Ad Law News and Views - July 2024

July 17, 2024

Congratulations to Ad Law’s New Special Counsel

Earlier this month two of our Advertising Law attorneys, Alex Schneider and Beth Chun, were promoted from Senior Associate to Special Counsel. Their promotions are a testament to their outstanding performance and consistently excellent client service. Congratulations, Alex and Beth!

Read the full announcement here.

UPCOMING EVENT

SAVE THE DATE for our next webinar in our 2024 State Attorneys General Webinar Series.

August 15 | 2:00 p.m. - 3:00 p.m. ET

Join Kelley Drye’s State Attorneys General Ad Law team for Part ll of our webinar led by Chair Paul Singer and Special Counsel Abby Stempson and Beth Chun. We have invited our special guests back from Part l, Stephanie Guyon, Deputy Attorney General, Idaho Office of Attorney General, and Kevin Anderson, Senior Counsel for Consumer Protection and Multistate Litigation at North Carolina Department of Justice.

We will continue our roundtable discussion on investigations and enforcement actions led by state attorneys general (AGs) and the broad authority the states have to perform pre-litigation discovery through investigative subpoenas, often called civil investigative demands or CIDs. In Part l, we discussed common issues that may trigger a state – or multi-state – investigation, other pre-suit investigatory authority, and the basics of a CID. Join us for Part ll, as we discuss:

Types of objections to CIDs businesses may make
Background and caselaw on AG CID authority
Strategies for avoiding an AG inquiry

IN THE NEWS AND LATEST UPDATES

Get these and other stories in real time when you subscribe to the Ad Law Access blog here or visit the Advertising and Privacy Law Resource Center here.

Court Sides with Tea Drinkers in Made in USA Dispute

In 2020, plaintiffs filed a class action complaint in California federal court against Bigelow Tea, alleging that the company falsely represents that its teas are made in the United States, when the teas are actually grown and processed abroad. Among other things, the plaintiffs pointed to Bigelow’s use of term “Manufactured in the USA” on the backs of certain packages.

Court Considers Vodka Influencers’ Posts

Two men – we’ll call them Mario and Alin – purchased Blue Ice Vodka based, in part, on social media posts in which various influencers suggested that the vodka was a “healthy product” that can help with personal fitness and weight management. “After conducting some research,” both men discovered that Blue Ice Vodka “does not have any health benefits.” They also discovered that the influencers were paid to promote the vodka.

FTC Sends Warning Letters Over Warranty Practices

The FTC is focused on ensuring that consumers have options when it comes to repairing products. Two years ago, we summarized an FTC workshop, report, Policy Statement, and three settlements on this issue. Last week, the FTC announced that they had sent warning letters to eight companies, raising concerns about whether their warranty practices were unlawfully hindering consumers’ right to repair their products.

FTC Updates Made in the USA Guidance

Last week, the FTC released an updated version of its Complying with the Made in USA Standard business guide. The heart of the guidance remains the same: if you expressly or implicitly state that a product is Made in the USA without any qualification, the product must be “all or virtually all” made in the USA.

California “Junk Fee” Statute Now Fully In Play with New Twist from Last Minute Legislation

As we previously reported, the California AG’s office recently provided clarification through FAQs on the California “hidden fee” law that amended the Consumer Legal Remedies Act, SB 478. Those FAQs articulated the position that restaurants must include all mandatory fees, including service charges and mandatory gratuity, as part of the displayed price for a product, while distinguishing delivery fees on the grounds that those fees are for a separate service.

State AGs Support FTC Enforcement Action Against Intuit

Last week, a coalition of 22 state AGs filed an amicus brief in support of a Federal Trade Commission (FTC) cease-and-desist order that prohibits tax software giant Intuit (the creator of TurboTax) from certain advertising practices relating to its free tax preparation software. Intuit asserts that the FTC’s decision is not supported by substantial evidence because its conduct was not deceptive. Further, Intuit argues that the FTC made legal errors in applying deceptive business practices standards. For example, Intuit asserts that the FTC improperly applied an unprecedented, heightened deception standard to advertisements containing a “free” message. In addition, since Intuit reached a prior multistate settlement, Intuit argues that the FTC Order should be overturned. In 2022, a coalition of 50 states and the District of Columbia secured $141 million from Intuit as part of a settlement that resolved state investigations into claims that Intuit deceptively marketed and advertised TurboTax.

