Alerts

AD-ttorneys@law - December 19, 2017

Alerts / December 19, 2017

In This Issue:

NARB to Unilever: Comparison Ad Requires Scrubbing

Bath & Body Works owner: ‘Cross-platform body wash campaign stinks!’

The Reveal

It’s a sunny, happy commercial – a bit of a throwback to the “blind taste test” ads from years ago.

In Unilever’s “Let Your Senses Decide” video, which is featured on the company website as well as on YouTube, women on the street sniff vials of body wash and choose the most appealing scent. Boxes labeled “A” are then lifted to reveal samples of Unilever’s Suave body wash products, and boxes labeled “B” reveal samples of competitor L Brands’ Bath & Body Works products.

The subjects all prefer Suave, whose fragrance and price point are praised in contrast to Bath & Body Works’ products.

Soap Dish

L Brands challenged the claims in January 2017 before the National Advertising Division (NAD), which delivered a ruling in L Brands’ favor. The NAD reasoned that Unilever’s preference testing did not provide adequate support for the line claim it was making and recommended that the ad be discontinued.

Unilever appealed to the National Advertising Review Board (NARB), which evaluated the commercial (and noted flaws similar to those identified by NAD) in November 2017.

The video itself, the NARB argued, did not make it clear that the subjects were comparing three separate Bath & Body Works products with three separate Suave products. Instead, the impression was that the entire product lines of both companies were being judged. Explanatory text appearing in the video was insufficient to limit the claims.

In short, the exact nature of the product comparison needed to be disclosed in the video itself – and disclosed accurately and explicitly.

Just Suds

A related claim that bridged the product packaging and the video – that Suave’s fragrance was “as appealing as Bath & Body Works [Product]” – was also criticized. The NARB maintained that this claim was not puffery and required substantiation.

Unilever submitted a preference study as support for the claims, but the NARB determined that the study did not support the line claim. Moreover, according to the NARB, Unilever failed to provide sufficient information regarding the study (i.e., study protocol, raw data, and statistical analysis) showing that the study was valid. Additionally, the NARB determined that the study was fatally flawed because it was not geographically representative.

The Takeaway

In the end, the NARB agreed with NAD and recommended that Unilever discontinue the video and related packaging claims. Unilever said that while it did not agree with the assessment, it would comply with the recommendations. Advertisers should take note that broad line claims must be substantiated by equally broad support.

Which Comes First, the Yogurt or the Feed?

Dismissed class action versus Dannon claimed tainted food chain

Corn Begat Cow, Begat …

Turns out there is such a thing as original sin.

Polly Podpeskar spells it out in her October 2016 complaint against the yogurt giant Dannon: crops made from genetically modified organisms (GMOs) are consumed by cows, the resultant cows’ milk is therefore not natural, and therefore the yogurt Dannon produces from that milk is not natural either.

This spelled trouble for Dannon, which Podpeskar claimed was falsely labeling its yogurt as “all natural.”

The case sought relief under Minnesota’s Uniform Deceptive Trade Practices Act, False Statement in Advertising Act and Consumer Fraud Act. It also charged the company with common law fraud under New York law and statutory claims under more than 40 different state laws. Finally, the action demanded an injunction barring Dannon from continuing its labeling practices.

Sour

Dannon predictably moved to dismiss the case, claiming Podpeskar failed to state a plausible claim and lacked standing to pursue the injunction. The company also asked that her claims be stayed pending the arrival of new regulations on “natural” food labeling from the Food and Drug Administration.

In its opinion dismissing the case, the court concentrated solely on the claims themselves.

The court maintained that Podpeskar had not, as required, stated a plausible claim as opposed to a merely conceivable one. The claims were lacking, the court held, because she had not asserted that Dannon had engaged in a specific practice (e.g., purchasing milk from cows that were fed GMOs) that justified the suit or that Dannon yogurt actually contains artificial or unnatural ingredients. The court reasoned that her argument was “predicated on her own speculation” that GMOs and antibiotics consumed downstream in the chain of ingredients were considered to have been legally carried down to the final product.

