Category - "Marketing"

Under Review: The FTC’s Focus on the Fakes

Share

You are thinking about buying a new laptop, or you want to try a new restaurant that’s been open a few months, so what do you do first? You check the online reviews, of course. Most consumers rely heavily on online reviews to make purchases and try new services, but how can you be sure the reviews you see are actually written by a real customer? And wouldn’t you want to know if the customer was paid or given free product in exchange for that review? The proliferation of online shopping platforms and social media have increased opportunities for consumers to find information about potential products they want to buy. However, it also makes it easier for companies to manipulate reviews or endorsements to make their products look better or their competitors look worse. Luckily, the Federal Trade Commission (FTC) is currently prioritizing this issue, through regulatory channels, enforcement actions, and litigation.

For background, when an advertiser uses an endorsement or review in connection with its products or services, there are guidelines to follow set forth by the FTC (the Guides Concerning the Use of Endorsements and Testimonials in Advertising). The FTC Endorsement Guides emphasize the basic principle of truth in advertising: that endorsements must be honest and not misleading. The Guides further state that the endorsement must reflect the true opinion of the reviewer, who must actually have experience with the product or service, and that a material connection between the reviewer and the company needs to be disclosed, if that fact would matter to the purchaser. While the Guides are not regulations, and have no civil penalties for a violation, the FTC can investigate whether the practices are deceptive or unfair under the FTC Act if an advertiser does not follow the Guides.

Continue reading “Under Review: The FTC’s Focus on the Fakes”

Thinking About Engaging an Influencer for Your Next Promotion? Plan Ahead!

Share

Those running promotions such as sweepstakes or contests on social media may seek to engage influencers, or individuals with significant social media followings, to enhance their promotions’ visibility and boost engagement. But before doing so, there are a variety of rules and regulations to consider and evaluate, including Federal Trade Commission (“FTC”) rules relating to misleading, deceptive, and unfair advertising, state-specific rules relating to promotions, and social-media-platform-specific rules, among others. This post gives a high-level overview of issues to consider before engaging influencers to boost your next contest or promotion.

Continue reading “Thinking About Engaging an Influencer for Your Next Promotion? Plan Ahead!”

State AGs Fail in Objections to Proposed Settlement in Class Action Challenging Godiva’s Labeling Practices

Share

The last thing the parties to a class action settlement want to see is an objection from state Attorneys General (AGs).  AG objections to class action settlements are relatively rare and courts tend to give AG objections more weight than objections from private parties.  Not all AG objections are successful, however, and in the recent consumer fraud case of Hesse v. Godiva Chocolatier, Inc., No. 1:19-cv-972-LAP (S.D.N.Y.), a six-state objection filed by the AGs of Florida, Idaho, Maryland, New Jersey, Ohio, and Utah failed to persuade Judge Loretta Preska to reject the proposed settlement.

Hesse concerned Godiva’s use of the word “Belgium” in labeling and promoting its products.  According to the complaint, this practice led consumers to believe, incorrectly, that Godiva’s chocolates are made exclusively in Belgium and to pay higher prices for these products than they otherwise would have.  The parties’ proposed settlement of those claims is fairly standard stuff.  Anyone who purchased Godiva chocolate products between 2015 and last year could file claims to recover $1.25 per purchase.  Class members with proof of purchase could recover up to $25 (for 20 purchases); those without proof were capped at $15 (for 12 purchases).  Plaintiffs claimed actual damages to be $0.46 per purchase, so they characterized this relief as more than full recovery.

Continue reading “State AGs Fail in Objections to Proposed Settlement in Class Action Challenging Godiva’s Labeling Practices”

2021 Year in Review: OPDP Enforcement Actions Involving Prescription and Biological Products

Share

The Food and Drug Administration’s Office of Prescription Drug Promotion (OPDP) issued a total of six letters in 2021 — four Untitled Letters and two Warning Letters — to pharmaceutical or biologics companies for promotional materials that allegedly misbranded prescription drug or biologics products. The two Warning Letters issued in 2021 addressed prescription drug promotion. Two of the Untitled Letters also addressed prescription drug promotion, while the other two letters addressed biologic product promotion.

OPDP also sent six letters in 2020; however, the majority that year (four) were Warning Letters, with only two being Untitled Letters. Both Warning and Untitled letters are made public on FDA’s website. Warning Letters are issued for violations of regulatory significance that may lead to enforcement action if not promptly and adequately corrected, whereas Untitled Letters cite violations that do not rise to the threshold of regulatory significance warranting a Warning Letter. Untitled Letters serve as the initial notification that FDA has taken notice of a violation and allow the company to come into compliance without further FDA regulatory action. Historically, OPDP has relied more heavily on Untitled Letters. 2020 was an outlier year with four Warning Letters versus two Untitled Letters, but 2021 signified a return to normalcy, as the agency issued twice as many Untitled Letters as Warning Letters.

