On August 4, 2022, the Consumer Financial Protection Bureau (“CFPB”) issued a report entitled, “The Convergence of Payments and Commerce: Implications for Consumers,” in which it examines the challenges and risks to consumers inherent in the rapidly evolving payment ecosystem and emergence of product offerings that blur the traditional lines of banking and commerce.

The report

In the report, the CFPB identifies three new product categories that have the potential to increase consumers’ choices and streamline their experiences by integrating commerce and financial services:

  • Super apps. Apps that provide access to a variety of products and services within a single app, thereby minimizing or eliminating the friction created by having to work with several different providers. The CFPB notes that in the U.S., the super app concept is following the “bank in the app” approach and identifies the PayPal wallet as an example of a U.S. super app “bank in an app.”
  • Buy Now, Pay Later (“BNPL”). An instant loan available at the moment of purchase that allows consumers to split purchases into four equal interest-free installments, with the first installment due at checkout. The CFPB notes that BNPL has emerged as a popular alternative to credit cards, as the application process for the non-interest loans is short and seamless with high approval rates.
  • Embedded commerce. The report describes embedded commerce as the incorporation of a payment capability within any area of a social media feed that enables consumers to shop directly on a social media website or app instead of being directed to a retailer’s website. The CFPB notes that the “frictionless” transactions that embedded commerce promotes is prevalent on e-commerce websites (e.g., Amazon) and in social media feeds.

While these new capabilities have introduced innovation in the financial services and payment space and can be regarded as “value-added conveniences” that benefit the consumers who use them, the CFPB is concerned that these new technologies may introduce new risks to consumers. The two risks highlighted in the report are:

  • Monetization of consumer financial data. The CFPB is concerned that as technology drives closer integration between financial service providers and non-financial companies (e.g., social media and e-commerce companies), companies will have more opportunities to aggregate, monetize, and misuse consumers’ financial data. The CFPB is also concerned that the data handling practices of companies and service providers may be opaque to consumers and their data may be used and shared for purposes they did not intend or understand, which can lead to “feelings of powerlessness” and “digital resignation.”
  • Scale and market power. The CFPB suggests that as the payment ecosystem continues to evolve, it is possible that the emerging business models described in the report (or others) will allow certain companies to quickly gain scale through the engagement of merchants and consumers and aggregate vast amounts of consumer data, which will result in the creation of “a new generation of dominant incumbents.”

The CFPB concludes the report by describing the steps it intends to take as part of a “multifaceted effort to promote fair, transparent, and competitive markets for consumer financial services.” Specifically, the CFPB plans to:

  • Propose rules pursuant to section 1033 of the Dodd-Frank Act in an effort to provide consumers with greater control over their financial data, including their payments and transaction data.
  • Assess new models of lending integrated with payments and e-commerce, such as BNPL.
  • Seek to mitigate the potential consequences of large tech firms moving into the real-time payments space in the U.S. by considering the experiences of other jurisdictions where the shift toward real-time payments has occurred and evaluating ways to protect consumers and reduce fraud losses incurred by consumers and market participants.

Putting the report in context

The report continues the work the CFPB began last year when it issued market monitoring orders pursuant to its statutory authority under the Dodd-Frank Act to six Big Tech companies (ordering them to turn over information about their payments products, plans, and practices) and five of the largest BNPL providers (ordering them to turn over information on the risks and benefits of fast-growing BNPL loans).

Read together with these orders, the report suggests that the changes occurring across the payment ecosystem have drawn the CFPB’s attention. They also signal that under its new director, former FTC Commissioner Rohit Chopra, the CFPB will continue to expand oversight of tech companies as they move into the traditional financial sector and intervene as needed to protect consumers and support its mandate.


Companies operating in the digital commerce ecosystem (and those considering moving into the space) should take steps to ensure that, among other things, their use, aggregation, and monetization of consumers’ financial data is fair and transparent and their products and services create value for consumers, merchants, and the financial system.

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Sustainability continues to be a hot topic in the fashion industry, both in ads and in lawsuits related to those ads. Last month, a plaintiff filed a proposed class action against H&M arguing that the company makes various false claims about the sustainability of its products. The lawsuit seems to be prompted by a June 28, 2022 article published in Quartz with the results of an investigation which allegedly demonstrated that “H&M showed customers environmental scorecards for its clothing that were misleading and, in many cases, outright deceptive.”

