This past week, several consumer actions made headlines that affect the retail industry.
FTC Issues Business Guidance under Consumer Review Fairness Act
On February 21, 2017, the FTC issued guidance to help businesses comply with the Consumer Review Fairness Act. Signed into law in December 2016, the Act is aimed at protecting consumers’ right to share honest opinions about a product or service in any forum. The FTC’s guidance stresses that it’s illegal for companies to include standardized provisions that threaten or penalize people for posting honest reviews, while protecting companies’ rights to prohibit or remove reviews that contain confidential or private information, are libelous, abusive, vulgar or inappropriate, are irrelevant or are clearly false or misleading.
FTC and Maine AG Remind Supplement Sellers of the Pain of Deceptive Claims
On February 22, 2017, the FTC and the Maine Attorney General’s Office announced their joint effort to halt marketing claims for supplements purporting to improve memory and to reduce back and joint pain. The action resolves charges against six of nine defendants involved in marketing supplements through radio infomercials deceptively formatted as talk shows and print ads featuring fictitious endorsers. The defendants also were charged with upselling consumers to buy clubs and discount medical programs with ongoing monthly fees without first making certain disclosures.
Keurig Settles Claims with CPSC
On February 21, 2017, Keurig Green Mountain, Inc., settled claims and agreed to pay a $5.8 million civil penalty for the company’s alleged knowing failure to report to the CPSC defects and injury risk in connection with its MINI Plus Brewing Systems. Keurig received over 200 complaints from 2010 through 2014 regarding the products’ propensity to spray hot water, coffee and coffee grounds, resulting in numerous second- and third-degree burns.
Wegmans Able to Save Its Comparison Shopping Claims Against Costco’s Challenge
On February 22, 2017, the NAD recommended that Wegmans make slight modifications to its in-store advertising suggesting that customers did not need to comparison shop and that Wegmans’ prices consistently beat Costco’s quoted prices. Wegmans stated that it checks competing store prices weekly, which is in line with prior NAD guidance and FTC precedent. The NAD concluded that Wegmans claims were generally accurate, but had three recommendations for modification: (1) state that the prices at other locations were subject to change, (2) remove the language, “Don’t shop around town,” because it discourages comparison shopping and (3) ensure that like products are being compared and, if not, note that the comparison may not be accurate.
NAD Trims Bowflex TreadClimber Weight Loss Claims
On February 22, 2017, the NAD recommended that Nautilus, Inc., discontinue claims that its Bowflex TreadClimber can cause dramatic weight loss simply by walking. The NAD found that Nautilus’s “Just Walk” ad campaign, coupled with testimonials and before and after visuals, imparted a direct message of substantial weight loss.