In other words, the court noted concisely that the plaintiff had failed to allege that “any ingredient used in the Products is unnatural.” “Her claim,” the court continued, “is that, several steps back in the food chain, there may have been something unnatural ingested by a cow.”

The Takeaway

Hanging over the case, and mentioned in Dannon’s motion, is the ongoing review of the term “natural” by the FDA, the relation of that term to genetic modification and the implications of GMO source ingredients. Dannon urged the court to stay Podpeskar’s claims until the review is complete. But “since the Court finds that there is ample basis for dismissal regardless of any new FDA rules, it does not find a stay necessary,” and thereafter it dismissed the claim.

Montel Messes With Marijuana Marketers

Former talk personality lights up Lanham Act charges

Respectability

Talk show host, military man, actor, producer, product endorser – Montel Williams has worn his share of hats, some more garish than others. So his latest role may come as a surprise to the public who knew him in the ’90s: serious medical marijuana advocate.

Diagnosed with multiple sclerosis in 1999, Williams has used medical cannabis products to alleviate the painful symptoms associated with the disease. In 2017, almost two decades after his diagnosis, he founded LenitivLabs, which characterizes itself as “a line of innovative, high quality medical cannabis products for patients.” The company goes to great lengths to maintain a profile of aboveboard legitimacy. From its sober, tasteful website to its professional team bio page, the message is clear: This is a serious business with a meaningful mission.

The Lenitiv site even fires a warning shot against the crowds of pretenders flooding the medical marijuana market: “The legal cannabis industry is laden with non-medical brands and products but the true medical cannabis consumer has been largely ignored by current brands in the cannabis space.”

Irony

As part of the rollout of the new company, Williams was featured in an article appearing in Forbes. The article stressed the seriousness of the new enterprise and featured quotes from the entrepreneur.

The article, a new lawsuit alleges, was turned against Williams in spectacular fashion.

Williams and his trademark holding company sued a number of companies that served as “sellers, suppliers, importers, and/or marketers of products” of so-called cannabidiol or CBD oils – purportedly for medical use. Several of the companies, the suit alleged, were managed by one Timothy Isaac, who also appeared as a defendant. Additional “unknown defendants” were named, part of an alleged murky soup of online CBD oil salespersons who had hidden their real identities.

The suit claims that the defendants used Williams’ “name, image, identity, reputation, persona, and trademark in a number of ways” in an effort to sell their own products. Williams’ image and the fabricated quotes attributed to him – sometimes posted to fake news sites and blogs – were also deployed to create the false impression that Williams had endorsed defendants’ products. The suit also asserts that the defendants engaged in credit-card scams, including negative-option pricing and misleading free trials.

To add insult to injury, the suit maintains, customer complaints were beginning to pour in to Lenitiv, “reflecting … actual confusion and damage to Plaintiffs’ reputation due to Defendants’ conduct.”

The Takeaway

Williams brings charges of false advertising, false endorsement and sponsorship, false designation of origin, and unfair competition under the Lanham Act, as well as violations of the right of publicity and right of privacy under Florida law and common law.

Williams seeks to bar the defendants from using his image, name, voice, reputation or trademark to market any product or service and to withdraw and destroy any advertising using the same, and he seeks profits and damages. How the lawsuit will grapple with the crowd of “unknown defendants,” whose highly mobile and obscure identities might change the scope of the case, will be of great interest. This case is another example of how celebrities have continued to pursue actions against marketers who use their names and likenesses to falsely endorse products, a trend which will surely continue in the future.

FTC Flexes Muscle, Wins Suit Over Supplements

Tarr Inc. penalized for $179 million in alleged bad sales scheme

Fountain of …?

False hope springs eternal.

According to a recent complaint filed by the Federal Trade Commission (FTC or Commission) in the United States District Court in the Southern District of California, three individuals and the 19 companies that these individuals operated preyed on some of the most basic desires in American culture: youth and vitality.

The companies, collectively referred to as Tarr Inc., promised youth and vitality – or at least the appearance of same – to its prospective customers. The FTC alleged that Tarr Inc. pushed more than 40 weight-loss, muscle-building and wrinkle-reduction products on a series of websites which made outlandish promises to consumers.

