With a new administration getting its bearings in Washington, the regulatory landscape is in a state of flux—with important changes on the horizon. Each newsletter we bring you a rundown of key developments in the consumer products industry from each of the three main regulatory agencies, as well as the NAD.
- At the end of March, CPSC approved a new Federal Safety Standard for infant bathtubs intended to improve their safety and prevent drownings. This standard incorporates the most recent voluntary ASTM standard and includes requirements for (1) latching and locking mechanisms, (2) static load testing, and (3) drowning and fall warnings, markings, and instructions.
- Viking paid a civil penalty of $4.65 million to resolve charges that it knowingly failed to immediately report allegedly defective gas ranges to the Commission under Section 15(b) of the Consumer Product Safety Act. Viking Range also agreed to enhanced internal controls and procedures.
- Following a fatal house fire, CPSC warned consumers to stop using Layz Board self-balancing scooters (commonly known as “hoverboards”) and is encouraging consumers to bring the hoverboards to recycling centers for safe disposal.
- FDA will hold a public meeting on May 25 from 2:00 p.m. to 4:00 p.m. at the Harvey W. Wiley Federal Building, 5001 Campus Drive, Auditorium (first floor), College Park, MD 20740 to receive input regarding cosmetics regulations. Specifically, the meeting will help prepare the administration for the July International Cooperation on Cosmetics Regulation-11 meeting in Brazil.
- On May 9, 2017, the Senate confirmed Dr. Scott Gottlieb as the new commissioner of the FDA. Dr. Gottlieb served as deputy commission of the agency under President George W. Bush and has an extensive background in the pharmaceutical and healthcare industries.
- Chairwoman Olhausen welcomed FCC Chairman Pai’s announcement to reverse the 2015 decision to classify internet service providers as Title II Common Carriers, placing internet service providers back within the FTC’s jurisdiction.
- FTC sent out ninety letters to brand influencers and marketers reminding those influencers and marketers to clearly and conspicuously disclose their relationship to brands. Specifically, FTC targeted Instagram posts and noted that because users must click “more” when scrolling through posts to see the end of a post, disclosures at the end of a post are not sufficient. FTC also stated that disclosures like “#sp,” “Thanks [Brand],” and “#partner” were not sufficiently clear.
- FTC charged a group of online marketers for deceptively claiming customers could participate in “free” or “risk free” trials for cooking gadgets, golf equipment, and access to related online subscription services. In fact, consumers were eventually charged for these services without their consent and any disclaimers that customers needed to cancel the services were buried in fine print.
- FTC approved two consent orders related to misleading “Made in the USA” claims. These claims are proving to be an area of focus for the Commission in the new administration.
- FTC approved a consent order with a Redwood City company over charges that the company continued to track its users’ data even after those users opted out of such tracking.
- BP Corporation challenged claims made by Shell Oil Co. for its V-Power NiTRO+ Premium Gasoline. NAD recommended discontinuance of superiority claims to provide the “best total engine protection,” because of the gasoline’s ability to protect against corrosion, “gunk,” and wear. Specifically, NAD found that Shell’s testing was insufficient to support its claims. NAD’s issues with Shell’s testing provide a useful map of pitfalls to avoid when conducting competitive testing. Among other issues, NAD noted that:
- Shell’s corrosion test did not test a relevant segment of the market. Testing three competitors was insufficient.
- Shell deviated from approved SAE industry testing.
- Shell’s “wear” test, a modified version of ASTM D6079, a test for lubricity, did not test for a meaningful consumer benefit. Specifically, the test did not measure “the extent to which gasoline will wear on pistons and cylinders in the normal use of vehicle engine.”
- NAD also noted that ASTM D6079 was designed for diesel, not gasoline engines.
- Shell did not perform any head-to-head testing for its “gunk” test and instead relied on statistical analysis.
- Shell only “gunk tested” one type of port-injected engine and not on direct-injection engine, which makes up a significant portion of the consumer vehicles in the U.S.
