Alerts

AD-ttorneys@law - January 10, 2018

Alerts / January 10, 2018

In This Issue:

Endorsement Lands Mark Hamill in TINA’s Sarlacc Pit

Everyone’s favorite Jedi accused of unclear advertising disclosure

The Dark Side?

Luke Skywalker, say it isn’t so!

You were our champion, our space-age Galahad. Idealistic, daring, pure of heart – you were that rare character who was as decent as he was strong.

Are you really trying to use Jedi mind tricks to sell merch?

Fan Disservice?

That’s the accusation leveled by Truth in Advertising Inc., which claims that Skywalker’s Hollywood avatar, Mark Hamill, took so long to disclose that a recent Instagram post was an ad that the post fell afoul of the Federal Trade Commission’s guides regarding the use of endorsements in marketing.

On Dec. 15, 2017, Hamill, who dons the Skywalker mien in “The Last Jedi,” the latest installment of the Star Wars saga, posted on Instagram a picture of himself wearing new RealD 3D glasses. Halfway through the caption to the picture, he pushes the new Star Wars vehicle and other projects, but the post ends with an aside: “(Btw-I consider this more of an artistic statement rather than just another shameless #ad.) 😜-mh.”

Even though Hamill eventually admitted that the picture is an advertisement, the final lines of the caption are not visible on mobile devices, according to Truth in Advertising. This cutoff conceals the connection with RealD, the manufacturer of the glasses (whose own Instagram page features the same photograph).

The Takeaway

The FTC’s Guides Concerning the Use of Testimonials and Endorsements in Advertising state that any “material connection” that would affect the impartiality of an endorsement needs to be “clearly and conspicuously” disclosed in the ad. Hamill’s post, according to the watchdog group, falls short (at least on certain platforms).

Hamill joins an illustrious roster of celebrity endorsers – including Olivia Munn, Tom Brady, Neil Patrick Harris and, yes, Donald Trump – whose endorsements have been scrutinized in Truth in Advertising’s “Ad or Not?” website feature.

No Love Lost Between Starz and Jilted Consumer Class

Free-trial users claim they’ve been betrayed

Trapped!

Claire Randall, heroine of the Starz smash hit time-travel bodice-ripper Outlander, finds herself torn from what she recognizes as reality and thrust into a confusing new demesne.

If Tawanna Roberts’ account is correct, she and others like her must feel like they’re going crazy, too.

According to Roberts’ recently filed class action complaint against Starz, the American video content provider twisted reality by offering a free one-week trial subscription that can be canceled at any time – but that trial subscription was difficult or impossible to quit. On top of that, Roberts and her fellow plaintiffs assert, Starz begins charging a regular monthly subscription fee without ever notifying the “customer.”

Conflicting Accounts

Roberts says she signed up for the trial in early September 2017 and attempted to cancel the offer two days later. Starz not only ignored her request, but started charging her $8.99 on a monthly basis, no matter how often she complained about the situation.

The scenario that Roberts describes is somewhat prosaic compared with certain consumer complaints she quotes in her action. Consider one Markisha Lewis, who claims that when she called to cancel her order, she was told she had two subscriptions – one through her phone and the other through her computer.

“I explained to [customer service] that I didn’t even have computer access,” Lewis asserts. “So that made zero sense yet she was adamant that I still owed the 9.71 that I was charged.” If her claim is true, it sounds maddening.

The Takeaway

Roberts and her fellow plaintiffs are suing Starz in the Southern District of New York for deceptive acts violating the New York General Business Law, and breach of express warranty. They seek damages and attorney costs.

Heartland Consumer Products Is Lachrymose Over Sucralose

Splenda producer sues Applebee’s and IHOP for faking fake sugar

Sweet Noir!

There are worse beats to serve on if you’re a private eye.

Investigators working for Heartland Consumer Products fanned out nationwide, posing as customers at Applebee’s and IHOP restaurants. Their assignment: Determine whether the restaurant chains were falsely identifying the artificial sweetener they were handing out to diners as Splenda, a sucralose-based sweetener brand owned by Heartland.

The results were grim. According to Heartland’s suit against the parent company of both chains, filed in the Southern District of Indiana, Indianapolis Division, 20 out of 28 Applebee’s locations and 26 out of 34 IHOP locations were trying to pass off non-Splenda sucralose sweetener as Splenda.

The suit alleges that Applebee’s and IHOP employees confirmed to customers in person that the sweetener they offered was actually Splenda. The chains also allegedly created their own packaging for the knockoff sucralose sweetener, using a yellow packet (similar to Splenda’s) to give the false impression that the chains were merely branding Splenda with their own logos.

White Lies

Heartland pursued claims for trademark infringement, false designation of origin, unfair competition and trademark dilution. The suit claims that the Splenda brand was irreparably damaged, and that a preliminary and permanent injunction must be issued to protect Splenda’s pre-eminence in the market (it has been the leading low-calorie sweetener in the United States since 2003).

The suit also sought corrective advertising to remedy the misidentification of the chains’ sweeteners as Splenda and to inform customers that the sweeteners actually offered by the chains were manufactured in China – Splenda’s made-in-the-USA marketing being particularly important to Heartland.

