🚩The Bountiful Company was issued a final consent order by the Federal Trade Commission (FTC) for deceiving consumers on Amazon. According to the FTC, Bountiful participated in a practice called “review hijacking,” which is where a company steals or repurposes reviews from one product and applies them to another.

Bountiful had manipulated a feature on Amazon and deceived consumers by applying ratings and reviews from established products that Bountiful offered on Amazon to its new products – this made it appear that Bountiful’s new supplements had more favorable reviews and ratings than they actually did. The Amazon feature is intended for variations on the same product (size, flavor, color, etc.), but Bountiful used it to group unrelated products in an effort to boost the sales of poor-selling releases. Aside from a boost in reviews and ratings, some new Bountiful products were also unjustifiably given badges like “#1 Best Seller” and “Amazon’s Choice” on the Amazon marketplace.

❓What are the consequences of Bountiful’s deceptive conduct?

The FTC took action to hold Bountiful accountable and protect consumers. Its order requires Bountiful to:
📌Pay $600,000 to compensate harmed consumers;
📌Stop making similar misrepresentations and using deceptive review tactics; and
📌Provide periodic records to the FTC to demonstrate compliance with the order.

💡What’s the ultimate lesson here?

✅ Keep your reviews truthful and accurate; and
✅ Don’t mislead your customers about the quality of your products or services (even when deception is easy).

☎ Need guidance or have questions about truthful advertising or how to comply with marketing regulations? Don’t hesitate to reach out to our team at Your Ad Attorney, Inc. Schedule a call with me at https://calendly.com/youradattorney. We are here to assist you in staying on the FTC’s good side.

📋 The Federal Trade Commission (FTC) has issued penalty offense notices to 670 companies, urging them to substantiate their product claims to avoid hefty civil penalties exceeding $50,000. These notices come after similar warnings related to endorsements, testimonials, education practices, and money-making opportunities.

These penalty offense notices warn companies of specific deceptive practices they should avoid, and the takeaways regarding product claim substantiation include:
❌ DO NOT make product claims without any reliable evidence to support them.
❌ DO NOT make health or safety claims without proper scientific evidence that has been objectively evaluated by qualified individuals and accepted by the professional community.
❌ DO NOT promote a product as a cure, mitigation, or treatment for a serious disease without conducting and relying on a well-designed human clinical trial that meets specific criteria.
❌ DO NOT misrepresent the level or type of evidence backing a claim.
❌ DO NOT assert that a product claim has been scientifically or clinically proven without enough evidence to convince the relevant scientific community.

In short, companies should be able to adequately back up what they say in their advertising – and they need to gather their evidence for their claims before they are made.

Although there is some controversy over the FTC’s use of their authority in sending these notices regarding substantiation, two things are clear:
🔹the FTC isn’t playing games, and
🔹it is crucial for marketers and manufacturers to comply with regulatory guidelines to ensure their marketing is accurate, valid, and not harmful to consumers.

📌 If you need guidance or have questions about substantiating your product claims or how to comply with marketing regulations, don’t hesitate to reach out to our team at Your Ad Attorney, Inc. We are here to assist you in navigating these important legal considerations with ease.

#marketinglaw #advertisinglaw #legal

Following a string of warnings to New York businesses since the outbreak of the COVID-19 pandemic, New York attorney general Letitia James recently published a Notice of Proposed Rulemaking to establish stronger barriers against price hikes during emergencies such as the pandemic. The proposed rule aims to protect consumers amidst abnormal market disruptions by imposing stricter regulations on businesses for price gouging.

New York’s current price gouging law, New York General Business Law 369-R, provides that, “[d]uring any abnormal disruption of the market,” no business in the distribution chain may charge an “unconscionably excessive price” for good or services. Proof of price gouging may include pricing representing a “gross disparity” between the price charged for the same product or service prior to and following the market disruption. The statute also provides businesses with an affirmative defense if they are able to show that a price increase preserves their profit margin or if additional costs beyond their control were imposed. However, the law offers little guidance regarding compliance, including regarding what constitutes “unconscionably excessive” pricing or a “gross disparity” in price.

Consequently, the following seven proposed rules seek to improve clarity for businesses by providing additional guidance and guardrails to rely upon:

🔸Presumptive Cases of Gross Disparity – a “gross disparity” in price exists when a product’s price increase exceeds 10% of the price at which it was sold before the market disruption.