The complaint claimed that Tarr Inc. told its users that they would shed pounds and wrinkles and gain attractive muscle mass, all without exerting much effort at all. One ad claimed, “Now you can lose weight without diet and exercise!” Another ad boasted, “I gained 16 lbs of muscle in 4 weeks. No Special Diet, No Intense Exercise.”

The FTC singled out these taglines because the results described were far too rapid and dramatic to be credible, and no substantiation was offered for the product claims. Unsurprisingly, the FTC found these fake media sites were owned and operated by the defendants’ affiliate marketers or by the defendants themselves.

Badvertising

But the Commission went on to reveal two more alleged missteps.

First, it noted that Tarr Inc. had spread the unsubstantiated health claims through a web of deceptive advertisements, representations and endorsements. Tarr Inc.’s messaging invoked purported “real-world” customers but also featured false celebrity endorsements from a gallery of stars – Will Ferrell, Paula Deen, Jason Statham and Kim Kardashian all made an appearance in the defendants’ ads.

The websites that were used to spread the word, the FTC claims, mimicked the names, URLs and logo design of a number of well-known health and lifestyle magazines, including Men’s Health, Good Housekeeping and Everyday with Dr. Oz.

Furthermore, the FTC targeted deceptive negative option schemes. In many cases, risk-free trials were offered to Tarr Inc. customers online. For a small fee, Tarr Inc. would ship the free product to the consumer; however, the defendants failed to disclose that the company enrolled the customers in continuity plans. These negative-option continuity plans charged more than $80 a month to the consumer if they did not cancel.

The Takeaway

This case alleged many overlapping violations, so it’s no surprise that the Commission threw the book at Tarr Inc. Based on the alleged conduct, Tarr Inc. was charged with violating the FTC Act, the Restore Online Shoppers’ Confidence Act (ROSCA) and the Electronic Funds Transfer Act. It surely didn’t help Tarr, Inc.’s case that they had allegedly created multiple regulatory-compliant versions of the same sites in order to keep regulators at bay, thereby demonstrating that the defendants were aware of but disregarded their legal obligations in many instances.

Tarr Inc. reached a settlement with the FTC just a few weeks after the initial complaint.

The agreement bans Tarr Inc. from using negative-option offers to sell much of the material in its product line, orders it to cease making unsubstantiated health claims and charges the company $179 million – the estimated amount that duped consumers were relieved of when they encountered Tarr Inc.’s offers. The monetary award will be suspended after the first $6.4 million is paid to the FTC.

This case serves as another example of the FTC’s focus on ROSCA violations as well as false and deceptive health claims. Advertisers should continue to exercise caution when making health and safety claims and marketing via negative-option offers.

ERSP Supports Sun Basket Claims a la Carte

Watchdog splits the bill on health and organic marketing

Send it back!

Sun Basket tried.

When an anonymous challenger raised issues about the San Francisco-based subscription meal delivery service with the Electronic Retailing Self-Regulation Program (ERSP), the company made some changes.

The challenge in part addressed Sun Basket’s claims about organic ingredients (“organic and non-GMO ingredients and delicious easy recipes designed for healthy weight management” read one tagline). And as soon as the inquiry began, Sun Basket made changes to its advertising, telling ERSP that it had removed all unqualified organic claims and added text explaining its standards to consumers.

But … it wasn’t quite enough. The claims, even though they had been modified and supported with informative text, remained inadequate because they communicated that the company used organic ingredients “wherever possible.”

The Takeaway

Things started looking brighter for the company when ERSP evaluated the company’s claims that its meals were healthy (“Healthy cooking made easy,” boasted one tagline).

“Healthy” was ruled an appropriate word for use in Sun Basket’s advertising, since it flowed with the expectations of the company’s target audience and could not be interpreted as promising specific nutritional value.

Another tagline called Sun Basket’s meals “lean and clean.” “Clean” was determined to be too nebulous a claim to be considered problematic. However, the term “lean” represented the meals could be used as a part of a weight management program, and thus ERSP recommended additional language to clarify the meaning of the word within this specific context.

Sun Basket promised to “take ERSP’s recommendations regarding our claims under consideration” as it began to review and rework its advertising.

Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.

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