🚩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.

☎️ In Muccio v. Global Motivation, Inc., the U.S. District Court for the Southern District of Florida dismissed a class action complaint involving a plaintiff who received five unsolicited marketing text messages in violation of the Florida Telephone Solicitation Act (FTSA) and the Telephone Consumer Protection Act (TCPA) because the plaintiff failed to allege that the violations resulted in a concrete injury.

Rather than focusing on the quantitative number of messages the plaintiff received, the court’s decision focused on the qualitative nature of the injury and followed the Eleventh Circuit’s Salcedo v. Hanna decision, which requires a holistic review of factors, including whether:
🔹plaintiff experienced a “financial loss or other pecuniary harm,”
🔹the content of the text messages was “highly offensive,” and
🔹plaintiff’s injury is more than a “bare statutory violation” or “generalized allegations of inconvenience, invasion of privacy, aggravation, annoyance.”

The lawsuit, subject to an appeal, demonstrates that plaintiffs continue to challenge telemarketing practices. The Eleventh Circuit’s (which includes federal courts in Florida, Georgia, and Alabama) embrace of a narrower interpretation of injury when assessing violations of the TCPA and similar state laws is not necessarily the framework elsewhere. We recommend thoroughly reviewing your business’s marketing practices, including analyzing which state laws apply.

💡Does your business engage in telemarketing? Contact Your Ad Attorney, Inc. today to discuss how we can help you comply with the TCPA and state telemarketing laws.

Intuit, the developer of TurboTax, will pay millions of Americans as part of a $141 million settlement with the 50 states and the District of Columbia.

The investigation, led by Letitia James of New York, revealed how Intuit tricked people into paying for TurboTax software even though they were eligible to receive it for free. The company admitted no wrongdoing and agreed to pay $141 million to put this matter behind it.

The deal covers those who paid TurboTax for the tax years 2016 to 2018. For each year a person paid for eligible tax filing services, the company will send them approximately $30.

The logistics of distributing the money will be handled by a third party. These payments will be sent by check or electronic services such as PayPal and Venmo. More than 465,000 consumers in Texas are expected to receive restitution payments from Intuit, along with more than 371,000 purchasers in California and more than 176,000 in New York.

Intuit will have to stop marketing TurboTax under “free” ad campaign and make several improvements with its disclosure of products. The company said that it already complies to most of the advertising practices and expects minimal effect from implementing the changes moving forward.

Contact me if you need help making sure your business’s marketing is under compliance with the law!

Are you unsure how to select a brand name that is both memorable and a strong asset? From a trademark perspective, a good name can help you not only stand out but also protect your brand. Here are 3 types of marks to consider.

3 Types of Trademarks

1️⃣ A “Coined” Mark–a word that has no meaning in the English language
E.g., EXXON for gasoline

2️⃣ An “Arbitrary” Mark–a word that exists but is entirely unrelated to the business, product, or service that uses it
E.g., APPLE for computers

3️⃣ A “Suggestive” Mark–a word that suggests the nature of the product or service without describing it
E.g., NETFLIX for streaming services

✅ DO select the strongest types of trademarks: COINED and ARBITRARY marks

These provide an Opportunity to build a positive association between the name and the company, product, or service

❌ DON’T Select a brand name that DESCRIBES the product or service

These are more likely to be used by competitors leading to a higher risk of brand competition

Descriptive words must remain available to describe products and services

These are more likely to be rejected as trademarks

Have a trademark law question? Message me!

Amazon told delivery drivers in its Amazon Flex program – and customers who placed orders through Prime Now and AmazonFresh – that 100% of tips would go directly to the drivers. But, for more than two years, Amazon secretly pocketed over $61 million of those tips. Now the Federal Trade Commission will hold Amazon to its promises and Amazon will be returning the entire $61.7 million to Amazon Flex drivers.

What can you learn from this case? 

When advertising, be transparent about material terms. Explain up front important information about pay, tips etc. If you change the nature of the deal, be clear about that, too. Concealing what’s going on can lead to class actions, fines, and investigations. 

Substantiate your claims – express or implied. 

Amazon misled customers and drivers by stating that “100% of tips are passed on to your courier.” How would customers have responded if Amazon had told them the truth: “We take 30% to cover our costs and pass on 70% to your courier”? Like other objective claims about products or price, companies also honor their representations to the public. 

Do you engage in marketing or have an online checkout flow for your products or services? → You may want to hire a marketing lawyer to keep you out of hot water.