Leaning on the Quartz article, the complaint alleges that the company “conveniently and egregiously” presented negative results as positive ones in its scorecards. For example, one scorecard claimed that a dress “was made with 20% less water on average,” when Quartz determined that the dress “was actually made with 20% more water.” The plaintiff claims that “a majority” of the products that H&M markets as being sustainably-made are actually “no more sustainable than items in [its] main collection, which are also not sustainable.”

(H&M removed the scorecards, which were based on the Higg MSI calculations, shortly after Quartz published the article. Facing scrutiny over its use of Higg MSI, the Sustainable Apparel Coalition also announced that it was pausing the use of the tool, pending further investigation. Critics who think that Higg MSI doesn’t measure enough of a product’s lifecycle are happy with that decision, but members of the Coalition and others who rely on Higg MSI are left to wonder what’s next.)

The plaintiff looks beyond the article and cites a number of other claims that allegedly mislead consumers, including claims that products are a “conscious choice,” a “shortcut to sustainable choices,” and made from “sustainable materials.” Moreover, the plaintiff alleges that statements that H&M will prevent its clothes “from going to landfill” through its recycling program are also misleading because recycling options are not commercially available on a large enough scale. According to the complaint, “it would take H&M more than a decade to recycle what it sells in a matter of days.”

The complaint covers a lot of ground, and it’s too early to predict how the case will turn out. Nevertheless, the case serves as another reminder that green claims continue to face scrutiny from a number of sources, including competitors, regulators, plaintiffs’ attorneys, and the press. Negative attention from one source can lead to negative attention from others. It’s important for companies to ensure that their claims are backed by solid evidence and that the language they use is closely tailored to that evidence.

Over the past several years, plaintiffs have filed several lawsuits around the country, alleging that retail websites that were not accessible to blind and visually impaired individuals constituted a violation of the Americans with Disabilities Act.  This was perhaps most prevalent in California, which has its own civil rights statute, the Unruh Act, that provides a right of action for both violations of the ADA and for other alleged denials of access to disabled individuals on the basis of intentional discrimination.

Retailers often objected to the allegations under these suits, arguing that a website is not a place of public accommodation and that maintaining a website cannot possibly evince intentional discrimination.  On August 1, 2022, the California Court of Appeals opinion in Martinez v. Cot’n Wash, Inc. agreed on both fronts.  First, it held that operation of a website cannot be a basis for “inferring intentional discrimination” under the Unruh Act.  Second, it agreed with a plurality of federal Circuit Courts that a retail website without any connection to a physical space does not constitute a place of public accommodation under the ADA.

Beginning with the Unruh Act, one of the ways to establish liability under the Unruh Act is by alleging “willful, affirmative misconduct with the specific intent to accomplish discrimination on the basis of a protected trait.”  In California, disparate impact of a neutral structure is not enough to establish an intent to discriminate.  To get around this bar, the Plaintiffs in Martinez attempted to establish intent by alleging that after becoming aware that the website was impacting blind and visually impaired individuals, the retailer failed to address the continuing effect, which shows that it had an intent to discriminate.  But the Court rejected this argument.  Instead, it held that the failure to address a known discriminatory effect is not alone sufficient to establish intentional discrimination.  As such, the Court held that the complaint failed to state a claim under the Unruh Act on that ground.

Next, the Court also examined the website under the ADA.  No individual may be denied access to any place of “public accommodation” under the ADA as a result of their disability.  In Martinez—and in other website accessibility cases—plaintiffs have argued that the website was such a public accommodation.  Plaintiff supported this argument in Martinez by pointing to both the goals of Title III of the ADA and the legislative intent behind the statute: improving accessibility.  Indeed, the plaintiff argued that a broad interpretation of public accommodation would benefit the goals of the ADA, claiming that “it would be absurd” to treat a sale through a digital-only retailer differently than a sale at a brick and mortar retailer.  The Court rejected this argument, however, noting that websites are not contemplated within the text of the ADA because there is no nexus to a physical location and that neither Congress nor the Department of Justice has yet issued guidance to necessitate such a finding.  Therefore, the Court held that a digital-only retailer cannot be a “place of public accommodation” under the ADA.

