In This Issue:
- Court in Crisco "Butter" False Ad Nixes Overbroad Proposed Classes
- Click Profit? More Like Clickbait, FTC Alleges in Suit Against Deceptive Earnings Scheme
- NARB Burns Down Claims That Wood Siding Singlehandedly Protects Homes From Fires
- NAD Swiftly Strikes Down Upstart's #1 Men's Hair Color Claim on Trustpilot
Court in Crisco "Butter" False Ad Nixes Overbroad Proposed Classes
Despite surviving two motions to dismiss, an Illinois plaintiff alleging that Crisco falsely advertised its cooking spray as containing butter couldn't slide class certification past the federal court judge. The court denied plaintiff's motion to certify two classes of plaintiffs, finding the proposed classes overbroad.
The complaint alleged that marketing by B&G Foods for its "Butter—No Stick Spray" sold under the Crisco brand misleads consumers. The use of the word "butter" in large letters on the front label alongside a prominent image of butter melting on a pancake falsely communicates that the spray contains butter when instead it uses artificial butter ingredients according to the complaint.
Plaintiff's motion in the federal lawsuit sought to certify two classes of plaintiffs: all those who purchased the cooking spray in Illinois during the limitations period, and all those who purchased the cooking spray in Iowa and Arkansas during the limitations period.
The court said Plaintiff's class definitions were not definite enough to warrant certification. By requiring only that class members have purchased the cooking spray, and not that they had also been deceived or injured in some manner, the classes would include an overly broad group of potential plaintiffs who were not claiming they had been in fact harmed by the alleged false advertising.
Plaintiffs in such a class might include those who were indeed deceived by the use of butter on the front label, as plaintiff was. But the court explained that such a class could also include others who had not been deceived by the alleged misrepresentation on the front because they had read the back label, and yet other plaintiffs who did not care and would have been willing to purchase the product for the advertised price even if it had been called "Butter Flavor" rather than just "Butter." The court added that there was also no evidence that some members of the proposed class would not have bought the product for the advertised price if they had known it did not contain butter.
In its order the court pointed out that even the plaintiff's expert witness acknowledged that consumers buy the product for many different reasons and that she had not tested whether the language of the label influenced the demand for the product or what consumers would be willing to pay for it, wrote the court.
The proposed class also failed to meet the procedural requirement that common questions of law and fact predominate over individual questions, according to the court. The different types of consumers who would have bought the product would require the court to make individual determinations about liability based on the many possible scenarios encompassed in the broad classes of plaintiffs.
Though these attempts to certify the suit as a class action failed, the plaintiff's alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and related consumer protection statutes, as well as common law causes of action in the complaint, are still alive.
Key Takeaways
The case is a good reminder that purchase period alone does not a proper class make as more judges make clear the necessity to properly plead actual harm or injury. The plaintiffs here learned the hard way that, without it, the class certification just won't stick.
Click Profit? More Like Clickbait, FTC Alleges in Suit Against Deceptive Earnings Scheme
It sounded too good to be true: a business opportunity to make "a ton of money" risk-free selling goods online, featuring trendy buzzwords like "AI-powered" and claiming to be affiliated with some of the world's biggest brands.
The Federal Trade Commission (FTC) thought so too, and it has obtained a temporary restraining order halting the operations of Click Profit, a company that allegedly turned out to be a business opportunity scheme powered by dubious earning claims.
According to the complaint, Click Profit marketed a proprietary AI-powered system for consumers to sell goods online, also doing business under the names FBALaunch, PortfolioLaunch and Automation Industries. The company billed itself as a business opportunity offering consumers the chance to run successful e-commerce stores. FTC said in reality the company's promises of lucrative passive income were deceptive.
Consumers forked over $45,000 or more to set up e-commerce stores. In exchange, the company promised to make customers "guaranteed" passive income facilitated by the AI system and Click Profit's supposed relationships with big-name brands.
To market its service, Click Profit made repeated and grandiose claims. It marketed itself as "safe, secure, and proven to build wealth." The company promised "consistent" and "predictable" income and held itself out as an expert in e-commerce with an outstanding track record of success.
On social media, on its website, and in promotional materials, Click Profit made multiple deceptive claims. From promising fully automated e-commerce shops that would make hundreds of thousands a month, to marketing six- to eight-figure guaranteed earnings, Click Bait emphasized high returns. FTC alleges in these ads that the company's co-founder Craig Emslie spoke of a "personal gold mine" and juxtaposed himself alongside Warren Buffett.
Problem was, the claims of success were false, said the FTC. Contrary to the promises of a turnkey business, the company took months to even open the online stores, and sometimes did not even do that. When it did open a store, many were blocked by the selling platforms, which were apparently aware of the scheme. When consumers complained, the company threatened lawsuits.
Like most things that sound too good to be true, Click Profit's promises did not live up to the hype. Not only did most consumers not make any money on this "proven" business but also lost the money they invested and in some cases incurred significant debt.
The lawsuit alleges multiple violations of the FTC Act, the Business Opportunity Rule, the Consumer Review Fairness Act, and the Rule on Impersonation of Government and Businesses.
Key Takeaways
This FTC has made clear that it is watching business opportunity advertising closely and is more than willing to take action.
NARB Burns Down Claims That Wood Siding Singlehandedly Protects Homes From Fires
In the context of rising consumer demand for products that will help homes withstand devastating wildfires like those that recently burned in California, the National Advertising Review Board (NARB) largely upheld the National Advertising Division's (NAD) findings that an advertiser of fiber cement siding could not claim that its product protects homes from wildfires.