🔸Costs Not Within the Business’s Control – a business may claim the affirmative defense that additional costs imposed on consumers are not within their control, provided that such costs are “only actually incurred costs attributable to the production, purchase, storage, distribution, taxation, labor, and sale of the specific good or service, and a directly attributable percentage of the overhead costs of the business.”

🔸New Goods or Services – the fact that a product or industry that did not exist before the market disruption is not a defense to the law, and profit margins for a new product that are higher in percentage terms than a comparable product may serve as proof of unfairly high prices

🔸Presumptive Cases of Unfair Leverage – “unconscionably excessive” pricing includes pricing obtained through “unfair leverage or unconscionable means,” including through the use of unfair bargaining power, high-pressure sales tactics, and ambiguous or hidden language in contracts

🔸Unfair Leverage – “unfair leverage” is presumed when either a seller with at least 30% market share or a large competitor (a business with over 10% market share in a market with five or fewer significant competitors) raises prices.

🔸The Statute Applies to All Parties in the Distribution Chain – the proposed rules specify that the statute applies to all parties involved in the distribution of goods and services sold in New York, including manufacturers, suppliers, wholesalers, distributors, and retail sellers

🔸Dynamic Pricing – for purposes of comparing pricing prior to and following a market disruption, the pre-disruption price for sellers employing dynamic pricing is the median price for the same good or service at the same time one week prior to the market disruption

Do you have any questions or concerns about the proposed changes to New York’s price gouging statute? If so, please contact Your Ad Attorney, Inc. today!

📌 Overview of Applicable Laws
The Federal Telephone Consumer Protection Act (TCPA) places several prohibitions and restrictions on calls or texts to consumers, such as whether businesses use equipment that qualifies as an automatic telephone dialing system (ATDS or auto-dialer).

The definition of ATDS has been at the forefront of TCPA litigation, particularly considering changing technology.

In Facebook v. Duguid (2021), the United States Supreme Court issued its ruling to decide a split on the definition of an ATDS, and, by doing that, the Court narrowed the dialing systems that qualify as an ATDS or auto-dialer under the TCPA by deciding that a device must have the capacity either to store a telephone number using a random or sequential number generator or to produce a telephone number using a random or sequential number generator.

On the other hand, many states (Florida, Oklahoma, and Washington included) have enacted mini-TCPAs in their states that include a broader definition of ATDS than the TCPA post-Duguid.

📌 Takeaway
Now businesses need to be aware of both the federal and state requirements when creating a compliant calling and texting campaign. Does your business engage in telemarketing?

💡 Need Help?
Contact Your Ad Attorney, Inc. today to discuss how we can help you comply with the TCPA and state telemarketing laws.

📋 The Federal Trade Commission (FTC) recently alleged that Intuit/TurboTax engaged in misleading ads for claiming that they offer “free” tax-filing services with inadequate disclaimers. The company failed to explain how people can make “free” tax filings or even clarify that the “free” claim only applies to consumers who file “simple tax returns.”

The FTC said that Intuit’s disclaimers were:

🔸Inadequate because the “free” tax-filing service is limited to “simple tax returns” or “simple U.S. returns only;”
🔸Disproportionately small when compared to the prominent text emphasizing the “free” service;
🔸Appearing for just a few seconds, in writing only, not read by voiceover, and often in color similar to the background;
🔸With eligibility requirements hidden behind a hyperlink over the words “See why it’s free,” requiring consumers to click on the hyperlink to trigger a pop-up explaining the limitations; and
🔸Unfair because their website forced consumers to spend significant time and effort creating an account and inputting their sensitive personal and financial information before learning they were ineligible for the “free” service.

Intuit has already agreed to settle claims with the attorneys general for all 50 states and the District of Columbia for $141 million, requiring Intuit/TurboTax to cease its “free” advertising campaign.

📌 The TurboTax case is a reminder that all advertising must be truthful and not misleading to consumers, and, more importantly, disclosures must be presented clearly and conspicuously. Disclosures cannot cure a false claim or provide information contradicting a material claim. Businesses should also avoid designing customer flows with #darkpatterns that hide or delay disclosure of material information (like fees!) or adopting bait-and-switch messaging to lead consumers to a more expensive outcome.

☎️Contact Your Ad Attorney today. We help businesses comply with advertising laws.