The 2018 Farm Bill legalized cultivation and processing of industrial hemp and various by-products. One hemp-based derivative of considerable interest to manufacturers of personal care products, dietary supplements, cosmetics, and OTC drugs is cannabidiol (“CBD”). As industry races to commercialize and advertise CBD, it’s important to understand the regulatory hurdles that remain. Ad law partner,
About a year ago, the SEC issued a warning to celebrities and social influencers who promoted Initial Coin Offerings (ICOs) on social media, noting that such promoters are subject to federal securities laws. Apparently, at least two celebrities weren’t paying attention because they recently settled the SEC’s first cases regarding promoting ICOs without proper disclosures.…
On November 27, the FTC Commissioners testified on a range of issues before the Senate Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security. One excerpt that caught our attention was their comments on “Made in USA” advertising and the potential for increased scrutiny.
Here’s an excerpt of the Q&A between Sen. Shelly Moore Capito (R-WV) and the FTC Commissioners (emphasis added):
CAPITO: Okay, last question I have on fraudulent marketing would be the… fraudulent Made in America label. How prevalent is this? And what are some of the means you’re going to try to curb this practice?
SIMONS: This is fairly prevalent. We get hundreds of these, hundreds of complaints a year, that people are improperly using the Made in the USA label. We are committed to investigating those, and usually a lot of times what happens is the firm, the company doesn’t even realize that it’s a violation. So we explain to them it’s a violation and they stop it.
Sometimes companies do it intentionally, sometimes we tell them and they don’t stop and those people we sue. And one of the things that we’re exploring now, as a general rule, we have only gotten injunctive relief in cases like this previously. Now we’re exploring whether we can find a good case that would be appropriate for monetary relief to serve as an additional deterrent.
CHOPRA: I just want to add here that I think there are manufacturers out there who hire American workers and who purposely do that because they want to put the flag on their product. And for those who lie, this cheapens the Made in the USA label so it’s not just hurting American consumers, it’s hurting every American manufacturer who is trying to do right. So I want us to be much more aggressive with this, actually. And if you and Senator Cortez-Masto want to team up, finding civil penalties for some of these bad actors, we can make sure we increase compliance levels. And I got to tell you — right now there’s a country of origin labeling issues in agriculture, country of origin issues in product marketing. We have to do more to put a stop to this because this is extremely unfair to honest companies.
California Governor Jerry Brown recently signed into law Assembly Bill 2632, which amended California’s slack fill law to create several new exemptions, hopefully providing some relief from the plague of slack fill lawsuits that has hit the food and beverage industry, among others, particularly hard in recent years. For those who are unfamiliar, slack…
The California Food, Drug, and Medical Device Task Force announced a settlement this week with Goop, the lifestyle brand founded by Gwyneth Paltrow, which we’ve written about here and here. The complaint alleges that Goop made false and misleading representations regarding the effects or attributes of three products—the Jade Egg, Rose Quartz Egg, and…
The FTC recently finalized updates to its Guides for the Jewelry, Precious Metals, and Pewter Industries, which provide the FTC’s interpretation of the jewelry marketing rules found in 16 C.F.R. §23. The FTC hosted a roundtable in 2013, which we wrote about here, and considered stakeholder comments prior to finalizing the new Guides. The updated Guides address a number of topics, including the surface application of precious metals, below-threshold previous metal alloys, gemstone products, and “cultured” diamonds.
Some highlights of the changes include advising that jewelry marketers may:
- Qualify if a coated product only has a service layer of a precious metal;
- Advertise a product’s precious metal coating to assure reasonable durability;
- Disclose the purity of coatings made with precious metal alloys;
- Qualify a product’s gold karat fineness or a parts per thousand (PPT) designation for silver products that have less than 925 PPT;
- Use alternative words and phrases for man-made stones (where it shares the same properties as the named stone) if they clearly and conspicuously convey that the product is not a mined stone.
Having now turned the page to the back half of 2018, we took a look at how the FTC’s “Made in USA” enforcement is stacking up to prior years. As we previously posted, the FTC made known its intent to prioritize “Made in USA” enforcement in remarks delivered at last fall’s NAD Conference. Year to date, the FTC has settled two cases (Bollman Hat Company and Nectar Brand LLC) and has issued 15 closing letters regarding “Made in USA” claims.
By comparison, there were two settlements and 22 closing letters in 2017. If the current pace continues, the number of closing letters may exceed prior years.
What can we learn from these cases?
- Qualified Claims Must Still Be Substantiated: Most closing letters involve unqualified “Made in USA” claims. However, qualified claims and those involving terms open to interpretation can still be the subject of scrutiny and must still be properly substantiated. Nectar Brands allegedly claimed in promotional materials that its mattresses were “Designed and Assembled in USA,” but the FTC’s complaint alleges that the mattresses were wholly imported from China, with no assembly taking place in the United States. “Crafted in America” was also among the claims that saw enforcement as was “Built in USA.”
- Watch For Disclosure Issues: In addition to labeling wholly imported products as “Made in USA,” the FTC alleged that Bollman Hat Company and its subsidiary licensed the “American Made Matters” seal to any company that claimed it had a United States-based manufacturing factory or one product with a U.S.-origin label, and met several membership requirements, including self-certifying that at least 50% of the cost of at least one of their products was incurred in the United States, with final assembly or transformation in the U.S., and payment of an annual licensing fee of $99. The settlement requires the respondents to engage an independent auditor regarding use of the seal or to clearly and conspicuously disclose that products and services may display the seal based on self-certification.
A federal jury in Illinois recently awarded Dyson, Inc. over $16 million in damages after finding that SharkNinja falsely advertised that its Rotator Powered Lift-Away vacuum was better than Dyson’s best-performing vacuum, the DC65. SharkNinja ran ads that claimed that independent testing showed that the Rotator Powered Lift Away vacuum was proven to have “more …
Those of us who spend our days at the intersection of law and advertising of health products generally accept that the prescription drug world is a universe unto itself, overseen by the FDA pursuant to the Prescription Drug Marketing Act. As prescription drug companies have increased their direct-to-consumer outreach through social media, native advertising, and health information platforms, questions have arisen as to the role that the NAD might play in regulating these advertisements. For those who are unfamiliar, the NAD is the National Advertising Division of the Better Business Bureau. It is an industry self-regulatory body that is charged with hearing and rendering decisions in advertising disputes, typically among competitors. It is commonly used amongst advertisers of consumer-directed products and services. It is not commonly used amongst prescription drug advertisers and, until recently, many likely assumed that NAD did not have jurisdiction to hear prescription drug advertising challenges.
A relatively recent NAD decision makes clear that that body believes that it has jurisdiction over prescription product advertising, however. Late last year, the NAD evaluated advertising by Synergy Pharmaceuticals for its Trulance product, which is prescribed for chronic idiopathic constipation. Allergan, maker of a competing product, challenged the advertising on the basis that it included false implied superiority claims, expressly false superiority claims, and undisclosed native advertising in the form of a waiting room pamphlet that allegedly was positioned as independent and impartial patient education material. …
Earlier this month, the Securities and Exchange Commission (SEC) issued a warning to celebrities and social influencers who use social media to encourage consumers to invest and/or purchase stocks. Recent celebrity endorsements for investment in Initial Coin Offerings (ICOs) were highlighted as examples in the SEC’s warning. In the future, if celebrities and social influencers…