Maker of engineered wood siding products Louisiana-Pacific Corporation challenged claims James Hardie Building Products made that its fiber cement siding reduces the risk of fire, saving homes exposed to wildfires. Hardie made these claims in several product demonstration videos and on a video featuring survivors of devastating California wildfires.
First NAD analyzed a product demonstration video Hardie published on YouTube and on its website comparing how combustible Hardie siding is to competing products when lit up with a blowtorch. In the video, the flame engulfs the competing products, but Hardie's siding is unharmed after being set on fire for ten minutes.
Hardie argued that the test is a valid demonstration of the non-combustibility of its product when exposed to a blowtorch flame, showing that the product does not ignite or burn whereas its competitors' product does, and that it substantiated this claim with evidence of "non-combustibility and zero flame spread" shown in ASTM test results. The message conveyed, argued Hardie, is that the company provides better protection from fires than its competitors, and reduces the risk of external fire damage to a home.
While NARB agreed that Hardie's flammability comparison is a valid demonstration of the siding's combustibility when set on fire with a blowtorch and that the message that cement fiber siding doesn't burn when exposed to flame is substantiated, it concluded that the video conveyed other messages that went too far.
Both NAD and NARB determined that the reasonable consumer would take away the message that the siding would protect a home from damage caused by real-world external fire conditions. This message was reinforced by a firefighter's statement on the video that he would use the siding in his home. Hardie had not substantiated this message, however, and a disclaimer in the video (that NAD had found insufficient) specifically stated that the demonstration was not intended to predict the performance of the siding when installed on a home beset by an external—that is an actual—fire.
The product demonstration overstated the benefits of the siding, said NAD in its original decision, by conveying an unsupported message that the siding would reduce the risk of fire damage to a home from real-life fires. NARB agreed that the advertising should be modified so consumers understand that non-combustible siding is only one of several elements that may help protect a home from external fires.
NARB next analyzed two of the company's YouTube videos featuring survivors of the devastating Tubbs and Grizzly Flats wildfires in California describing how Hardie saved their homes while showing footage of their homes untouched in neighborhoods otherwise ravaged by the fires. Hardie argued that the testimonials and endorsements in these videos were substantiated by ASTM testing evidence, third-party recommendations, and the real-life first-hand experiences of the homeowners who gave the testimonials.
NARB disagreed, finding the wildfire testimonial videos unsupported and recommended that they be discontinued. Hardie had not provided any evidence of a causal connection between the homes making it through unscathed in the fires and the use of Hardie siding.
NARB also concluded that a trade show product demonstration video comparing the water-resistant features of the siding to the challenger's siding was problematic. The demonstration made the claim that the advertiser's siding absorbs water while the challenger's properly installed wood siding will swell when exposed to water.
The NARB panel found the demonstration did not accurately reflect product performance. Not only was the challenger's siding installed inconsistently with installation requirements mandated by its warranty but the video's depiction of the siding's performance over six months of being underwater was not reflective of real-world conditions.
Key Takeaways
NAD and NARB have long cautioned advertisers to keep it real when advertising product demonstrations to avoid overstating product benefits and misrepresenting comparative product performance. This case represents a textbook example of an "accurate" demonstration that failed given its lack of real-world applicability.
NAD Swiftly Strikes Down Upstart's #1 Men's Hair Color Claim on Trustpilot
Can a company say that it is the "#1 men's hair color" on a site that ranks products based on categories when the site doesn't list "Men's Hair Color" as a category?
This was the question before the National Advertising Division (NAD) recently in a Fast-Track SWIFT challenge initiated by Just for Men hair color brand maker Combe Incorporated to claims made by relative newcomer in the men's hair color space Simpler Hair Color, Inc ("Simpler"). Combe challenged claims that Simpler's products are rated the #1 men's hair color and beard color product on popular review site Trustpilot.com.
Combe argued that Simpler's #1 claims were misleading because there is no "Men's Hair Color" category on Trustpilot. It explained that Trustpilot's #1 ratings are linked to official Trustpilot product categories, for which Trustpilot features a "Best in" list that allows users to research who the #1 is in a given category. Further, Combe argued that even when "Men's Hair Color" is searched on Trustpilot, other companies have higher "TrustScores" than Simpler.
Simpler countered that its "#1 rated" claims are substantiated based on verified product reviews on Trustpilot. To counter Combe's argument that Simpler does not come up as #1 even when users search for "Men's Hair Color," Simpler argued that it would not be reasonable to lump together brands that sell "novelty" hair colors in the same category as Simpler, who it said is solely dedicated to selling men's hair color products in natural shades alongside very few other brands.
NAD concluded that the claim was not substantiated, finding that Simpler's claim that it is the "#1 Men's Hair Color" in Trustpilot reasonably conveys the message that the claim is based on a recognized Trustpilot category. Trustpilot specifically compiles its "Best in" lists for consumers to compare the highest-rated products within a given product category, so any claim that it is the "#1 men's hair color" would signal to consumers that Men's Hair Color is a Trustpilot category and that Simpler is the #1 rated brand in that category, said NAD.
Instead, Simpler formulated its claim based on its own assessment of Trustpilot product ratings. There also was no evidence that the men's hair color reviews on Trustpilot were representative of the men's hair color products on the market, meaning that there was no evidence that consumers considered brands selling novelty products to be a separate category. The NAD determined that Simpler's #1 claims were not grounded in a meaningful comparison of the competing hair color products available on the market, and advised Simpler to discontinue making such claims.
Key Takeaways
For a host of reasons, NAD has previously and repeatedly found that claims based on Trustpilot reviews are not sufficiently reliable. Add to that an advertiser's self-formulated category and it is no surprise NAD gave this one short shrift. Participation in the SWIFT track may not have helped Simpler's case either.
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