In This Issue:

Alpine Herbs Cause Class Action Avalanche

Plaintiffs’ bar goes after Ricola for promoting inactive ingredients

Please Ignore This Section if You Are Easily Annoyed

Let’s unpack, for just a moment, one of the most oft-cited television commercials of all time.

Yodeling out “Reeee-cola!” at the top of your lungs will gain you instant recognition from Americans over a certain age. That’s due to the ear-wormy 1990s Ricola cough drops TV spots that, thanks to the miracle(?) of the Internet, you can watch whenever you want.

We’ll focus on the 1994 spot linked to above.

We open with two Swiss dudes in blue tunics standing in a field somewhere; one sings out “Reeecola!” while the other plays some sort of Alpine horn. Consider what happens next.

A skier, making his way down a nearby slope, coughs. His companion pulls out a packet of Ricola cough drops. Cut back to the two dudes in the sky-blue frocks, who repeat the iconic “Reeecola!” interval. This time, a woman in the front seat of a tandem bicycle begins to cough. Her fellow biker, who’s rocking a yellow kerchief, hands her a packet as well.

Outlandish Plots

Don’t you see the pattern? Dude yodels. Someone coughs. Dude yodels again. Someone else coughs.

The yodeling is making people sick, which is in turn driving up Ricola usage. Do NOT tell us we’re thinking too much about this.

In any case, exploring the ominous David Lynchian subtexts of Ricola ads could be a hobby, or even a part-time job. If you’d like to indulge in this pastime, check out this spot. Or this oneOr whatever on earth is happening in this one.

But we’re going to stop for now and simply note that the end of the 1994 ad boasts Ricola’s wholesome ingredients: “Pleasant tasting Ricola is blended from organically grown Swiss Alpine herbs and other natural ingredients,” the narrator states. It’s this same wholesomeness that, two and a half decades later, may find Ricola at trial.

Illinois resident Lacie Davis is bringing a class action suit against Ricola over the effectiveness of its ingredients and is making explosive accusations that may echo through the cough drop world like ... oh, let’s say, some sort of yodel.

The Takeaway

“Ricola was founded almost a hundred years ago in the shadow of the Swiss Alps,” Davis explains, somewhat poetically. “The original Ricola lozenge was a potent therapeutic combination of Swiss herbs that was developed based on centuries of local knowledge, passed down orally through the rural mountainside communities. For many decades, the Ricola lozenges were able to provide therapeutic benefits based on its unique blend of Swiss Alpine herbs.” (Query how Davis can say the herbs are both therapeutic and don’t contribute to the soothing effects of the drops, but we take these complaints as we get them.)

But recently, she claims, everything went south. A 2021 review of the company’s branding led it to use the tagline “Made With Swiss Alpine Herbs.” This tag is misleading, Davis claims, because although the herbs in the cough drops are depicted on the front of the package, they are inactive ingredients and don’t contribute to the soothing effects of the cough drops. That is handled by the active ingredient, menthol, but not by the herbs.

Davis notes how the market for natural herbal ingredients is exploding, citing several reasons, including the prevalence of “alternative medicine systems” like Ayurveda. This growing interest in herbal ingredients is reflected in a price premium, which she wouldn’t have paid if the packaging had been clear about the role of herbs in the product.

If all this sounds familiar, it should. Davis’ suit is yet another class action from the SnackDragon law firm, which represents a crowd of plaintiffs disappointed in almost everything about a wide variety of products, from taste to health effects to environmental impact.

It looks like SnackDragon is widening its range of client industry just a bit more. We’ll let you know how the case develops.

Product Peddler Is a Pretend Patriot

Confessional video gives the lie to the lion in made-in-the-USA claims

America for Sale

Sean Whalen is the owner of Lions Not Sheep, LLC, (LNS) an apparel company that sells T-shirts, hats and various other products that are oozing with a certain high-octane version of American machismo. “YOU HAVE TWO CHOICES. TO LEAD OR TO BE LED,” blasts the LNS homepage. “WE ARE A GENERATION OF LEADERS. WE ARE A GENERATION OF LIONS,” it asserts. [The caps are in the original.]

As for the design, the front page of the company’s site looks like someone splattered it with an American-flag-filled water balloon.

If you’re interested in the things Whalen is all worked up about, you can check out his blog on Lions Not Sheep, or his YouTube channel – we won’t link to either, for fairly obvious reasons.

But if you do decide to flip through his videos, we’d like to note that there’s one famous clip of Whalen’s that you won’t find there – at least, we couldn’t find it. It’s a video that provided the lynchpin for a false made-in-the-USA complaint filed by the Federal Trade Commission (FTC) in May.

No wonder it’s missing.

