“OK, Google. Send a Letter to the CPSC.”: Privacy Groups Request Recall of Google Home Mini

Last Friday, ten consumer and privacy advocacy groups, including the Electronic Privacy Information Center, Center for Digital Democracy, and Consumer Watchdog, sent a letter to Acting Chairman Ann Marie Buerkle, requesting that the CPSC recall the Google Home Mini smart speaker. The speaker was designed to respond to the voice commands, “OK, Google” and “Hey, Google,” as well as to a consumer pressing a small button on the top of the unit. Last week, the blog Android Police reported a glitch that caused the device to detect a touch even when a consumer was not pressing the button and remain “always on.” In response, Google issued a software update and completely disabled the button functionality.

The groups claim that this glitch resulted in Google intercepting and recording private conversations without consumers’ knowledge or consent, and that the device therefore poses a risk to consumer safety. Although they acknowledge that “the privacy concerns associated with Internet-connected devices appear different from traditional public safety concerns,” the groups call on the CPSC and its “broad mandate” to respond to such concerns, particularly in light of the “failure” of the FTC to investigate complaints involving Internet-connected devices.

Under the Consumer Product Safety Act, manufacturers, importers, distributors, and retailers have an obligation to immediately report to the CPSC when they obtain information that reasonably supports the conclusion that a consumer product contains a defect that could create a substantial product hazard, or creates an unreasonable risk of serious injury or death. While the groups note that the CPSC recently announced a recall of Internet-connected devices, the cited recall involved a product that posed an actual injury to consumers. CPSC action based on a non-physical injury, such as invasion of privacy, would be breaking new ground, but manufacturers, distributors, and retailers of IoT and other connected products should continue to watch for new developments and consider the potential safety issues associated with the products.

FTC’s “Made in USA” Enforcement On Pace With Prior Years

In a keynote address at the National Advertising Division conference earlier this month, Mary Engle, Associate Director in the Advertising Practices Division of the FTC, included “Made in USA” as among the agency’s current enforcement priorities.   The FTC’s interest in U.S. origin claims is nothing new, but these claims have garnered considerable regulatory attention in recent years, as we have written about here.  With manufacturers and retailers increasingly eager to highlight their domestic operations, we took a look at how the FTC’s “Made in USA” enforcement this year stacks up to prior years.

For 2017 year to date, the FTC has issued 15 closing letters and has settled one case (Block Division).  By comparison, for calendar years 2014-2016, the FTC issued 56 closing letters and settled one case (Chemence, Inc.)  This suggests that “Made in USA” enforcement is roughly on pace with the prior three years.

Enforcement year to date also spans a considerable number of industries and products, involving advertising on household items like pillows, coffeemakers, and lawn mowers, to office and industrial equipment such as ice machines, standing desks, data security products, scales, cell phone signal boosters, air purifiers, and LED tubes.   Common remedial measures noted in closing letters include discontinuation of the claims at issue and replacement with qualified claims, packaging modifications, coordinating corrective measures with vendors, and monitoring and correcting third-party marketers.

Given that “Made in USA” claims will remain a priority from the foreseeable future, claim substantiation is a key consideration for advertisers.  If you are new to making country of origin claims or just need a refresher, check out our webinar, originally offered in May 2017, called “Buy American, Hire American: Is Your (Or Your Competitor’s) Product Really ‘Made in the USA’?,” for an overview on the substantiation requirements for advertising and the “Buy American” standard that applies to government procurement.

 

Moonlight Slumber Says “Goodnight” to Misleading and Unsubstantiated “Organic” Advertising Claims After Settlement with FTC

In its first case challenging “organic” claims, the FTC announced a settlement with Moonlight Slumber, LLC  resolving charges that the company misrepresented or could not support a variety of environmental and health-related claims about its baby mattresses.

Misleading and Unsubstantiated Claims. The FTC’s complaint asserts that Moonlight advertised its baby mattresses as “organic,” “natural,” “hypoallergenic,” and “eco-friendly.” Moonlight also indicated that the mattresses were made with “BabySafe Natural Materials” and “eco-friendly plant-based foam.” According to the FTC, the company’s products were made of a majority of non-organic materials. For instance, the cores and fire barriers of the company’s Starlight Simplicity and Little Star mattresses did not contain any organic material, and 70% of the cotton cover of these mattresses was non-organic material. The Little Star mattress core was made of a synthetic latex material, rather than the “natural latex” the company advertised, and for both the Starlight Simplicity and Little Star mattresses, only the mattress ribbon itself contained solely organic materials. According to the FTC, most of the company’s mattresses were made of polyurethane, either wholly or substantially, and the foams in these mattresses were comprised of “little or no plant-based material.”

