Advertising Law

Webinar: Midyear Update on Privacy and Data Security, July 14

The proliferation of emerging digital applications and technologies offer seemingly limitless ways for marketers to engage consumers through social media. At the same time, keeping up with legislative and regulatory developments related to privacy—and developing best practices for compliance—can be daunting. With that in mind, Manatt is pleased to present a complimentary webinar titled “Midyear Regulatory and Legislative Update in Privacy and Data Security.” Charles Harwood, Regional Director at the Federal Trade Commission, and Linda Goldstein, chair of Manatt’s Advertising, Marketing and Media practice and a member of the firm’s Privacy and Data Security practice, will serve as faculty of this one hour program. To register or learn more about Manatt’s continuing Webinar Learning Series in Privacy and Data Security, click here.

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CARU Stresses Out Over Claims for Spa Product

The Children’s Advertising Review Unit (CARU) was stressed out over implied claims made by The Maya Group for its Orbeez Body Spa.

The product consists of an inflatable lounge chair that users cover with Orbeez pellets—small, superabsorbent pellets that swell to more than 100 times their original size when soaked in water—and features a “soothing vibration.” In a television commercial, two girls are shown sitting at a desk looking exasperated and stressed out, while a voiceover asks, “Feeling stressed out?”

In the next segment, the girls are smiling and lying in a pool of Orbeez pellets, after which they are shown sitting in Orbeez Body Spa chairs, covered with pellets, next to a serene pool and waterfall that suggests a spa-like environment. The voiceover states, “Orbeez Body Spa will melt your stress away.”

The commercial ends with a shot of the product packaging and an image of the Spa chair brimming with Orbeez pellets.

CARU expressed concern that the commercial failed to accurately depict the number of pellets that are included with the initial purchase of the chair and that the commercial was misleading because it did not disclose the need for an air pump to fill the product. Most importantly, CARU questioned whether the advertiser could substantiate the implied claim that the chair will reduce stress.

Emphasizing that advertisers “have special responsibilities when advertising to children,” the decision said the implied claim implicated CARU’s Guidelines, Part I, subsection (a) on Deception, which states: “1. The ‘net impression’ of the entire advertisement, considering, among other things, the express and implied claims, any material omissions, and the overall format, must not be misleading to the children to whom it is directed. 2. Whether an advertisement leaves a misleading impression should be determined by assessing how reasonable children in the intended audience would interpret the message, taking into account their level of experience, sophistication, and maturity; limits on their cognitive abilities; and their ability to evaluate advertising claims.”

Looking to the overall net impression to determine what reasonable takeaway messages were conveyed to the child audience, CARU determined that the statement “Orbeez Body Spa will melt your stress away” implied, both aurally and visually, that the product would reduce stress. The Maya Group, however, failed to provide substantiation for the implied claim.

The self-regulatory body concluded that the advertising “does not comply with [CARU’s] guidelines” and recommended that the advertiser discontinue the implied claim.

As for the depiction of the number of pellets, CARU examined the product and found that it “came with a significant number of pellets as was reflected in the commercial,” and the depiction of pellets was therefore not excessive or misleading with regard to the amount included in an initial purchase.

Finally, Maya explained that the Spa chair does not require an air pump for inflation and that Maya staff inflate the product without a pump when they attend a trade show. Satisfied with the advertiser’s assurances, CARU said additional disclosures were unnecessary.

In the Advertiser’s Statement, Maya said it agreed to discontinue the stress-reduction claim in future airing of the commercial.

Why it matters: The CARU decision reminds advertisers that they are responsible for all reasonable interpretations of their claims, not just the ones they intended to convey, and reiterates that children are more vulnerable to advertising messages. In addition to the standards applied to ads directed to adults (that advertising be truthful, accurate, and not deceptive), child-directed ads must also be appropriate for the audience.

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OTC Homeopathic Product Advertising on the Agenda for the FTC

Advertising for over-the-counter homeopathic products will be the subject of a Federal Trade Commission workshop scheduled for September 21.

Over the last few decades, the multibillion-dollar industry has undergone major changes, that, according to the agency, necessitate a review of its marketing and advertising practices, particularly because its primary marketing focus has shifted from individual user formulations to mass-market products that are sold nationwide by major retailers. The public workshop will bring together stakeholders with differing perspectives, ranging from medical professionals to consumer advocates to industry representatives and government regulators. To help stimulate discussion, the agency invited attendees to submit research and/or issues for discussion.

Topics to be covered include the changes in the homeopathic market and its advertising, the level of consumers’ awareness, and the science behind homeopathy and its effectiveness. Also on the agenda are the effects of recent homeopathic-related class action lawsuits, the application of Section 5 of the Federal Trade Commission Act to ad claims for homeopathic products, and the public policy concerns about the existing federal regulations.

The deadline for submitting public comments is Friday, November 20.

