Ad Law Access : Washington D.C. Advertising Lawyer & Attorney : Kelley Drye & Warren Law Firm : New York, Chicago, Connecticut, New Jersey, Brussels

This post was written by Dana B. Rosenfeld and Raqiyyah R. Pippins.

On May 26, 2010, the GAO submitted testimony to the U.S. Senate Special Committee on Aging, entitled “Herbal Dietary Supplements: Examples of Deceptive or Questionable Marketing Practices and Potentially Dangerous Advice.” The testimony was requested by the Special Committee on Aging, because “recent studies have shown that use of herbal dietary supplements…by the elderly within the United States has increased substantially.”

According to the report, “the GAO was asked to determine (1) whether sellers of herbal dietary supplements are using deceptive or questionable marketing practices and (2) whether selected herbal dietary supplements are contaminated with harmful substances.”

The GAO concluded that “certain dietary supplements commonly used by the elderly were deceptively or questionably marketed,” with claims the supplements could treat, prevent, or cure conditions such as diabetes, cancer, cardiovascular disease, high cholesterol or Alzheimer’s disease—claims that, under the Federal Food Drug and Cosmetic Act, and related FDA implementing regulations, are not permitted for use in the labeling or marketing of dietary supplements. The GAO referred the names of companies that made these claims to FDA and the FTC “for appropriate action.”

The GAO’s testimony also states that while the GAO “found trace amounts of at least one potentially hazardous contaminant in 37 of the 40 herbal dietary supplements products tested,” no contaminants were found “in amounts considered to pose an acute toxicity hazard.” The GAO noted that “the levels of heavy metals found do not exceed any FDA or Environmental Protection Agency EPA) regulations governing dietary supplements or their raw ingredients, and FDA and EPA officials did not express concern regarding any immediate negative health consequences from consuming [the tested] supplements.”

Click here for more information about the GAO’s study, including a full copy of the testimony.

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On May 19, 2010, Senator John D. Rockefeller, Chairman of the U.S. Senate Committee on Commerce, Science, and Transportation, introduced legislation that may have a significant impact on Internet retailers offering negative option programs. Negative option programs generally cover offers in which goods or services are provided automatically and consumers must either pay for the service or specifically decline it in advance of billing.

The proposed legislation was released on the same day that the Committee on Commerce released the second of two reports regarding companies that allegedly used aggressive sales tactics to enroll online consumers in services without their consent. The proposed bill contains a number of provisions relevant to companies that offer negative options:

• Requirements for Certain Internet-Based Sales. The proposed bill would make it unlawful for any post-transaction third-party seller to charge a consumer’s credit card for a good or service without providing clear disclosures regarding the terms of the offer and receiving the consumer’s express informed consent to billing. Express informed consent requires that the consumer provide all billing information and take an additional affirmative step (such as clicking on a box that indicates the consumer’s consent to billing).
• Prohibition on Data Pass of Billing Information. Sen. Rockefeller’s proposed legislation would prohibit the practice of merchants disclosing and transferring a consumer’s billing information to any post-transaction third party seller for use in any Internet-based sale of goods or services from the third-party seller.
• Limitations on the Use of Negative Options in Internet-Based Sales. The proposed bill would make it unlawful to charge a consumer through an Internet-based negative option program unless: (1) the seller clearly and conspicuously discloses, prior to the sale, the material terms of the offer and the identity of the entity making the offer; (2) the seller has obtained the express informed consent to bill; (3) the seller provides a simple process to cancel billing that must be available through both the Internet and telephone; and, (4) the seller provides a notice of billing to a purchaser at least 10 days prior to each billing interval.

Companies who offer any type of Internet-based negative option program would be well-served to keep a close eye on how this proposed legislation makes its way through the Senate. As evidenced by the report released with the proposed legislation, Senator Rockefeller has taken on a strong pro-consumer agenda, and he will certainly seek to bring further attention to these types of offers.

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This post was written by Sarah Roller and Megan L. Olsen.

On May 19, 2010, the Federal Trade Commission (FTC) approved a final settlement order with the Indoor Tanning Association charging that the association exaggerated the health benefits of indoor tanning and misrepresented that indoor tanning increases the risk of skin cancer. The settlement bars the Association from making misrepresentations about the health and safety of indoor tanning and requires that future advertisements from the association that make health or safety claims be accompanied by clear and prominent disclosures about the risks of indoor tanning. The Indoor Tanning Association represents tanning facilities and suppliers of tanning equipment.

