Court Holds FTC’s Prize Contest Not Breach of Contract

Frankel v. United States

Facts:

  • FTC conducted a $50K prize contest to submit innovative solutions to block illegal robocalls
  • Rules included judging criteria, and stated that judges would be impartial and decide based upon same
  • Judges narrowed entries based upon a concept not specifically set forth in rules and then used judging criteria

Allegation:

  • Illegal and breach of contract to narrow entries based upon concept not specified in rules

Decision:

  • Waiver of liability provision in rules upheld where there was no fraud, gross mistake, or intentional misconduct

 

Federal Law Enacted Which Requires a Review of Your Website TOS

Consumer Review Fairness Act (H.R. 5111)

Facts:

  • Effective 12/15/16
  • Prohibits form contracts—like Terms of Service (TOS)—from restricting individuals’ written reviews
  • Prohibits requiring a person to transfer ownership of reviews
    • Excepts non-exclusive licenses to use the content

Check Your TOS To See:

  • If you take ownership of reviews via your TOS
  • If your TOS restricts a consumer’s ability to write reviews

 

FTC and NY AG Sue Alleging False Advertising and Inadequate Substantiation

Fact:

  • Prevagen advertises it is clinically proven to “improve memory”
  • Manufacturing has one clinical trial to substantiate claims
  • Clinical trial as a whole not statistically significant
  • Vast majority of post hoc comparisons failed to show statistical significance

FTC and NY AG’s View:

  • “Given the sheer number of comparisons run and the fact that they were post hoc, the few positive findings on isolated tasks for small subgroups of the study population do not provide reliable evidence of a treatment effect”

 

NAD Recommends Connection Be Disclosed For Product Packaging Claim

In re Reckitt Benckiser (#6043)

Claim:

  • “#1 World’s Recommended Brand*”
    • *“more dishwasher brands recommend Finish products worldwide than any other brand”

Allegation:

  • Recommendation is based upon marketing partnerships with dishwasher manufacturers, but the claim conveys the impression that recommendations are independent and impartial

Decision:

  • If compensation or incentives were provided for recommendations, manufacturers should disclose a connection with “#1 World’s Recommended Brand” claim

 

“Starting At…” Price Held Not Deceptive

Wood v. Honey Baked Ham

Facts:

  • Honey Baked Ham advertised hams “starting at $23.99”
  • The plaintiff went to the store and was presented with, and bought, a ham that cost more than $23.99

Allegation:

  • Illegal “bait and switch” advertising

Decision:

  • The ad couldn’t reasonably be interpreted as offering all hams at $23.99
  • People know that hams vary by weight and that weight varies
  • The plaintiff’s interpretation was contrary to the express language of the ad and common understanding