Continue reading “2021 Year in Review: OPDP Enforcement Actions Involving Prescription and Biological Products”

Californiafying New Jersey’s Consumer Protection Laws

Share

Starting now, national advertisers and retailers may want to pay the same attention to legislative and judicial developments in New Jersey that they long have paid in California.

New Jersey’s Governor, Phil Murphy, came into office in 2018 explicitly promising to remake New Jersey into “the California of the East Coast.”  Recently reelected and holding leadership posts in both the National Governors Association and Democratic Governors Association, Governor Murphy is building a national profile.

Continue reading “Californiafying New Jersey’s Consumer Protection Laws”

Launching a Sweepstakes or Contest on Social Media – What You Should Know

Share

As discussed on our blog previously, here and here, a promotion sponsor must finalize Official Rules before a promotion begins. But using a third-party social media platform to administer your promotion or accept entries raises additional issues that must be considered, particularly when the promotion involves the submission of user-generated content (“UGC”).

Using a social media platform to administer your promotion raises two additional issues: (1) ensuring compliance with the platform’s specific promotion requirements; and (2) ensuring that the sponsor is protected from liability if the promotion involves UGC. This blog provides a high-level overview of issues to consider before administering your promotion on a third-party social media platform, and in particular when your promotion involves submission of UGC.

Continue reading “Launching a Sweepstakes or Contest on Social Media – What You Should Know”

Antimicrobial Marketing Claims: What You Need to Know to Mitigate the Risk of EPA Enforcement

Share

Since the SARS-CoV-2 pandemic began, many companies have continued to develop antimicrobial products and devices to address health and safety concerns. Many of those companies are surprised to learn that the way in which they are marketing their products may subject them to regulation by EPA under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).

Continue reading “Antimicrobial Marketing Claims: What You Need to Know to Mitigate the Risk of EPA Enforcement”

Environmental Marketing Claims – It’s Not Easy Being Green

Share

It’s April, which means it’s time for Earth Day.  But for so many consumers, sustainability is top of mind all year.  Consumers are constantly seeking out products and services that they can feel good about using and purchasing.  And marketers want to tout what their company is doing to be good to the environment.  As a result, the marketplace is flooded with claims that our household cleaners are “non-toxic” and our packaging is “recyclable” along with many other environmental benefit statements for products and services.

To avoid what’s commonly known as “greenwashing,” marketers need to ensure that statements made about the environmental benefit of their products or services are clear, truthful, and evidence-based.  A top resource in this area is the Federal Trade Commission’s “Green Guides,” which can help companies avoid making environmental benefit claims that can attract regulators and mislead consumers.  While the Green Guides are not FTC regulations, they provide detailed guidance on the types of claims that the FTC considers deceptive under Section 5 of the FTC Act, which broadly prohibits “unfair or deceptive acts or practices in or affecting commerce.” (15 U.S.C. § 45(a)(1).)  Although these Guides have not been updated in almost 10 years, they remain instructive when it comes to a review of environmental benefit claims.

Continue reading “Environmental Marketing Claims – It’s Not Easy Being Green”

Healthy Choices: The Power and Perils of Health and Wellness Claims in Advertising

Share

Even before COVID-19 had turned each of us into an amateur epidemiologist, companies in nearly every industry had begun to recognize the magnetic appeal of health and wellness claims in consumer advertising.  Marketers of everything from cleaning products to apparel to furniture to homes were suddenly making claims touting the health and wellness benefits of their products. It wasn’t just better, it was better for you and your family.  It will surprise no one to learn that the pandemic year of 2020 only intensified this trend, as consumers focused as never before on the ways that their purchases might not only help them live better lives, but perhaps even keep them alive.

Predictably, competitors, regulators and the plaintiff’s bar have all taken notice of this trend, and moved aggressively in response.  In 2020, for example, the BBB National Programs’ National Advertising Division (NAD), the nation’s premier forum for competitor initiated advertising challenges, recorded an extraordinary 50% uptick in challenges to health-related advertising.  Similarly, the Federal Trade Commission (FTC), Food and Drug Administration (FDA), Environmental Protection Agency (EPA), and state regulators across the country have focused intense scrutiny on companies claiming to offer health benefits to consumers often desperate for help.  It is natural to predict that class actions and Lanham Act activity will soon reflect these trends as well.

