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Dannon Settles Class Action Challenging "Clinically" and "Scientifically" Proven Health Claims For $45 Million The Dannon Company recently settled a Northern District of Ohio class action which challenged the company's claims that its Activia and DanActive yogurts were clinically or scientifically proven to help regulate the body's digestive system. The settlement is being characterized as one of the largest settlements of food false advertising case and highlights the importance of ensuring that a marketer's level of claim support matches the advertised claim.
Colorado Passes Two Restrictive DM Taxes The state of Colorado recently passed two laws which apply to the direct marketing industry. Both laws went into effect on March 1, 2010. One of the laws applies particularly to out of state sellers who do not collect and remit Colorado sales tax.
Proposed Dietary Supplement Bill Seeks to protect Consumers while placing Greater Burden on Manufacturers Manufacturers, distributors and retailers of dietary supplements have become the target of new legislation proposed by Senator McCain and co-sponsored by Senator Dorgan. S.3002, The Dietary Supplement Safety Act of 2010, is currently pending before the United States Senate. The proposed legislation seeks to modify the Food, Drug, and Cosmetic Act and the Dietary Supplement Health and Education Act of 1994 ("DSHEA") on matters relating to safety.
New IAB/4As Standard Terms Published The Interactive Advertising Bureau and 4As recently published the latest version of their Standard Terms and Conditions for Internet Advertising. What are they, and how can they be used?
Appellate Court Upholds Verdict Against Company President in False Advertising Suit Regarding Fruit Juice A distributor of pure pomegranate juice sued a competitor company and its president under the Lanham Act and California's false advertising and unfair trade practices statutes alleging that ads which claimed their juice was "100%" pure pomegranate juice with "no sugar added" were false, and the defendants knew or should have known that they were not true.
The Truth Is Not Always Enough When it comes to the rules of advertising, many remain confused by the legal doctrine that while a statement can be literally true, it still can be considered false or deceptive. Three advertisers learned recently this lesson the hard way in the last few weeks when the National Advertising Division of the Better Business Bureau (NAD) recommended that certain of their marketing claims, while literally true, should be discontinued.
Proposed Legislation Threatens Legitimate Suppliers and Media Businesses Many marketers may be in favor of the proposed Wall Street Reform and Consumer Protection Act of 2009(H.R. 4173) recently passed by the House in December 2009 and currently before the Senate because the bill seeks to address elements which caused the current financial crisis. Unfortunately, the devil is in the details. The proposed legislation is purportedly intended to provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, to regulate the over-the-counter derivatives markets. However, hidden within the proposed legislation is the "Improvements to the Federal Trade Commission Act" and other provisions that would significantly expand the authority of the Federal Trade Commission (FTC) beyond the massive powers the agency already possesses. These proposedchanges will place legitimate marketers, suppliers, and media businesses in an even more precarious position. Indeed, the DMA has gone so far as to call the proposed enhancements "The FTC on steroids."
Advertising Trade Groups Agree on Icon and Wording to Indicate Compliance With Behavioral Advertising Self-Regulation A broad coalition of advertising associations have agreed on an icon and an information disclosure statement to consumers who are receiving online advertising.
New York Attorney General Settles with Fandango and Investigates 22 Online Retailers for Linking Consumers to Discount Clubs New York Attorney General forges groundbreaking agreement with Fandango to protect online shoppers from hidden charges.
FTC Rejects FDA Defense in Dietary Supplement Marketing Action In a recent administrative opinion, the Federal Trade Commission (FTC) rejected a defense that the marketing of dietary supplement products within FDA so-called structure and function claims, precluded enforcement by the FTC of deceptive health claims.
New York Attorney General Sues Marketer and Finance Company of Home Study Courses The New York Attorney General has sued not just the marketer, but the finance company that processed the contracts company to recover for alleged false advertising by marketer, even though the finance company was not alleged to have been involved in active wrongdoing. In its announced lawsuit, the Attorney General sued State National Training Services, Inc (SNTS) a marketer of study at-home courses, alleging that they falsely represented that purchasers of their $1000 course materials would obtain jobs.
