. Judge Wolfson found the provisions could be harmoniously read and dismissed the claim.
Accident Forgiveness Settlement Leaves LA Consumers in Good Hands
On November 30, 2016, the Los Angeles, San Diego and Riverside County District Attorneys’ Offices settled claims that Allstate Insurance Company had allegedly aired advertisements in California touting its “Accident Forgiveness” benefits without disclosing that such policies are not available in California. Proposition 103 made accident forgiveness programs illegal in California, but Allstate’s nationwide ad campaign failed to disclose that fact in the ads that ran in California. Allstate agreed to discontinue the ads in California, pay a $600,000 settlement and submit to an injunction precluding it from making untrue or misleading representations in its advertisements.