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A recent lawsuit filed by the Los Angeles City Attorney's office should serve as a good reminder to retailers and manufacturers to comply with state and local weights and measures statutes.  Last week the city filed a multi-count criminal case alleging that Ralph's Grocery Company and its parent, the Kroger Company, overcharged consumers for prepackaged and weighed products in violation of the Business and Professions Code. 

The lawsuit includes 14 counts of false and misleading advertising, 18 violations of unlawful computation of value, 9 violations of selling prepackaged commodities in less quantity than represented, and 18 violations of false labeling.  Each company could face fines and penalty assessments up to $256,000.  Ralph's had been put on notice of overcharges, including payment of $6,500 in fines in 2008 and $10,400 in fines in 2009.

Practice Pointer:  Although the fines for these alleged violations may seem relatively low, they can quickly add up if inspectors visit different stores in the same state or if inspectors in other states begin enforcing those state statutes.  Companies that receive notice of overcharges should review their practices to address any recurring issues.

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In a previous post we discussed the “preliminary vote” by the Santa Clara County, California, Board of Supervisors to institute a new ordinance which prohibits restaurants from "providing" toys, coupons, or other "incentive items linked to the purchase" of any product containing “excessive” calorie, fat, saturated fat, sodium, added sugars, or prohibited levels of trans fat, non-nutritive sweeteners, or caffeine.

On May 11, 2010, the Board passed the new ordinance. Click here to read more about the criteria for prohibited single food items, meals, and beverages in the Kelley Drye client advisory.

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This post was written by Sarah Roller and Raqiyyah R. Pippins.

On May 11, 2010, the White House Childhood Obesity Task Force submitted a report to President Obama titled, “Solving the Problem of Childhood Obesity Within A Generation.” The report was submitted in response to President Obama’s February 9, 2010 Memorandum Establishing a Task Force on Obesity, which also requested a “comprehensive interagency plan” for attacking the obesity epidemic from the Task Force within 90 days.

The Task Force report reinforces the authoritative public health recommendations that have developed in the United States since 2001, when Former Surgeon General David Satcher issued the nation's “Call to Action To Prevent and Decrease Overweight and Obesity,” including recommendations made in the Institute of Medicine’s reports entitled, “Action Plan for Obesity Prevention” (2005) and “Food Marketing to Children and Youth: Threat or Opportunity?” (2005). The Task Force report elaborates upon previous recommendations aimed at fostering a healthy environment for children at school and elsewhere, and extends the range of specific public health intervention strategies considered to include regulation of obesogenic chemical exposures, front-of-package and menu labeling, and various economic incentives (taxes, subsidies, licensing standards) to encourage the marketing of food products that support dietary patterns that meet U.S. Dietary Guidelines standards. In addition, the Task Force report recommends "concrete actionable benchmarks " for marking progress and determining success, and “defines solving the problem of childhood obesity in a generation as returning to a childhood obesity rate of just 5 percent by 2030.”

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 This post was written by Sarah Roller and Raqiyyah R. Pippins.

On April 27, 2010, the Board of Supervisors for Santa Clara County, California, conducted its “preliminary vote” to institute a new ordinance which prohibits restaurants from "providing" toys, coupons, or other "incentive items linked to the purchase" of any product containing “excessive” calorie, fat, saturated fat, sodium, added sugars, or prohibited levels of trans fat, non-nutritive sweeteners, or caffeine.  More information regarding the specified nutritional criteria is available here.  The ordinance includes no food labeling requirements and provides that the requirements must be construed in a manner that is consistent with state and federal law.

In order for an ordinance to go into effect in Santa Clara, it must undergo both a “preliminary” and “final” vote before Santa Clara’s Board of Supervisors. The “final vote” will be held Tuesday, May 11, 2010. If the ordinance passes again on May 11, enforcement will begin 90 days later (August 11, 2010). If the ordinance does not pass it will be removed from the docket and would have to undergo another “preliminary vote” before it could be presented to the Board of Supervisors for a “final vote” again.

The ordinance would ban the use of incentive items for products based on nutrient and ingredient content, including coupons and other items that constitute commercial speech, presenting significant First Amendment issues. The ordinance would define "incentive item" broadly to include "any toy, game, trading card, admission ticket or other consumer product, whether physical or digital… or any coupon, voucher, ticket, token, code, or password redeemable for or granting digital access to any [of the aforementioned items].”

Restaurants that violate the new ordinance would be subject to administrative and civil penalties, including fines. The county would use fines collected under the ordinance to fund obesity prevention programs conducted by the county public health department. The Board of Supervisors found that “restaurants encourage children and adolescents to choose specific menu items by linking them with free toys and other incentives,” citing 2006 data regarding fast food child-directed promotional expenditures published by the Federal Trade Commission.

