The Federal Trade Commission (FTC) has reached its largest administrative settlement to date: US$245 million. The proposed settlement is with Epic Games, Inc. (Epic Games), the company that developed and offers the multiplayer, online game Fortnite, and stems from Epic Games’ unlawful collection of personal information and illegal use of digital dark patterns to bill Fortnite users for unintentional in-game purchases. In total, Epic Games will be responsible for US$520 million, which includes a US$275 million penalty.Read More
By: Ashley Song
Summary: The Northern District of California dismissed, without further leave to amend, a proposed class action against Apple, which claimed virtual loot boxes in the video game application “Brawl Stars” amounted to gambling.
Key Takeaways: In Taylor et al. v. Apple Inc., Rebecca Taylor and her underage son brought a proposed class action seeking to hold Apple liable for distributing game apps through the Apple App Store that they alleged include features that are legally equivalent to slot machines, as defined and prohibited under California law. The complaint advanced claims for relief under California’s Unfair Competition Law (“UCL”) and California’s Consumers Legal Remedies Act (“CLRA”).Read More
By: Amy Wong
Summary: In 2018, the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) implemented the National Bioengineered Food Disclosure Standard (NBFDS). While some food companies have voluntarily complied with the NBFDS since 2018, the new regulations make compliance mandatory as of January 1, 2022.
Key Takeaway: The NBFDS is an extensive marketing standard with which every regulated entity should become familiar. While the USDA does not have authority to issue a recall or impose civil penalties for violations of the NBFDS, the AMS could initiate an investigation and publicly publish the findings of its investigation. It is also possible that States will adopt the same or similar requirements and impose remedies for violations of their standards, such as damages, penalties, injunctive relief, and attorney’s fees.Read More
Summary: Eighth Circuit affirms that a plaintiff does not have standing to sue for a defective product unless the defect has actually manifested.
Key Takeaways: In In re Polaris Marketing, Sales Practices, and Products Liability Litigation, 9 F.4th 793 (8th Cir. 2021), the purchasers of off-road vehicles filed a putative class action against the manufacturer and designer of the vehicles based on allegations that the vehicles’ engines overheat and cause fires. Half of the named plaintiffs alleged their vehicles caught fire, while the other half alleged only a risk of fire. The Eighth Circuit upheld the District of Minnesota’s decision that a plaintiff whose vehicle had not experienced a fire – i.e., the alleged defect had not manifested in their vehicles – lacked Article III standing to sue because they had no injury in fact. The “no-fire” plaintiffs contended that they suffered economic damages because they would not have purchased the vehicles or they would have paid less if they had known about the alleged defect. This was not enough: “In the context of defective products, . . . it is not enough for a plaintiff to allege that a product line contains a defect or that a product is at risk for manifesting this defect; rather, the plaintiffs must allege that their product actually exhibited the alleged defect.” Without manifestation, there was no injury and, accordingly, no standing.
Summary: The National Advertising Division (NAD) of the Better Business Bureau recently published a decision reminding advertisers that claims directed to sophisticated audiences are still subject to the same rules and guidelines as those claims directed to the general public and lay audiences. In Bausch Health US, LLC (INFUSE Contact Lenses) the NAD reviewed a number of claims in a Bausch & Lomb (B & L) brochure distributed to eye care professionals (ECPs) for single-use contact lenses.
Among the claims challenged by Alcon and reviewed by NAD were a number of claims related to the scientific properties and measurements of the lenses, incorporated into a bar graph that demonstrated the different measurements among B & L lenses and those of its competitors (specifically, comparable lenses produced by competitors Alcon and Johnson & Johnson). Under the chart, the brochure displayed various statements that the B & L lenses provide superior comfort, wearability, or eye health benefits. For example, a claim about B & L lenses having the “lowest modulus” (a measurement of the lens) was immediately accompanied by the statement “that ‘low modulus’ . . . provides a comfortable lens wearing experience.”
The NAD turned to a prior case involving B & L contact lenses where the NAD found that “lens property claims paired with a superiority claim . . . conveyed a comparative message requiring a showing that the demonstrated differences will be clinically significant (i.e., consumer relevant.)” In the present case, NAD found that the lens property claims were “clearly intertwined” with clinical benefits of such properties and thus required separate studies to support such claims—which B & L was unable to provide.
The NAD specifically noted that “while a sophisticated audience may understand nuanced and technical language, as well as industry-related data used in a claim . . ., all messages reasonably conveyed should be truthful and accurate.”
Key Takeaways: The key takeaway in this case is a simple one: that all claims by an advertiser, regardless of audience sophistication, should be supported by reliable evidence. The K&L Gates consumer protection and advertising group can help review your final advertising campaign for claim substantiation concerns and a wide variety of other advertising issues.Read More