The Definition of Asking for It

To quote the FTC:

During the video, Respondent Whalen explains he sources t-shirts from China, screens them in the USA, folds them into bags in the USA, and then sends them to U.S. consumers. He states, “So our shirts are made in America. ... But those shirts are made in China, just like damn near every single made in America shirt you’re wearing is. This is how it works.”

The complaint goes on to allege that Whalen

...closes by stating he could conceal the fact that his shirts are of Chinese origin by removing origin tags, but to do that he would have to “charge you more for the tshirt ‘cause I gotta pay the manpower and the labor to f----g tear the China tag off and put the America tag on. Which maybe at some point in time we do. ... God bless American-made products; God bless China; God bless the entire f----g world.”

The next line?

From May 10, 2021 through October 21, 2021, Respondents removed tags disclosing appropriate foreign country of origin from shirt products and printed “Made in USA” at the neck of the shirts ….

If you can say one thing about the FTC – they understand the power of understatement.

Patriot Shames

The video, as bold a confession as one can imagine, was, according to the FTC, a high-point of honesty for the company. The Commission maintains that Whalen and his various companies were far less forthcoming in other ads and videos, using tags ranging from the banal – “Made in the USA”; “Made in America” – to the downright Clint Eastwood-yelling-get-off-my-lawn – “BEST DAMN AMERICAN MADE GEAR ON THE PLANET.”

But if you didn’t see the one video where Whalen gives up the game, you might have gone about purchasing products you thought were made in the states. Perhaps paying more for such a product than others you understood were made elsewhere on the planet.

The FTC had a problem with this because Whalen’s products were indeed “wholly imported or contain[ed] significant imported content.” Accordingly, the entrepreneur was hit with counts under the Federal Trade Commission Act and the Textile Act. There’s a settlement in the works, including a $200,000-plus “financial remedy” and a ban on Whalen for further origin-claim chicanery.

The Takeaway

We’re exhausted from typing and retyping summaries of the made-in-the-USA marketing guidelines. For all the guidelines you’ll need, check out the Commission’s May 11 press release about the LNS complaint, subtly titled “Lions Not Sheep lambasted for deceptive Made in USA claims.”

(Get it? Lions? Lamb-asted? If they keep coming up with gems like this, we’re going to hire the Commission’s copywriters away, mark our words.)

Watching a deceptive marketer who peddles mislabeled made-in-China Americana out himself on social media is surely amusing fun. But there are some trends to note regarding this species of enforcement action.

As we noted in an earlier post, the Commission changed its made-in-the-USA policy to a firm rule, with hefty fines that it’s been actively enforcing. While “no action” closures continue, there’s been a marked increase in enforcement actions. The FTC is getting serious.

And for all the present-day (and wanna-be) Sean Whalens out there: This suit is the latest sign that the Commission is going after company leadership alongside the offending businesses.

Hopefully, it will serve as a new deterrent for those who want to sell their country cheap.

Sugary, Watery Claims Go Down the Drain, but Class Action May Still Yield Fruit

Despite plaintiffs’ best efforts, sport drink manufacturer still faces charges

Back to the Drawing Board

Any lawyer worth her salt knows that even the most straightforward case can take unpredictable turns. Yes, the law is a discipline built on interpreting written rules, but the human factor makes prediction a mug’s game.

In fact, humans – messy, unpredictable, self-contradictory human beings – are what keep the practice of law interesting.

Take Silver et al. v. BA Sports Nutrition, LLC, for example. Filed in California’s Northern District in early 2020, it concerned two health-conscious consumers, Marc Silver and Alexander Hill, who purchased BodyArmor SuperDrink sports drinks, believing, they say, that the drinks would boost their workouts.

The original complaint, filed in 2020, focused on the drinks’ package claims of “superior hydration.” The court chucked the case, maintaining that the hydration claims were “nonactionable puffery” because they were not a “specific and measurable claim of product superiority based on product testing ….”

The court gave the pair leave to amend.

It’s Only the Central Focus of Your Case

Amend they did, refiling in July of that year. This time, they alleged that they were “misled by the fruit-based labeling of the drinks and that the drinks did not contain any fruit juice,” but they also restated their claims against the hydration tag. “Plaintiffs also expanded on the allegations that plaintiffs were misled by the labeling to believe that the sports drinks provided health benefits, including adding new allegations that plaintiffs understood hydration to be an objective and measurable attribute.” It was a clear attempt to raise the hydration claims above the definition of puffery.

Then came Hill’s and Silver’s depositions.

“When asked about how much hydration a man of his age and size would need after an hour-long bike ride,” the court’s recent order summarized, “Hill testified, ‘My understanding of hydration is not a measurable quality at this point. So I don’t know how to answer that question.’”

Ouch.

He went on to testify that “‘superior hydration’ means ‘it has to be superior to something’ but that he did not know what BA was claiming BodyArmor was ‘superior’ to.”