Greco resigns as DMA President Effective Immediately After a tumultuous tenure, John Greco, has resigned as President and CEO of Direct Marketing Association (DMA). The resignation is effective immediately according to the press release which announces Greco's resignation and the search for a new President & CEO. The DMA has faced membership challenges in the era of growing reliance on the Internet and other technology-oriented channels. In addition, the 2009 board of director elections was highly controversial indicating a rift in the membership base. Given the significant challenges that industry now faces -- ranging from the economy to increased government enforcement -- direct marketers should hope for a strong leader that is not afraid to stand up for their rights.
Membership Club Marketer Revamps Enrollment In Light of US Senate Scrutiny This development occurs as a result of Senate hearings held last fall. The U.S. Senate Committee on Commerce, Science, and Transportation, released an investigative report entitled: "Aggressive Sales Tactics on the Internet and Their Impact on American Consumers."
Facebook's New Promotions Guidelines On November 4, 2009 Facebook issued new Promotions Guidelines which govern the publicizing or administering of any sweepstakes, contest, competition or other similar offering.
Google Sues Marketer of "Google Money" Program On December 7, 2009 Google filed a lawsuit against a U.S. company it alleges runs work-at-home scams that unnecessarily charge people's credit cards and spoof Google's brand name.
Complimentary Webinar On The New FTC Testimonial and Endorsement Guidelines Perhaps the most important development in advertising law in several decades, the FTC's recently revised Guides Concerning the Use of Endorsements and Testimonials in Advertising go into effect on December 1, 2009. The revised Guides (available online at http://www.ftc.gov/os/2009/10/091005revisedendorsementguides) have a number of new elements that are extremely important for all marketers to understand, including: * The elimination of the "results not typical" safe harbor for advertisements showing a consumer's experience with a product; * Making it clear that endorsers as well as advertisers can be held liable for false or unsubstantiated claims * Describing the obligation of celebrities to disclose relationships when making endorsements outside of ads (e.g. on talk shows); and * The disclosures and liability marketers face when incorporating on-line media reviewers and promoters.
Investigation Being Conducted Regarding the Online Marketing of Membership Clubs The United State Commerce Committee has expanded its investigation into e-commerce companies which present membership club enrollment offers to their online customers and have the customers agree to pass their customers' credit card or debit card numbers to enroll in the membership club. Senator Rockefeller who is the Chairman of the Committee has entitled the investigation is focusing on this practice because it has been the center of criticism by consumer advocates. Click here for more information.
NY Refund Policy Law To Take Effect Retailers with stores in New York should take note that effective November 25, 2009, an amendment to the state's existing refund policy law takes effect. Set forth at New York General Business Law § 218-a, the law requires retailers to disclose the store's refund policy in one of four defined locations and to make a written policy available to consumers who request it. The refund policy must state state whether or not it is the retailer's policy to give refunds and, if so, under what conditions, including but not limited to whether a refund will be given, including (i) on merchandise which had been advertised as "sale" merchandise or marked "as is;"(ii) on merchandise for which no proof of purchase exists; (iii) at any time or not beyond a point in time specified; (iv) in cash, or as credit or store credit only; or (v) subject to any fees, including a restocking fee, and the dollar or percentage amount of each fee; and (b) advise consumers that they are entitled to a written copy of the store's refund policy upon request.
FTC Publishes Final Guides Governing Endorsements, Testimonials by Andrew Lustigman and Adam Solomon On October 5, 2009 the Federal Trade Commission announced that it has approved final revisions to the guidance it gives to advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act. Changes affect testimonial advertisements, bloggers and celebrity endorsements.
Seinfeld Prevails in Cookbook Copyright Lawsuit This time it appears Jessica Seinfeld, wife of comic Jerry Seinfeld, is getting the last laugh. On September 10, 2009, the United States District Court, Southern District of New York, dismissed all federal copyright, trademark and unfair competition claims brought against Seinfeld by fellow author, Missy Chase Lapine alleging Seinfeld's "Deceptively Delicious" cookbook copied her cookbook, "The Sneaky Chef," both of which discuss ways in which parents may camouflage nutritious foods in their children's meals making for a healthier overall dish. See Lapine, et al. v. Seinfeld, et al., No. 08 Civ. 128 (LTS) (S.D.N.Y. Sept. 10, 2009). |
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