For more information on the Homeopathic Medicine & Advertising Workshop, click here.

Why it matters: Homeopathic products are on the radar of federal regulators, having just been the subject of a two-day Food and Drug Administration public hearing in April, titled “Homeopathic Product Regulation: Evaluating FDA’s Regulatory Framework After a Quarter-Century.” The FDA event focused on product regulations, while the FTC workshop will take a different approach and consider product advertising, including the substantiation necessary to satisfy the requirements of Section 5 of the FTC Act. Industry should keep a close eye on these proceedings.

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Hidden Charges in Cable TV Packages, New Suit Claims

According to a new class action filed in California state court, Cox Communications slips extra charges into its monthly cable TV subscription rate without telling consumers.

Four plaintiffs sued the cable provider asserting that they paid extra fees for their “Advanced TV” package. Cox offers various levels of cable television service, as well as bundled products that also include telephone and Internet services.

In “standardized, uniform marketing materials,” Cox represents to consumers that the advertised price of the Advanced TV package includes the total monthly recurring fees and any applicable discounts (such as a temporary promotional rate), the plaintiffs allege. The only other charges not included are government-required applicable taxes, fees, and surcharges.

“In reality, however, unbeknownst to consumers, and without their authorization or consent, Defendant has charged, and continues to charge, many Advanced TV subscribers separate, additional amounts for Advanced TV,” according to the complaint. Cox does not disclose these fees and instead “deliberately misleads consumers and obfuscates these additional, unauthorized charges, including but not limited to, by misleadingly and confusingly labeling them as fees for ‘Advanced TV,’ the name of the television cable service.”

To the extent any disclosures were provided, they “are and were inadequate in terms of their content, presentation, proximity, prominence or placement such that consumers are unlikely to see or understand such disclosures,” the plaintiffs added.

The four named plaintiffs estimated they paid at least $50 in additional charges, in addition to other losses.

Such false advertising and deceptive conduct violated California’s Consumers Legal Remedies Act, the state’s Business & Professions Code and False Advertising Law, as well as Nevada’s Deceptive Trade Practices Act and Arizona’s Consumer Fraud Act, the plaintiffs claimed.

Seeking certification of three classes of Cox customers based on residency (an Arizona class, a California class, and a Nevada class), the complaint requests preliminary and permanent injunctive relief to halt the current advertising campaign, restitution for all affected customers, actual and punitive damages with interest, and attorneys’ fees and expenses.

To read the complaint in Yousif v. Cox Communications, click here.

Why it matters: The plaintiffs argue that Cox falsely advertised the total price for their subscription packages as inclusive of all applicable fees and charges but then tacked additional charges onto their monthly bills without their knowledge. Advertisers should ensure they disclose all relevant consumer charges and fees to consumers.

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Colgate Washes Its Hands of Soap False Ad Suit

For $2 million, Colgate-Palmolive reached a deal in a false advertising suit challenging claims for the company’s Softsoap Antibacterial liquid hand soap.

Multiple putative class actions, combined into a multidistrict litigation in New Hampshire federal court, charged that the company overstated the powers of the soap’s active ingredient triclosan with statements that the product was “clinically proven to eliminate 99% of germs your family encounters,” “offers antibacterial protection,” “kills 99% of common germs,” and “America’s most trusted hand soap.”

Colgate denied the allegations, but after almost four years of litigation—and the court having rejected two motions to dismiss—the parties reached a deal.

In a joint memorandum in support of a motion for certification of a settlement class and preliminary approval, the parties told the court that the deal is “fair, adequate, and reasonable.”

The settlement class consists of all persons who purchased Softsoap Antibacterial in the United States dating back to January 1, 1992. In exchange for a release of all claims, the class members will receive injunctive relief and Colgate will provide $2 million to satisfy the notice and administrative costs, the incentive awards to the named plaintiffs, and attorneys’ fees and costs. If any money remains, it will be paid to the Children’s Health Fund.

With respect to the injunctive relief, the defendant will not make the statement “Goodbye Germs – Hello World” on labeling or marketing materials and will refrain from making a “99%” efficacy claim without an accompanying disclosure that “generally describes the testing methods.”

In addition, although Colgate has no present intention to reintroduce triclosan as an ingredient in the soap, it promised to use triclosan only “in a manner consistent with final [Food and Drug Administration] regulations” if the company changes its mind in the future.

The terms and requirements will expire five years after the effective date of the settlement or upon any changes to an applicable statute, regulation, or other law that Colgate believes would require label changes for compliance.

To read the joint memorandum in support of preliminary approval in In re: Colgate-Palmolive Softsoap Antibacterial Hand Soap Marketing and Sales Practices, click here.

Why it matters: Although all class members will not receive individual payouts from Colgate, the parties informed the court that the injunctive relief would provide a beneficial result. And after almost four years of litigation, Colgate was likely relieved by agreeing only to label changes and a modest payment of $2 million.

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