Arkansas AG Files Suit, Labels Temu a Data-Theft Business

Tim Griffin, Arkansas Attorney General, did not mince words when he filed a lawsuit against the parent companies of Temu, stating in a press release, “Temu is not an online marketplace like Amazon or Walmart. It is a data-theft business that sells goods online as a means to an end.” He further commented that, “…Temu is functionally malware and spyware.” The 51-page complaint was filed against WhaleCo. Inc. d/b/a Temu, and its owner, Chinese e-commerce company PDD Holdings Inc. Like General Griffin’s press release, the complaint leaves little to the imagination about the state’s feelings toward the popular online shopping platform, which, according to the complaint, was the most downloaded app in the United States in 2023 and is responsible for tens of millions of shipments into the country each year.

NAD Decision Shows “Simple” Claims Can be Complicated

In the spring, we posted about a case involving a heavy dose of makeup. As the summer heat sets in, you may be thinking about a more minimalist approach to your personal care products. If so, Native has you in mind with a line of products it claims has “simple” ingredients and is “Clean. Simple. Effective.” SC Johnson filed an NAD action challenging the “simple” claims (among other things) and much of the dispute centered around what that word conveys to consumers.

Farewell to the two-step: Supreme Court overrules Chevron

In a big week for administrative law watchers, the Supreme Court issued a pair of 6-3 decisions paring back the powers of administrative agencies. In Loper Bright Enterprises v. Raimondo, the Court overruled Chevron U.S.A. v. Natural Resources Defense Council, Inc., and in Jarkesy v. S.E.C. it held that the Seventh Amendment prohibits agencies from seeking civil penalties for suits resembling actions at common law before administrative tribunals. Taken together, these cases demonstrate the Court’s focus on separation of powers. Below, we consider their potential impact on the Federal Trade Commission.

What Updates to the Health Breach Notification Rule Mean for Your Business

On July 29, 2024, the FTC’s revised Health Breach Notification Rule (HBNR) takes effect. The Rule requires vendors of personal health records (PHRs) and related entities not covered by HIPAA to notify individuals, the FTC, and in some cases, the media in the event of a breach of unsecured personal health data. Businesses operating a wide array of services, including health, diet, and fitness apps should take care to review the revised HBNR and assess its applicability to their practices.

New Decision Addresses Consent to Use Photos on Social Media

We often get questions from clients about whether they can use content they find on social media. In response, we’ll usually walk them through options to get consent, which can range from relatively informal options (such as getting consent through messages on the social media platform) to the more formal options (such as getting a signed release). Although there are different ways to approach this issue, a recent lawsuit in California illustrates some of the challenges.

2024 AGA Annual Meeting Wrap-Up

The Attorney General Alliance (AGA) hosted its 2024 Annual Meeting this June, bringing together State AGs, staff, and industry for discussions on a number of topics important to AGs, including AI (again), nonpartisan cooperation, partnering with criminal law enforcement including in the fight against fentanyl, supporting small businesses and free enterprise, and protecting America’s youth. We provide some highlights below.

Telemarketing in 2024 – A Mid-Year Review

As we approach the 2024 halfway mark, businesses that rely on texting and calling to promote their products and services face an onslaught of new and significant legal and regulatory developments.

Ninth Circuit Considers the Meaning of an “Up to” Claim

Energizer claimed that its AA MAX batteries are “up to 50% longer lasting than basic alkaline in demanding devices.” Two California men purchased those batteries based on that claim and later filed a lawsuit against the company alleging, among other things, that the claim is false because the batteries do not last up to 50% longer “than other competing batteries, including, for example, Duracell Coppertop batteries.” One of the key questions in the case is how reasonable consumers would interpret Energizer’s claim.