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Love Is a Many-Splendored Thing, but It’s Not an Ingredient

The Food and Drug Administration has made the news lately for disapproving a Massachusetts bakery’s inclusion of “love” among the listed ingredients in its granola products.  Nashoba Brook Bakery produces breads and granolas that are sold in independent markets and fine-food stores in Massachusetts and New Hampshire.  As the FDA primly put it, “‘Love’ is not a common or usual name of an ingredient, and is considered to be intervening material because it is not part of the common or usual name of the ingredient.”  The concern with such “intervening material” is that it may distract from the mandatory listing of ingredients in the order of redominance.

In fairness to the FDA, objecting to the listing of love as an ingredient was not the main point of its warning letter.  The FDA conducted an inspection of Nashoba Brook’s plant, and the bulk of the letter lists sanitary and food-storage violations of the Current Good Manufacturing Practice.  Obtaining and reviewing product labels is a typical part of such inspection visits, and this resulted in the FDA’s detection of the love ingredient violation.

The moral here is simple.  There are a lot of places on your packaging where you can be cute, but the FDA mandated facts panel and ingredient statement are not among them.

 

One More Step Forward: Senate Committee Approves Nomination of Ann Marie Buerkle as CPSC Chairman

The Senate Committee on Commerce, Science and Transportation approved Acting Chairman Ann Marie Buerkle’s nomination to become CPSC Chairman last Thursday in a 14-13 vote along party lines. She is expected to be confirmed by the full Senate, and would then be able to move forward with staff appointments. Buerkle has served as Acting Chairman since February, and was nominated to become Chairman in July. For more information about Acting Chairman Buerkle’s priorities at the CPSC, please view our previous blog posts here and here.

Associate Lauren Myers contributed to this post. She is practicing under the supervision of principals of the firm who are members of the D.C. Bar.

NJ Supreme Court Disapproves Class Certification In Landmark TCCWNA Case

Today, the New Jersey Supreme Court drove a stake into the many class actions alleging claims under New Jersey’s Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”).  That law provides for $100 in damages whenever an “aggrieved consumer” demonstrates that a contract or other document contains provisions that violate any “clearly established legal right.”  The Supreme Court’s new decision construed both of those statutory limitations in a manner that should preclude virtually all the pending class action cases. 

The decision in Dugan v. TGI Fridays, Inc. and Bozzi v. OSI Restaurant Partners concerned those restaurants’ alleged practice of not printing drink prices on their menus.  The plaintiffs alleged that keeping consumers in the dark about those prices until they received their checks allowed the restaurants to inflate drink prices by a dollar or two each.  They sued under New Jersey’s Consumer Fraud Act, and because they also contended that the menus were “notices” that violated a “clearly established right” to see prices, they sued under the TCCWNA.  An appellate court found that the claims could not proceed on a class basis because the plaintiffs’ issues were too individualized, and the Supreme Court today affirmed that holding. 

The Supreme Court began by rejecting the plaintiffs’ consumer fraud class action theories, holding that whether any person was “overcharged” and by how much could only be decided person-by-person.  The Court then engaged in an extensive discussion of the TCCWNA, laying waste to the theories under which so many plaintiffs recently have sued online and brick-and-mortar retailers for TCCWNA violations.  Continue Reading

Case Dismissed in FTC v. Quincy Bioscience

On Thursday, a federal court in New York dismissed an FTC and New York Attorney General action against Quincy Bioscience, which sells the dietary supplement, Prevagen.  Quincy bases claims for its product on research that includes a randomized, controlled clinical study.  The court observed that the parties agreed that this “gold standard” study followed “normal well-accepted procedures” and showed statistically significant results in a subgroup of healthy, aging adults, although not the experimental group overall. 

The court acknowledged the regulators’ arguments that data analyses revealing the subgroup results were subject to an increased risk of false positives.  The court, however, concluded that the regulators failed to allege that “any actual errors occurred” or that “that reliance on the subgroup data ‘is likely to mislead consumers acting reasonably under the circumstances.’”  The court observed that “the subgroup concept” is “widely used in the interpretation of data in the dietary supplement field.” 

Kelley Drye represented Quincy Bioscience in the matter. 

 

Three Reasons “Natural” Class Actions Are Here to Stay

In a review of new class action cases filed against in 2017, we counted at least 11 actions in the food industry alone alleging that a product was not “natural” or “all-natural” as claimed in its advertising or labeling. “Natural” is, by a healthy margin, the most contested single word in food and personal care products class action litigation.  Why do class action cases around “natural” continue unabated?

  1. “Natural” Doesn’t Mean Much …

There is no generic, official definition of “natural.” In November 2015, after being prodded by almost every stakeholder, the FDA put out a request for information and comments regarding the use of “natural” in foods.  Since then, the FDA has done nothing.  It hasn’t even closed the web page for submitting comments, which were supposed to end in May 2016 – you can still leave a comment if you want to.  This doesn’t mean we have no idea what the FDA thinks “natural” means.  There is enough guidance on narrower definitions, such as the FDA’s definition of “natural flavor” and its opposite, “artificial flavor,” and the USDA’s general definition of “natural,” that we can guess with some confidence what the FDA’s definition of “natural” would look like if it were issued tomorrow.  But a guess doesn’t carry much authority, and isn’t much use in stopping litigation.