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This post was written by Dana B. Rosenfeld and Megan L. Olsen.

On May 4, 2010, Rep. Rick Boucher (D-VA), the House Energy and Commerce Communications, Technology, and the Internet Subcommittee Chairman, and Rep. Cliff Stearns (R-FL), the Ranking Member of the Subcommittee, released a discussion draft of a privacy bill intended to address concerns about online behavioral advertising and place limits on how consumer personal information is collected, used, and disclosed. The bill would require organizations that collect consumer information to (1) clearly and conspicuously disclose privacy policies; (2) allow consumers to opt out of information collection and sharing and, in some instances, require the consumers’ express affirmative consent to the information practices; and (3) allow the FTC to adopt rules to implement and enforce the bill’s requirements.

The release of the draft bill follows increased legislative and regulatory scrutiny over consumer privacy protection measures—a topic that was extensively explored in recent House Energy and Commerce Committee hearings, in the Federal Trade Commission’s (FTC) recent series of privacy roundtables (see our previous posts here, here, and here), and addressed, at least partially, in the FTC’s April 26, 2010, announcement (see previous post) that it intends to develop Internet privacy guidelines. All of these efforts underscore that regulation of business practices concerning consumer information will likely remain at the forefront for the near future. A more detailed analysis of the Boucher/Stearns bill will be available through Kelley Drye and Warren's Advertising practice client advisories.

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This post was written by Sarah Roller and Kristi L. Wolff.

The Food and Drug Administration (“FDA”) issued a notice last week seeking public comment and consumer research data in support of the agency’s initiative to improve the usefulness of nutrition information provided to consumers at the point-of-purchase, including through front-of-package (“FOP”) labeling and shelf tags in retail stores (“FOP initiative”). FDA’s request for information comes while a related study by the Institutes of Medicine (“IOM”) remains pending. The IOM Committee on Examination of Front-of-Package Nutrition Rating Systems and Symbols currently is evaluating scientific evidence concerning the nutrition information and ranking systems that currently are used by food manufacturers and retailers for FOP labeling, shelf tags, and other food marketing purposes.

The FDA notice specifically requests research data and other information addressing the following matters:

• Data and information on the extent to which consumers notice, use, and understand nutrition symbols on front-of-pack labeling of food packages or on shelf tags in retail stores;
• Research assessing and comparing the effectiveness of particular possible approaches to front-of-pack labeling;
• Graphic design, marketing, and advertising data and information that can inform and guide the development of better point-of-purchase nutrition information; and
• The extent to which point-of-purchase nutrition information may affect decisions by food manufacturers to reformulate products.

Click here to see the specific elements of each of these categories of interest to FDA.

FDA will consider public comment submitted in response to its notice until July 28, 2010.

For more detail, please reference the Kelley Drye client advisory. 

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This post was written by Sarah Roller and Raqiyyah R. Pippins.

In conjunction with the First Lady’s “Let’s Move” campaign  and related federal regulatory efforts focused on nutrition and marketing to children, the USDA Center for Nutrition Policy and Promotion is instituting a new program, titled “Innovations for Healthy Kids Challenge,” intended to “motivate the creation of innovative, fun, and engaging applications or games that encourage children, especially “tweens” (aged 9-12), to eat more healthfully and [to] be more physically active.” USDA is seeking public comment on the paperwork and regulatory burdens associated with the program until June 28, 2010.

The purpose of the challenge is to develop new and innovative technology to “not only increase access to socially relevant technologies that seek to improve eating and physical activity behaviors among children, but…also expand the tools available through the MyPyramid Website.” Through this program, USDA encourages developers to use recently released USDA nutrition data, data the USDA has pre-calculated for common portion sizes and portion increments including solid fats, added sugar, and sugar alcohol content, to design games, applications, and other programs aimed at promoting at least one of the following behavioral objectives:

· Teaching kids to eat more whole grain

· Increasing fruit and vegetable consumption

· Focusing on consuming more low-or non-fat milk

· Choosing lean sources of protein (meat and beans)

· Making food group education fun

· Understanding calories and energy balance

· Increasing choices of foods with high nutrition value and decreasing amounts of foods with solid (saturated) fats and added sugars (i.e., “extra” calories), and decreasing amounts of sodium

· Identifying and consuming proper food portion sizes

· Being more physically active

· Balancing physical activity and food intake.

More information on the program can be found at http://www.appsforkids.com.

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