That is not to say that no website can be considered a place of public accommodation, however.  The Court’s holding was carefully limited to only standalone websites that do not have any connection to a physical facility.  This mirrors the approach taken by courts in the Third, Sixth, Ninth, and Eleventh Circuits, which all held that denial of access to a website can support an ADA claim if the denial prevents a blind or visually impaired plaintiff from enjoying the goods or services at the brick and mortar location.  As such, if a website is for a business that maintains a physical location, an inaccessible website may ultimately leave the business susceptible to a claim under the ADA (and by extension, the Unruh Act).

Still, the Martinez Court’s expansive holdings on both the Unruh Act’s and ADA’s applicability to websites should shed a light on the risks faced digital-only retailers and brick and mortar retailers alike.

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As heat waves spread across the country, many men are looking for opportunities to go without socks. (To those men, I might suggest a good pair of no-show socks but, like with other grooming tips, that’s beyond the scope of this post.) The point is that, despite the heat, one Missouri man wants more socks, even though they appear to be thick and rather warm. In fact, he filed a $5 million class action against Bass Pro Shops for failing to give him more of those socks under the company’s lifetime guarantee.

Bass Pro sells a product called “RedHead® Lifetime Guarantee All-Purpose Socks.” As theBass Pro Socks name suggests, the company prominently advertises that the socks are subject to a lifetime guarantee and that “if they wear out, they get replaced.” In a YouTube video, a store manager elaborates on that, saying: “If anything ever happens — if the dryer steals one of them on you — you bring the other one in, and we give you a brand new pair of socks.”

Whether or not our man in Missouri had socks stolen by his dryer we may never know, but we do know that he took advantage of the lifetime guarantee a number of times since 2015, “typically 2-4 pair at a time.” Each time, Bass Pro replaced the socks with new socks that were subject to the same lifetime guarantee. That changed last year, though, when he attempted to exchange four pairs of socks. This time, he was given “distinctively-marked 60-Day Socks.”

(If you’re not sure what you’re wearing, glance down towards your calves. If you see a “distinctive stripe pattern” on your socks, that could be a warning that they’re just 60-Day Socks. Tread carefully.)

The lawsuit alleges that Bass Pro has engaged in false advertising and that it failed to honor its warranty. Although it’s too early to tell how this case will turn out, this lawsuit is worth contemplating for any company that is considering a lifetime warranty. A lifetime warranty may be a big selling point but, as the saying (sort of) goes: “With big selling points come big responsibilities.” Absent any clear disclosures, those responsibilities could last a lifetime.

Twilio advertises that its customer data platform is the “#1 CDP” and discloses that the claim is based on 2020 market share, as measured by the International Data Corporation. Adobe challenged the claim, arguing, in part, that the 2020 IDC Report doesn’t reflect the current landscape and, even if it did, that Twilio’s disclosures were insufficient. NAD’s analysis includes tips for anyone looking to make #1 claims.

When a company makes a #1 (or similar) claim, it’s important to have current and accurate support. Adobe took issue with the 2020 IDC Report because it doesn’t include major competitors that were just entering the market at the time. Indeed, the IDC noted that it expected “significant change in the structure of the CDP market,” now that competitors like Adobe were entering the market.

Although NAD acknowledged that the market may have changed, it was persuaded by Twilio’s argument that the 2020 IDC Report is the most recent annual study by IDC on the entire CDP market. Accordingly, NAD determined that the claim was substantiated, as long as Twilio clearly disclosed that it was based on a 2020 study. (Click here for a case in which NAD determined that a #1 claim could no longer be substantiated when newer data contradicted it.)

The next question is whether the basis of the claim was clearly disclosed. Twilio didn’t fare as well on that issue. For example, the claim “Twilio #1 Customer Data Platforms” appeared on the advertiser’s website, with a disclosure stating, “IDC report on 2020 market share rankings for Customer Data Platforms is now available.” NAD thought that was potentially confusing because the statement about the report being available doesn’t clearly communicate that the claim is based on that report.

It’s worth highlighting that Adobe also challenged the lack of disclosure on Google search results. Many advertisers assume that because space is limited on those results, disclosures aren’t necessary, but that’s not the case. Here, NAD recommended that Twilio work with Google to modify search results to make clear that its “#1 CDP claim is for 2020 market share as determined by the 2020 IDC Report.” Twilio agreed to make those changes.

Number 1 (and similar) claims can attract favorable attention from potential customers, but they usually also draw scrutiny from competitors, especially those who are close in market share. Make sure you scrutinize them first.

