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Retailers and consumer products companies need to be aware of a new law affecting negative online reviews. On December 14, 2016, President Obama signed the Consumer Review Fairness Act of 2016 (H.R. 5111) into law. The Act voids “non-disparagement clauses” in form contracts designed to prevent consumers from posting negative comments and online reviews of products and services. The Act also makes it unlawful for companies to include these clauses in their form contracts. The Federal Trade Commission will enforce the Act in the same way it enforces against unfair or deceptive trade practices under its jurisdiction; state attorneys general may also enforce the Act under certain conditions. For existing contracts, the Act will take effect in 90 days and FTC/state enforcement may commence one year from now.

Continue Reading Consumer Review Fairness Act of 2016 — Beware of the Negative Online Review

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On February 12, 2016, the Federal Bar Association will host a day-long Fashion Law Conference at Parsons School of Design (Starr Foundation Hall in the New School’s stunning new University Center) on the last day of New York Fashion Week!

Speakers include in-house counsel from The Estee Lauder Companies, Inc., Tiffany & Co., New York

Miller FTC Image Businesses that try to prevent disgruntled customers from sharing their experiences with other consumers may have to answer to the FTC for engaging in an unfair practice.

In Roca Labs, the FTC filed a complaint against marketers of purported weight loss products who “spent millions of dollars … to serve online advertisements.”  Consumers who went online to complain about their experiences faced threats and lawsuits for violating “a Gag Clause purporting to prohibit purchasers from disparaging Roca Labs, its products, and its employees, regardless of the purchasers’ outcomes.” That Gag Clause, part of the terms and conditions
Continue Reading Don’t Put a Sock In It: FTC Says “Let Customers Complain”

In the FTC’s administrative proceeding against ECM Biofilms, Inc., Administrative Law Judge Chappell rejected the FTC’s assertion, taken directly from the Green Guides, that marketing a product as “biodegradable” includes an implied claim that the product “will completely decompose into elements found in nature within one year after customary disposal.” ALJ Chappell ruled that the

The FTC continues its active presence in the environmental claims space with 20 warning letters targeting marketers of “dog waste bags” who make biodegradability and/or compostability claims for the bags and their, er, contents. The sweep contains no surprises in terms of FTC interpretation of environmental claims and is consistent with past FTC actions against

To tackle the challenges of launching products on the Internet of Things, the FTC recommends designing security into interconnected products from the outset as well as monitoring products post sale to quickly identify security risks. Most consumer product companies already have similar programs in place to ensure the safety of the products and meet CPSC

At this year’s National Advertising Division (NAD) annual conference in New York City held on September 29-30, the hot news was old news—speakers from NAD, FTC and various stakeholders emphasized a back-to-basics focus.

For instance, Crowell & Moring’s Chris Cole moderated a panel on product demonstrations. The panel discussed recent NAD decisions, but these recent decisions revolved around the fundamental principles that product demonstrations must accurately reflect how the advertised product works, and must be adequately substantiated.

Even panels on “newer” advertising forms, like native advertising, came back to the concept that consumers should be provided enough information to know who is the author or promoter behind an “info-tisement,” so that they can weigh the information accordingly. Again, the themes of reasonable consumer expectations, accurate information, and adequate support reigned supreme.

Continue Reading Highlights from NAD and CARU Annual Conference in NYC: New Technology, But Old Principles

The choices facing American consumers are no longer just “paper or plastic” or “do you want fries with that?” Today, when strolling the aisles of a grocery store, customers have the option to buy local, organic, gluten-free, low-carb, or any other of a dozen choices. The local coffee shop offers a selection of responsibly-sourced coffees, shade grown coffees, and beans from Ethiopia, Yemen, or Guatemala. What savvy companies and marketers have realized is that American consumers like choice and they like to feel good about the products they buy.

And global trends— like safety concerns about foreign-made products, interest in supporting a flagging U.S. economy, or just plain patriotism—may encourage consumers to change their buying patterns—in favor of American goods. Smart manufacturers and marketers understand this and know that customers may be willing to pay a premium for American quality goods. And so, unsurprisingly, smart companies are doing what they can to make and market products as “Made in America.”

Continue Reading “Made in America” Claims: the Landscape, FTC Guidance, and Tips for Manufacturers and Marketers

The rise of social media for contests and marketing campaigns has captured the attention of the Federal Trade Commission (FTC), particularly campaigns that provide for contest entry based on what amounts to social media endorsements. “Like Company XYZ now to enter!” The FTC is taking stock and beginning to weigh in on this relatively recent practice. Just ask Cole Haan. Late last month, the FTC sent the popular shoemaker a letter marking the end of its investigation into a marketing campaign that turned on “pinning” Cole Haan products for entry into a contest. In it, the FTC concluded that Cole Haan needed to do more to disclose the connection between the contestants’ “pins” and the company’s contest.

It all started last year when Cole Haan launched its Wandering Sole marketing campaign. Cole Haan encouraged consumers to create Pinterest boards that included five shoe images from Cole Haan’s own Pinterest board and another five images of the contestants’ favorite places to wander. Whoever created the board that the company dubbed most creative would win a $1,000 shopping spree. To identify the contestants, Cole Haan asked that the Pinterest users include the hashtag #WanderingSole in the description of their images.

Continue Reading The FTC “Pins” Cole Haan on Pinterest Campaign: Disclosure of Contest Driving Endorsement of Products Required

A California state court recently issued a preliminary ruling proposing to assess a statutory penalty against online discount retailer Overstock.com in the amount of $6.8 million for engaging in allegedly false and misleading discount advertising.1 Overstock.com was alleged to have advertised discounted prices that were pegged to the company’s own uncorroborated estimate of undiscounted retail value, rather than on actual data. The case highlights the risk that both online and brick-and-mortar retailers face if they advertise “discounts” from “regular” prices that have never actually been offered in commerce, in violation of the Federal Trade Commission guidelines against deceptive advertising (“FTC Guides”). The case also signals a major new threat to retailers engaging in these kinds of marketing strategies, which are common in the industry.

The Overstock.com case began in 2010, when a group of California district attorneys filed a private action under California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act. Their complaint alleged that Overstock.com “routinely and systematically made untrue and misleading comparative advertising claims” by comparing its retail prices to “advertised reference price(s)” (ARPs) that were not the prevailing market prices for its products. The district attorneys claimed that Overstock.com instead used misleading internal formulas designed to “inflate the comparative prices and artificially increase the discounts it claimed to be offering consumers.” The complaint also alleged that because Overstock.com was no longer merely a reseller of distressed merchandise, but was now actively engaged in original design, production and sale of a wide variety of products, it could not possibly advertise a “discount” for such products that were never sold at an undiscounted price.

Continue Reading California Court Proposes to Assess $6.8 Million Penalty Against Online Discount Retailer For Engaging in Commonly Used Pricing Claims