Silver did his share, as well. “Silver was asked[,] ‘What did you understand BodyArmor to be claiming that it was superior to?’ [to which] Silver answered, ‘That I cannot tell you because I don’t know the answer.’”

With plaintiffs like these …

The Takeaway

The court notes that BA didn’t “move for summary judgment based on the ‘reasonable consumer’ standard, but rather on the ground that plaintiffs’ deposition testimony refutes their claims,” and you can understand why. They must have been elated to hear the depositions and thought the dismissal was in the bag. Indeed, the court concluded, “Plaintiffs’ testimony demonstrates that they were not deceived by any specific representations about BodyArmor’s hydrating qualities.” The remaining claims regarding sugar content were thrown out too.

But ...

“The Court concludes that plaintiffs’ deposition testimony does not doom their claims that they were misled by the fruit labeling and that they believed BodyArmor contained fruit juice.”

Say what?

Yes, the fruit labeling component of the class action, added to the restatement of the previous claims in the amended complaint, survived and kept the case open. One can imagine the reaction at BA.

What’s the lesson?

Once a case gets set in motion, there’s no telling which way it will turn. Perhaps the defense let its guard down when it saw the quality of the depositions, but that’s still no excuse. Pursue every meaningful strategy you can on each charge, based on its merits.

Apartments.com Hit in NAD Zillow Fight

Creative claims lead to watchdog headaches for rental network

Victim of Success

If you’re an urban land-dwelling mammal of the hominid variety, chances are you’ve used either Zillow.com or apartments.com to look for an apartment for you or someone else.

Despite the flack that all things IP-related have taken of late, apartment hunting seems like one of the areas of our lives that have been thoroughly improved by the Internet – even if the much maligned real estate broker sub-group of our species somehow survived its advent. It’s hard to beat finding a new pad by surfing a website in your pajamas.

But with the focus off of the individual broker in a local real estate office, the apartment rental business ceased being mom-and-pop, and online brokers like Zillow and apartments.com became massive platforms in their own right. And with the jump in scale came the attendant advertising woes faced by any online vendor – including negative attention from one’s adversaries.

Recently, Zillow brought a complaint before the National Advertising Division (NAD) taking apartments.com to task for a whole grab bag of claims. The results were mixed, with NAD supporting a few of apartments.com’s claims and blasting others. The writeup, while worth reading, is a tad exhaustive. We’ll focus on three of the more interesting conclusions from the dispute.

Unique ≠ Popular

The first was a set of popularity claims made by apartments.com (we’ll use this moniker for the eponymous flagship website and its fleet of related web pages, including ForRent.com, ApartmentFinder.com and After55.com). The tags included “The Most Popular Place to Find a Place,” “Apartments.com puts more renters in new homes than any other website” and “#1 site for renters.”

After affirming Zillow’s request that these claims be modified to indicate that they applied only to rentals (Zillow lists houses to buy as well as rentals), things got worse for apartments.com.

The company, you see, was justifying its popularity tags by bragging that it had the highest volume of unique visitors, and this didn’t fly with NAD. “The volume of unique visitors is ‘an important indicator of popularity,’” the watchdog maintained, “but is not necessarily a measure of the #1 or ‘most popular’ website.” Barring sales figures, “[M]etrics such as unique visitors, website visits, time on the website, and listings on the website are all metrics that can indicate whether a website is #1 or the ‘most popular.’”

Conversion Therapy

NAD also tackled a complaint about apartments.com’s “conversion rate” claims. For those of you who are, like us, on the consumer end of the apartment hunt, conversion occurs when a user’s search for a new apartment turns into a bona fide rental. The tags in question included “Apartments.com puts more renters in new homes than any other website,” “More People Find Their Place on Apartments.com than any other website” and “We deliver at least 2.7x more leases for our advertisers than the competition.”

NAD found apartments.com’s data weak. “Data relied on by the advertiser to support its conversion claims provides information on only a subset of property owners,” it wrote, and “not the entire rental market.” It asked that the conversion claims be discontinued.

Finally, there’s a prevalence claim that got axed for an interesting reason. The tag “7x more exposure” was based, according to apartments.com, on the company’s extensive network of additional sites. With seven additional sites, the argument ran, apartments.com would get listers seven times the exposure.

Not so fast, said NAD, which “determined that one reasonable takeaway is that the additional websites provide 7x more exposure than competing websites by volume of visitors, not limited to 7x more websites where rentals can be viewed.” Without traffic data, this claim got the axe as well.

The Takeaway

Apartments.com plans on appealing NAD’s decisions before the National Advertising Review Board. But without hearing the final result, we can benefit from this turmoil (schadenfreude-free, of course).