How To Protect Employee/HR Data and Comply with Data Privacy Laws
Wednesday, July 20

As workforces become increasingly mobile and remote work is more the norm, employers face the challenge of balancing the protection of their employees’ personal data and privacy against the need to collect and process personal data to recruit, support and monitor their workforces. Mounting regulations attempt to curb employers’ ability to gather and utilize employee data—from its historical use in processing employee benefits and leave requests to employers’ collection, use or retention of employees’ biometric data to ensure the security of the organization’s financial or other sensitive information systems. Learn what employers can do now to protect employee data and prepare for the growing wave of data privacy laws impacting the collection and use of employee personal data.


Avoiding Price Gouging Claims
Wednesday, August 3

Recently State Attorneys General, the House Judiciary Committee, and many others have weighed in on rising prices in an attempt to weed out price gouging and other forms of what they deem “corporate profiteering.” States and federal regulators are carefully looking at pricing as consumers and constituents become more sensitive to the latest changes and price gouging enforcement is an avenue states may be able to use to appease the public. Unlike other emergencies in the past, the current state of supply chain and labor shortages, along with skyrocketing costs for businesses, make it unrealistic for companies to simply put a freeze on any price increases. This webinar will cover:

• The basics of price gouging laws and related state emergency declarations and how to comply
• The differences and varied complexities in state laws
• General best practice tips
• How AGs prioritize enforcement


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Find more upcoming sessions, links to replays and more here

In a February 2021 blog post, CARU encouraged advertisers to focus on diversity and inclusion in their ads. In August 2021, they went a step further when they announced that the new version of the CARU Guidelines would include a provision stating that ads “should not portray or encourage negative social stereotyping, prejudice, or discrimination.” Last week, CARU released the first decision involving that new provision.

During the course of CARU’s routine monitoring, they found clothing on Primark’s website that included different slogans on shirts advertised to girls and boys. For example:

  • Slogans on shirts advertised to girls such as “Be Kind, Be Happy,” “Kindness always wins,” “Always Perfect,” “Grateful, humble and optimistic,” and “Be good, do good.”
  • Slogans on shirts advertised to boys such as “Change the game,” “Born to win,” “Power,” “Champion,” “Total Icon,” and “Awesome Adventures.”

CARU found that “Primark’s separate lines of messaging advertised to girls and boys created a dichotomous world of goals and attributes – those appropriate for girls and those appropriate for boys – that portrayed or encouraged negative stereotyping, prejudice, or discrimination.” Based on these findings, CARU recommended that the company modify ads “so that the messages do not portray or encourage negative stereotyping, prejudice, or discrimination.”

Beyond CARU’s analysis of this new provision, this case involved some unique jurisdictional issues. The CARU Guidelines only apply to “national advertising that is primarily directed to children under age 13 in any medium.” And the term “advertising” is defined, in part as “any commercial message or messaging primarily directed to children under age 13… that promotes the sale of one or more products or services.”

Primark argued that the CARU’s concern related to products, not ads for those products. CARU disagreed, finding “that the messages on the clothing are indeed commercial messages whose purpose is to promote the sale of the clothing.” Moreover, CARU disagreed with Primark’s argument that the clothes were advertised to parents, who are the purchasers, rather than to children. They held that the “messages are designed to be attractive to kids who are enticed by their colorful and eye-catching advertising messages and will want the clothes and urge their parents to buy them.”

This case provides some hints about how CARU is going to interpret its new provisions and suggests that they will take an expansive view of what constitutes national advertising primarily directed to children under 13. Companies that design products for children will want to keep a close eye on future decisions involving these issues to see how this line of thinking develops.

With the clock now running on the comment period for the California Privacy Protection Agency’s (CPPA) Draft Regulations to implement the CPRA – comments are due on August 23 – one of the items on many businesses’ CPRA preparation to-do lists is to address new (and the expansion of existing) consumer rights. The Draft Regulations published by the CPPA lay out how the CPPA is likely to define these obligations. This post takes a deeper look at what’s in the CPPA’s proposal – as well as what’s missing.