The Takeaway

Heartland’s suit against the chains’ parent company, DineEquity, follows on the heels of a similar case it brought against Dunkin’ Donuts, which was settled under unknown terms in February 2017.

It remains to be seen whether Splenda gumshoes have still more restaurant chains in their sights.

Bigelow Tea Steams Over Herbicide Charges

Consumer association brews up lawsuit over “all-natural” claims

Uncertainty Principle

The herbicide glyphosate, available in commercial form from Monsanto as “Roundup” since the early 1970s, had by 2007 become the No. 1 herbicide in the United States agricultural sector, and the second most used in the home and garden sector. But the debate about whether the product causes negative health effects – especially cancer – has simmered for years, with some unexpected twists and turns.

A number of regulatory agencies from around the globe have studied the effects of glyphosate on human health, with a grab bag of results. A German study found the connection between glyphosate and cancer unconvincing; the European Food Safety Authority likewise found the link unlikely.

Compromised?

On the other hand, in 2015, a branch of the World Health Organization (WHO) classified glyphosate as a substance that may cause cancer. Lawsuits ensued, including class actions against product manufacturers that claimed to make “natural” products but used the chemical in their production cycle. Quaker Oats was a target of such a suit, previously covered in these pages.

But then Reuters published an article noting that the WHO report, which launched multiple suits regarding glyphosate as well as calls for an outright ban in the European Union, had contained language in draft form that contradicted the findings of the final report. Why the alleged edits were made, and by whom, remains a mystery.

Shouting Match

This same report is cited in a recent action filed against R.C. Bigelow Tea, Inc. by the Organic Consumers Association (OCA). The OCA claims that Bigelow, which advertises its teas as “all natural,” is engaging in deceptive conduct because glyphosate appears in one of its products at .38 parts per million. The suit, filed in the D.C. Superior Court, Civil Division, in December 2017, seeks an order enjoining Bigelow’s conduct and corrective advertising under the district’s Consumer Protection Procedures Act.

Cindi Bigelow, Bigelow Tea’s current CEO, fired back publicly, calling the case “frivolous” and “illogical.” Moreover, she reminded her interviewer that the levels found by the OCA were much lower than the safe limits defined by federal standards.

The Takeaway

It will be interesting to see whether Bigelow will mount a defense around the federal standards that the OCA doesn’t even mention in the complaint.

Additionally, the Quaker case was dismissed because the Northern District of Illinois ruled that food labeling was not governed by the individual states, but by the Federal Food, Drug, and Cosmetic Act. It seems likely that Bigelow will move to dismiss on similar grounds.

FTC, Reservation Agencies Settle Charge-Disclosure Lawsuit

Agencies mimicked hotel websites, charged bookings upfront

Hotel Spoof

Reservation Counter and its parent companies had a good thing going, according to the Federal Trade Commission’s (FTC) recent complaint.

The companies, which ran websites with names like ReservationCounter.com, ReservationDesk.com and Reservation-Desk.com, sold hotel room reservations to consumers. Their hotel inventory was primarily derived from affiliate marketing relationships with more familiar online travel agencies – think Expedia or Orbitz.

The reservation companies were masters at sleight of hand internet marketing, according to the FTC, attracting customers mostly through search engine ads that were designed to give the impression that the user was clicking through to the actual hotel. To this end, the companies allegedly developed URL naming conventions that gave the impression that the customer was directly contacting a specific hotel. Once the user clicked through, he or she would arrive at a cunningly designed microsite that mimicked the look and feel of the actual hotel’s website. Consumers who booked through these sites, as opposed to booking directly with the hotel, were not eligible to receive loyalty reward points, and could not take advantage of payment and cancellation policies that would have been available had they booked the reservation with the hotel.

Hard-Charging

Things got trickier when it came to charge policies. The defendants charged consumers fees for the hotel room, fees for their services and fees owed to the original online travel agency.

But in a departure from normal hotel booking practice, the reservation companies allegedly charged customers for the full amount of the booking immediately. Most hotels take a customer’s payment information at the time of booking but hold off initiating the charge until the guest’s arrival. According to the FTC, the reservation companies flouted this convention.

What’s more, they often did not disclose their approach. There might be no mention of the direct and immediate charge at all; or, if it was mentioned, the disclosure might be hidden in a seemingly unrelated section of the microsite where the hotel was booked, such as in paragraphs about dining at the hotel.

The Takeaway

The order requires the reservation companies to cease misrepresenting their affiliation with the hotels, and to banish hotel names, logos and phone numbers from their online materials.

Additionally, workers at the companies’ Central American call centers will be required to disclose that they are employed by a third-party reservation agency – and to disclose the actual price of the booking and when it will be charged.

A Summary of Sales and Marketing Law

Thomson Reuters recently published a direct marketing Q&A: US in its Cross-border: Transaction Guides written by BakerHostetler partner Alan Friel, with assistance from associates Moustafa Badreldin and Stephanie Lucas. The overview explores the laws that regulate the making of unsolicited telephone calls for marketing purposes, direct marketing by email and text messaging, and much more.

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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