This past week, several consumer protection and regulatory actions made headlines:
Volkswagen to Pay an Additional $86 Million to California
On July 6, California Attorney General Kamala Harris announced that Volkswagen (“VW”) will pay the state an additional $86 million in a second partial settlement over VW’s emissions “defeat devices.” This civil penalty sum is the largest amount ever recovered by California from an automaker, and comes on the heels of the recently announced $14.7 billion settlement negotiated by the EPA and the FTC over the German automaker’s emissions-cheating scandal. The $86 million is part of a total $603 million VW has agreed to pay to resolve consumer-protection claims with 46 jurisdictions. As part of the settlement, VW agreed to strict injunctive terms, including prohibitions on false advertising and affirmative disclosure of defeat devices.
FTC and Florida Take Action Against Tech Company for Misleading Consumers Regarding Malware
The Federal Trade Commission and the State of Florida filed a complaint against a tech company alleging that the company, among other things, used “high-pressured sales pitch designed to scare consumers into believing that their computers are corrupted, hacked, otherwise compromised, or generally performing badly.” Then, after allegedly misleading consumers into thinking their computers were compromised, offered consumers remote tech support for purchase. The defendants face violations of the FTC Act, the Telemarketing Sale Rule and the Florida Unfair and Deceptive Trade Practices Act.
At-Home Addiction Fix Settles over False and Misleading Claims
Sunrise Nutraceuticals has settled with the FTC over a complaint that their marketing of the opiate-treatment product, Elimidrol, was false and misleading. Sunrise advertised the product on the Internet, claiming high success rates in overcoming opiate withdrawals and increasing the chances of successful recovery from addiction. A proposed stipulated order dated July 7 bars the company from making deceptive claims for any health-related products, unless they can show “competent and reliable scientific evidence” to back up their claims for opiate-treatment products. The settlement also includes $235,000 to be paid as redress.
Puritan’s Pride Allowed to Make Careful Claims
After reviewing advertising claims for the dietary supplement “Active Mind,” the Electronic Retailing Self-Regulation Program (“ERSP”) made recommendations to the product’s marketer, to modify or discontinue advertising that expressly or impliedly claimed its ingredients (such as caffeine) were “scientifically shown” to “improve” attention and focus. Other claims, like “begins working in about 60 minutes,” were also recommended to be discontinued due to lack of clear supporting evidence. But, the marketer was allowed to make limited claims about the benefits of its ingredients – i.e., that caffeine helps “support” focus by “assisting” with attention. ERSP and the marketer agreed on several statements as “non-actionable puffery,” and the marketer voluntarily withdrew other “limited time offer” claims.
Food and Cosmetics
Senate Pushes Through Bipartisan GMO Labeling Bill
On July 6, the U.S. Senate voted in favor of legislation that would require companies to disclose if their foods contain genetically modified organisms (“GMOs”). If passed, companies would be able to choose one of three ways to disclose GMO information, including through a QR code on the package. Organic products would also be automatically allowed to be labeled “non-GMO,” without other certification requirements and fees some manufacturers currently face. The bill – which would preempt state laws such as those recently effected in Vermont, Connecticut and Maine – has been touted as a compromise, with strong praise coming from industry groups. The House has not yet considered the legislation, but could do so as early as this week.
Revlon Seeks to Settle Makeup Claims
On June 30, Revlon and a proposed class of consumers submitted a $900,000 settlement to a federal judge for approval. The deal follows vigorous litigation over consumer protection claims against Revlon’s “DNA Advantage” makeup line. The plaintiffs claimed the cosmetics, labeled as “Age Defying with DNA Advantage,” were likely to deceive ordinary consumers into thinking the products were more scientifically efficacious than they actually were. No ingredients identified by Revlon were capable of affecting the DNA in human skin cells – a claim the plaintiffs insist Revlon’s advertising suggested. The settlement reiterates, “Revlon firmly contends its products are not falsely or deceptively advertised.”
Monster Still on the Hook for False Ad Claims
On July 8, 2016, the Ninth Circuit ruled that putative class action claims against Monster Beverage Corp. were improperly dismissed by the lower court. On remand, Monster will have to defend claims of false and deceptive marketing on their product packaging. The panel, which included a DC Circuit judge sitting by designation, held that the consumers’ claims are not preempted by the Food, Drug, and Cosmetic Act. Reasoning that the alleged “violations of consumer-protection laws related to deceptive marketing and advertising…are not the sole purview of the FDA,” the panel also held the surviving claims were not hindered by the primary-jurisdiction doctrine. Other claims, such as “off-label” false and deceptive marketing campaigns and on-label claims regarding the amount of caffeine in the drinks were properly dismissed and will not be revived.