A couple of overarching points are worth keeping in mind.  First, implementing the CPRA’s consumer rights provides an occasion to review and update data maps so that they accurately capture how personal information flows both through their organizations and to service providers, contractors, and/or third parties.  Second, preparing for CPRA consumer requests should go hand-in-hand with reviewing the systems and procedures that are in place to honor consumers’ requests. Continue Reading Preparing for Expanded Consumer Rights Requests Under the CPRA

The halfway point of 2022 finds NAD digging deep on supplement substantiation and looking closely at whether product names convey misleading claims.  Here are highlights from the past quarter and links to our posts from earlier this year.  Enjoy!

The Proof Is In the Testing (NAD Case No. 7067)NAD recommended that Dakota Nutrition, Inc., discontinue a broad range of claims relating to the presence of elderberry in the company’s Elderberry Capsules and Elderberry Gummies products, including claims that the products even contain elderberry or provide benefits commonly associated with elderberry.  NAD also recommended that Dakota Nutrition discontinue use of the term “elderberry” in the product name given that Dakota Nutrition was unable to provide a reasonable basis that its products contain elderberry, based on HPLC and HPTLC testing provided by the advertiser.  This case is a reminder of the importance of robust ingredient and finished product testing, particularly as many companies have shifted to alternate suppliers during the pandemic to meet consumer demands.

Mmmm…Chicle (NAD Case No. 7077):  NAD also went deep into ingredient testing in a challenge filed by global confectioner Perfetti Van Melle USA, Inc., against Mazee, LLC, maker of Glee Gum.  Mazee advertised Glee Gum as, among other things, an all-natural, eco-friendly chewing gum made from chicle, a tree sap that Mazee claimed is sustainably harvested from the rainforests of Central America.  To support its claims that Glee Gum contained chicle, Mazee provided information from its supplier stating that the gum base is 94% chicle tree sap (the other 6% consists of candelilla wax and natural citrus acid), along with the results of Carbon-14 testing by Beta Analytic.

Perfetti rebutted that the supplier information did not show that chicle is an ingredient because the CAS Registry Number it listed to identify “Chicle Tree Sap” is not the CAS Registry Number of chicle or any other known chemical substance.  Further, the challenger argued that the results of Mazee’s Carbon-14 tests do not provide any information as to whether the gum base in Glee Gum contains chicle, but only purport to provide information regarding whether the carbon in Glee Gum is plant or fossil-based.  Perfetti further attacked Mazee’s claims with analysis from two experts who concluded that Glee Gum did not exhibit typical chicle-related characteristics and, instead, their analysis suggested the presence of synthetic materials.   Based on this, NAD recommended that the advertiser discontinue claims that the gum base of Glee Gum is “made with chicle.” Continue Reading Mid-Year Check-in on NAD Food, Supplement and Personal Care Product Cases

My law firm picture was taken on a Tuesday morning, but I’ve always lamented that the photographer wasn’t available to take it on a weekend, which would have given me a better opportunity to showcase my Saturday night hair. In case you think that’s something only I worry about, take note that questions related to the ease of creating such an enviable hair style recently made their way into an advertising dispute between Dyson and SharkNinja.

In an infomercial for its Shark HyperAir hair dryer, SharkNinja claimed that “only with Shark Intelligent IQ Stylers can you get Saturday night hair every day of the week.” Dyson argued that the claim was misleading because it suggests that only HyperAir users can routinely achieve styling results that other products’ users can attain only by investing substantially more time. SharkNinja argued that the claim was puffery because “Saturday night hair” is not a measurable attribute and that no reasonable consumer would understand that to be a comparative claim.

As with most cases involving puffery, it’s important to zoom out and consider the claim in context. (Look at the entire hairstyle, rather than the individual hairs, if you will.) During the course of the 30-minute infomercial, SharkNinja makes various comparisons to other hair dryers, including specific references to Dyson’s own Supersonic hair dryer. NAD determined that although “Saturday night hair” may be puffery on its own, in the context of the infomercial, “it conveys a comparative superior performance message because the infomercial states that only the Shark Intelligent IQ Styler can achieve that result.” Accordingly, NAD recommend that SharkNinja modify the claim.

The case covers a lot of ground, but we wanted to start here because this topic – puffery, more so than hair styles – comes up a lot in our conversations with clients. Context is always critical. Phrases that come across as subjective (and thus require no substantiation) when standing on their own can come across as objective (and thus require substantiation) when combined with references to competitors. Hair styles may come and go, but this rule has stood the test of time, so comb through your claims carefully.

Tuesday Morning Hair