Press Release. Shell Oil Company, Shell V-Power NiTRO+Premium Gasoline, NAD Case # 6065 (March 2017)
- Capital One Bank challenged claims made by Discover Financial Services in a comparison “check mark” chart, a popular tool used by advertisers to tout the benefits of their brand over a competitor. In the chart, Discover made claims and placed a check mark or an “X” under a column titled with the name of its card, “Discover it Cash Card,” and/or in the column titled with Capital One’s “Quicksilver” card. Following well known precedent, NAD found that Discover was responsible for all reasonable interpretations of its claims, whether intended or not. On each claim, NAD found as follows:
- “1% or more of cash back on all purchases” [both columns have a check] – NAD found that this express claim implied that both cards provided 1% cash back on all purchases. However, Capital One’s card provided 1.5% cash back on all purchases. Discover voluntarily discontinued this claim.
- “Freeze your account in seconds with an on/off switch on either mobile app or website to prevent new purchases.” [Capital One has an “X”] – NAD found that this express claim implied that users can only freeze their accounts on both mobile and online with the Discover card. However, Capital One users could switch their accounts off online or through a mobile device. Discover voluntarily discontinued this claim.
- “Redeem your rewards for cash at any time.” [Capital One has an “X”] – NAD found that this express claim implied that Capital One users could not redeem their rewards at any time. Capital One users could not redeem their rewards if their accounts were delinquent and their rewards were not automatically credited to their accounts if those accounts were closed. Conversely, Discover users could redeem rewards even if their accounts were delinquent and automatically received rewards upon closing their accounts. NAD permitted Discover to continue this claim.
- “Track FICO Credit Scores for free on monthly statements and online.” [Capital One has an “X”] – NAD found that this express claim implied that Capital One users could not track their credit scores for free. Although literally true, because Capital One users could not receive a free FICO score, NAD recommended that Discover discontinue this claim. NAD found that a reasonable consumer would not differentiate between a FICO score and another type of credit score.
- Press Release. Discover Financial Services, Discover it Cash Credit Card, NAD Case # 6069 (March 2017).
- Gerber challenged Beech-Nut Nutrition for a series of claims that Beech-Nut made about the processing, content, and sustainability of its baby foods. While upholding some of Beech-Nut’s claims, NAD recommended that Beech-Nut discontinue or modify several of its claims. Each of these types of claims is discussed below:
- Beech-Nut made a series of claims about the content of its baby food, such as, “This is not baby food. This is real food for babies.” NAD found that Beech-Nut supported these claims and could continue them. Importantly, NAD found that these claims did not imply that Beech-Nut did not thermally process its foods, like all canned food manufacturers.
- Beech-Nut labelled some of its products “COLDPUREE” and used that descriptor in print advertising. NAD found that this label implied that Beech-Nut did not use thermal processing and recommended that Beech-Nut discontinue the use.
- Beech-Nut claimed that its glass containers were “the ultimate in sustainability.” NAD found that this claim was unsupported and recommended that Beech-Nut discontinue it. As an initial matter, NAD found that this was a superiority claim and an unqualified claim about Beech-Nut’s containers. NAD noted that the description “ultimate” conveyed to consumers that its containers provided more sustainability than any of its competitors. NAD then compared Beech-Nut’s lifecycle analysis of its container to Gerber’s and found that it was not sufficient to show Beech-Nut’s superior sustainability.
- Beech-Nut also claimed that glass was “nature’s safest container” followed by a long descriptor of why. NAD also recommended that Beech-Nut discontinue this claim. Beech-Nut did not provide any competitive testing to suggest that its glass containers did not interact with baby food and that competitors’ plastic containers did. It also did not provide any evidence that regulatory bodies were concerned about food contamination for plastic containers. Thus, it could not support the claim.
- Beech-Nut claimed that “no one but us makes baby food this way.” NAD recommended that Beech-Nut discontinue this claim. Although Beech-Nut submitted a patent for its three-step method, it could not establish that others, such as Gerber did not employ its three steps. Further, Beech-Nut could not establish that it did not use additional steps in its manufacturing process. NAD also found that this claim implied that Beech-Nut’s process provided some benefit that its competitors’ processes did not. Beech-Nut could not establish this.
- Beech-Nut claimed that its baby food products contained “just real whole fruits and vegetables … and nothing else.” NAD recommended that Beech-Nut modify this claim. Although this claim applies to two of Beech-Nut’s types of baby food products, it does not apply to the entire line and NAD found that this could reasonably be interpreted as a line claim. Therefore, NAD recommended that Beech-Nut modify the claim to reflect that it applies to only two lines and not Beech-Nut’s entire line of baby food.
Press Release. Beech-Nut Nutrition Company, Beech-Nut Baby Foods, NAD Case # 6070 (April 2017).