  1. … but Some Consumers Think It Means a Lot …

In advertising law, however, neither the advertiser nor even the government is the final arbiter of what an advertising claim means. It is the consumer audience that gets to interpret advertising claims, and regardless of what was intended, the advertiser is responsible for any reasonable interpretation of its advertising.  In private cases, the proxy that is used for a “reasonable consumer” is a significant proportion of consumers who report receiving a particular meaning in a competent consumer perception survey, that proportion sometimes being as low as 15%.  The implicit assumption is that at least 85% of consumers are reasonable, so that any slice of 15% of consumers must include some reasonable ones.  It may seem like a debatable premise these days, but it’s one we have to live with. Continue Reading

What Does Tweeeeeting Mean for Advertisers?

This week, the news broke that tweets are likely getting longer.  Twitter plans to extend the maximum length of a tweet from 140 to 280 characters, and has already rolled this feature out to selected users.  What are the implications for advertisers, especially those struggling to cope with the need to disclose material connections to endorsers, qualifications to advertising claims, and other information in their marketing tweets?

The FTC has already asserted that endorser disclosures within a tweet, not merely on your profile page, are necessary.  The Commission’s recent spate of cautionary letters to Instagram advertisers and endorsers has stressed that, when required, disclosure of the material connection has to be in a form understandable by average users, who may not be familiar with conventions such as an #sp tag for “sponsored.”  In prescription drug advertising, the FDA similarly declined to give advertisers much of a pass in omitting or shortening necessary side-effect disclosures, stating in its 2014 Draft Guidance for Industry on Internet/Social Media Platforms with Character Space Limitations that such information still has to be squeezed comprehensibly into that 140 character limit, though with a limited allowance for abbreviations not permitted in other contexts. 

Double-sized tweets will make the agencies even less likely to forgive inadequate disclosures on Twitter or to cock a sympathetic ear at the excuse of character limitations.  More than ever before, Twitter marketers and endorsers should be attentive to compliance with required disclosures.  The silver lining on this cloud is that the extra characters will give marketers a little more room to do this, while still putting out effective marketing messaging.

 

Government-Mandated Health Warnings in Sweetened Beverage Advertising Found Likely to Chill Protected Free Speech

On September 20, the Ninth Circuit blocked the City and County of San Francisco from implementing an ordinance that would have required health warnings on advertisements for beverages that contain one or more added sweeteners and more than 24 calories per 12 fluid ounces of beverage. The Ninth Circuit’s panel opinion, in reversing a district court order, held the ordinance likely chilled protected commercial speech under the First Amendment.

The 2015 ordinance would have required that advertisements (not labels) for sweetened beverages contain an explicit health warning that “occup[ied] 20 percent of the advertisement [] set off by a rectangular border”, like so:

The American Beverage Association, the California Retailers Association, and the California State Outdoor Advertising Association (“Associations”) sued to enjoin the implementation of the ordinance on constitutional grounds.  The district court denied a preliminary injunction and the Ninth Circuit granted interlocutory appeal.

Under established precedent, regulations that compel speech by imposing a disclosure are governed by the framework set forth in the SCOTUS case of Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio (1985) (upholding a state bar disciplinary rule requiring that attorney advertisements regarding contingent-fee rates inform clients they would be liable for costs (as opposed to legal fees), even if their claims were unsuccessful). The Zauderer framework historically had been applied to government-mandated disclosures needed to prevent consumer deception.

The Ninth Circuit panel opinion applied the Zauderer framework beyond the context of preventing consumer deception.  Under the framework, the Ninth Circuit held that compelled disclosures could be related to other substantial government interests, such as promoting public health, but had to be “factual and non-controversial” and not “unjustified or unduly burdensome.”

The San Francisco ordinance satisfied neither of these factors.  The Ninth Circuit panel observed the warning falsely conveyed the message that sweetened beverages contribute to obesity, diabetes, and tooth decay, regardless of the quantity consumed or other lifestyle choices.  This message was contrary to statements by the FDA that added sugars are “generally recognized as safe,”  and “can be a part of a healthy dietary pattern when not consumed in excess amounts.”

The Ninth Circuit also held the warning was misleading.  “By focusing on a single product, the warning conveyed the message that sugar-sweetened beverages were less healthy than other sources of added sugars and calories and were more likely to contribute to obesity, diabetes, and tooth decay than other foods.”  This message was found to be deceptive in light of the current state of research on the issue.

Finally, the court held the warning requirement unduly burdened and chilled protected commercial speech.  The panel observed the black box warning “overwhelms other visual elements” in the advertisement.  This, according to the panel, would defeat the purpose of the advertisement, “turning it into a vehicle for a debate about the health effects of sugar-sweetened beverages.”

Thus, Ninth Circuit panel concluded that the Associations had shown a likelihood of success on the merits of their First Amendment claim.

 

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