The first takeaway: Popularity can be based on a constellation of factors; relying on volume of traffic (or, we presume, any single one of the other criteria mentioned by NAD) isn’t enough. Consider what factors you’re using to support your claim; if they aren’t derived from hard sales data, then assemble a comprehensive package of other indicators.

Another takeaway: Ensure your supporting data is comprehensive and represents the entirety of the market you’re bragging about conquering.

Finally, beware of shaky math. The 7x claim is remarkable, and we’re not sure it could have been justified with a straight face. Of course listing on seven separate websites doesn’t guarantee seven times as much coverage as one site; coverage depends on the quality and reach of the sites in question.

After Cali Court Victory, AGs Take For-Profit Education to the FTC

Earnings claims review is occasion for big push on troubled sector

California Attorney General Rob Bonta won a big victory at the end of March when he secured a $22 million penalty against Ashford University. It’s a dispute we first covered back at the end of last year, when the case went to trial after four years in San Diego Superior Court.

Back then, we framed some of the basic accusations made against Ashford – and, indeed, against many participants in the for-profit education sector.

Ashford’s admissions department—in reality “the most aggressive sales floor I have ever seen,” according to one company supervisor—allegedly misrepresented the likelihood and timing of financial aid, not to mention the cost of the education itself. The complaint states, “Many Ashford students discovered ... that they were not eligible for enough financial aid to cover their entire costs of attending, and that they were liable to Ashford for these shortfalls.”

Whatever one’s feelings about the for-profit sector are, the millions of dollars in penalties levied by the court must feel like a vindication for Bonta, who is not only continuing his predecessor’s work – the case was filed in 2017 by then-Cali-AG Becerra – but is now participating in a nationwide groundswell against the sector.

The Takeaway

That movement has taken on the form of a missive to the Federal Trade Commission from two dozen state attorneys general, decrying “misrepresentations by for-profit schools [that] can be broad and especially harmful for students who may carry the burden of student loan debt for the rest of their lifetimes.”

Framed as a response to the FTC’s recent request for comment on earnings claims, the letter focuses narrowly on the for-profit education sector to “aid in the Commission’s determination of the requirements and scope” of a more general rule, given some of the unique issues posed by the sector.

The topics are serious – the letter covers the crushing lifelong debt allegedly imposed by the schools, a disproportionate level of harm against minority populations who may be specifically targeted by for-profits, and the amount of earnings a degree earned from a for-profit can actually generate.

Bonta closes his press release with a list of actions against “predatory actors” in the education sector; it’s a promise for more action to come.

But for-profit schools are only one of a variety of industries that make earnings claims, It will be interesting to see – should the Commission propose an actual rule – how the Commission balances the different approaches and unique issues relevant to each of these different industries.

Check Out Our Latest Blog Posts

If an Agency Calls Something Unfair, Does That Magically Make It Unlawful? A Recent Blog Post by the FTC’s Chief Technology Officer

Last week, the Federal Trade Commission’s (FTC) tech blog quietly published a post that could have broad implications – for privacy practitioners and beyond. In this post, the agency takes the novel position that if consumer data is compromised in a security incident and the company does not provide consumer notice, that could in and of itself be considered a violation of the FTC Act.

Testimonial Guides Update – The Things That Make Us Go Hmm

As we reported yesterday, the FTC has issued its proposal for an update to the Testimonial & Endorsement Guides. These are not THE LAW, because (1) guides are not law and (2) even if we treat them as such, this is a proposal. That said, the changes are an important indication of what the agency is currently thinking, and it is certainly possible for the agency to take an aggressive enforcement posture and indicate that the draft changes put industry on notice.

May 2022 Public Commission Meeting – Meet Commissioner Bedoya, Plus Blasts from the Past, Endorsements and an FTC Legend

In February 2020, the Federal Trade Commission (FTC) announced that it was going to reexamine the Endorsements and Testimonial Guides (Guides) and sought comment on whether and how the Guides should be changed, including addressing issues involving reviews, affiliate links, children’s perceptions and changes in technology. Two very long years later, the FTC has proposed some real changes to the Guides, which will be subject to another round of comment. Also on the agenda was a policy statement proclaiming that ed tech is a priority area for agency Children’s Online Privacy Protection Act (COPPA) enforcement. This basically was the equivalent of scheduling a meeting to discuss future meetings – and of course, the first meeting with a full commission for Commissioner Alvaro Bedoya.

And Then There Were Five – Commissioner Bedoya Has Arrived

When a new commissioner arrives at the Federal Trade Commission (FTC or Commission), there are some changes to expect as that new person gets up to speed and learns how different it is to be at the FTC versus watching what the Commission does from the outside. But the addition of a new commissioner can be far more significant when that commissioner is the missing piece needed to create a new majority.