So with the undeniable power of these claims balanced alongside the risks of a misstep, how should brand messaging communicate the health and wellness benefits of a product in the “right” way?  And what are the red flags to look for in the advertising of your competitors?  Here are a few hints:

  1. Identify the Claims. Advertisement and marketing claims are intended to communicate characteristics of a good or service designed to entice a purchase.  Claims are present in all forms of branded communication, from TV commercials, to print ads, radio announcements, pop-up ads, and social media influencer posts.  Keep in mind it isn’t just about what you are saying, but what can be implied from the images, graphics and pictures.So whether looking to substantiate your own claims, or to challenge the claims of a competitor, the first step is to systematically identify the statements that actually qualify as a “claim.” For many marketers this can seem daunting, but in fact this initial analysis involves asking just a simple question:  what exactly are you promising?  Claims are promises and comparisons presented as facts:  you should buy this product because it will improve your memory.  You should buy this chair because it will reduce your back pain.  You should use this cleaning product because (unlike the products sold by our competitors) it does not contain toxic chemicals.  Performance claims, superiority claims, comparative claims – all of them are, in the end, statements which are either true or false, accurate or misleading.  And it isn’t enough to say “everybody knows X is true” – all claims must be substantiated before you make them.  And remember, it isn’t just what you say directly:  you can be held accountable for what your spokesperson or influencer says, too.
  2. Substantiation. What kind of evidence would substantiate the claim?  How much data is necessary?  Do I need a clinical trial?  Is my evidence enough?The simple answer is…it depends.  The level of scientific evidence necessary to support a claim always depends on the claim that is being made.  Moreover, specific regulatory requirements may apply depending on the claim.  If the product claims to ‘sanitize,’ for example, then it is possible that EPA approval may be necessary or it must meet certain FDA requirements.  Of course, if the product is not regulated, the standard may differ.  This is where talking things through with your counsel is most critical:  the same type of claim on a different kind of product may not be subject to the same requirements.  In any event, the science must closely match the requirements of the claim language.  Don’t let your claim outpace the science – anecdotes from happy customers, or enthusiasm for your product, can never substitute for systematic evidence.
  3. Magic Language. We all love puffery – and we all think we know it when we see it.  But, that isn’t always the case.  Statements that are specific, quantifiable or purport to describe objective facts may not constitute puffery, regardless of how over the top the language may seem.  Claims about the ‘safest’, ‘best’, ‘highest quality,’ can all require substantiation under certain circumstances.  Perhaps it is just enough to merely offer the “finest” of all puffery….
  4. Is this a Regulated Claim?  Is it possible that the product “sanitizes”, has “antimicrobial” properties, or somehow prevents or reduces the likelihood of contracting COVID-19?These statements are important ones as they may transform the product from an ordinary consumer product to a regulated product.  Sanitizing and antimicrobial properties may trigger EPA review and treatment or prevention of a disease may render a product a ‘drug’ regulated by the FDA.  Of course, the FTC may also assert its authority particularly if these statements are disseminated on a product website or in other forms of advertisement.  It is possible that the mere existence of these words invite enforcement activity.
  5. Is this a Comparative Claim? The most, the best, the mostest, the bestest, the… mostest bestest?  We all want to be on top, but sometimes that means a “head-to-head” comparison is necessary to substantiate the claim.  Even then, it is necessary to understand that an unqualified comparison may trigger a greater level of substantiation because consumers may understand it to mean “as compared to all leading products nationwide.”  Our advice: “Think before you compare” and determine the basis for your comparison – don’t just assume that everyone will understand it in the same way.

While health and wellness claims are subject to an increasingly intense level of scrutiny by competitors and regulators alike, there is little question that consumers want to know whether the products they buy are in alignment with the health and wellness goals they have set for themselves and their family.  A well-crafted campaign supported by properly substantiated claims is not only a way to stay out of trouble, but a way of building deeper and more lasting engagement with educated consumers.

Brandemic: How COVID-19 May Change the Who, What, and How of Your Company’s Brand Identity

Share

The global COVID-19 crisis has created dynamic shifts in how businesses source and sell goods and services.  Whether those shifts are temporary or will solidify into more permanent structures ushering in a “new normal” era of consumerism, remains to be seen.  As I write this, it is the weekend after Memorial Day 2020.  Just yesterday, my home state of Virginia commenced phase I of a graduated reopening of the state economy, while last weekend’s headlines focused on widespread defiance of stay-at-home orders and social distancing guidelines as the U.S. death toll climbed towards 100,000 (a milestone it has now passed).  It is clear that there are limits to our willingness to stay home, and that bodes well for the survival of some brick-and-mortar retailers.  But brick-and-mortar retail and business in general may look significantly different in a post-pandemic world.  The companies emerging stronger will likely be those that use this time to rethink who they are, what they do, and how they do it — and the ways in which they convey that message to consumers.

Continue reading “Brandemic: How COVID-19 May Change the Who, What, and How of Your Company’s Brand Identity”