Electric Toothbrushes Battle It Out Before NAD
In a battle over electric toothbrushes, the National Advertising Division determined that Procter & Gamble can support superiority claims for its Oral-B models challenged by competitor Philips Oral Healthcare, the maker of Sonicare, while recommending that Philips discontinue two broadcast commercials.
In two television commercials, Philips promoted Sonicare with claims that the toothbrush had a greater number of "brush movements" and was "The most loved toothbrush in America." Although the advertiser told the self-regulatory body that the brush movement comparison was about innovation, not efficacy (because Sonicare had better technology) and that the "most loved" claims were puffery, the NAD was not convinced.
"Considering the entire context, imagery, and visual and audio claims," the commercials "reasonably convey a message of superior performance and efficacy versus Oral-B," the NAD wrote. The commercials depicted a comparative demonstration of the brush movements of the two brands (Sonicare toothbrushes use a sweeping motion with high bristle speed while Oral-B utilizes a rotating-oscillating design) and claimed "27% more brush movements" and healthier gums.
As for the "most loved" commercial, the NAD determined it also conveyed a message of superior performance and efficacy over competing electric toothbrushes. The commercial posed a question: "Why is Philips Sonicare the most loved electric toothbrush brand by Americans and their dentists?" with the answer in the form of a list of specific performance attributes including "a level of clean like you've never felt before" and "healthier gums in two weeks."
"A consumer seeing the commercial could quite reasonably take away the message that consumers and dentists love Sonicare because it performs better than competing toothbrushes by providing a superior cleaning experience, producing healthier gums, and that it does so because of the 62,000 brush movements," the NAD wrote.
Since Philips argued there were no implied claims in the commercial, it did not attempt to substantiate them, leaving the NAD to recommend that the commercials be discontinued. The advertiser's more limited express claims also failed review, despite Philips' contention that "most loved" constituted puffery.
"As is often the case, context matters," the NAD said, finding the "most loved" claim was tied to specific performance attributes. "Consumers know what unclean teeth feel like and what clean teeth feel like," according to the decision. "The claim appears immediately after the 'most loved' question is posed, suggesting that consumers love Sonicare because of something they can actually feel or detect or experience." Accordingly, "consumers could reasonably expect that the advertiser possesses evidence to substantiate its comparative superiority claim."
In a second decision, the NAD considered P&G's claims for Oral-B rechargeable toothbrushes found on its website, in print advertisements, and in television commercials such as "Oral-B cleans better by removing up to 22% more plaque than Sonicare and 33% more plaque in hard to reach places. Plus, it's even 32% better at improving gum health. For a superior clean, Oral-B is the right choice."
Philips argued the claims were unsupported and overbroad, and implied that Oral-B's entire line of rechargeable toothbrushes is superior to Sonicare's entire line of rechargeable toothbrushes. The challenger also questioned the strength of the studies forming the basis of P&G's claims.
The NAD found that the advertiser's health-related claims were supported by competent and reliable scientific evidence with studies published in independent, peer-reviewed journals and the detailed testing protocols that were provided. P&G did need to clarify which toothbrushes were the subject of the comparison, and to modify the claims "to expressly state" which Oral-B and Sonicare products were being compared.
To read the NAD's press release in Procter & Gamble's challenge to Philips' claims for Sonicare, click here.
To read the NAD's press release in Philips' challenge to P&G's claims for Oral-B, click here.
Why it matters: The decisions—in which the NAD noted that the two companies are the leading manufacturers of electric toothbrushes in the United States and "compete intensely" for market share in the oral healthcare field—provided many useful lessons for advertisers. Health-related superior performance or efficacy claims must be supported by competent and reliable scientific evidence, the self-regulatory body noted, and whether a claim is puffery depends on the total context of the advertising. "Where an objective representation is made regarding the performance or other tangible attributes of a product that is sufficiently specific and material enough to create expectations in consumers, then substantiation for the claim is required," the NAD noted.
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Direct Marketers to Pay $875,000 to New York AG
To settle investigations by the New York Attorney General's office, a pair of companies agreed to pay almost $1 million and change their advertising practices.
Tristar and Product Trend "lured" consumers with deceptive infomercials for products including the Genie Bra, Ab Coaster, Total Pillow, and Furniture Fix, according to AG Eric T. Schneiderman. Some of the ads featured "Buy One, Get One" offers that required the consumer to pay two separate processing and handling fees. The "confusing" order process included multiple upsell offers for additional products without providing consumers an opportunity to review and edit an order before it was placed.
The Assurance of Discontinuance with Tristar used a Genie Bra infomercial as a representative example of the activities investigated by the AG. As actresses wiggle in their ill-fitting bras, a voiceover asks questions such as "Are you constantly struggling with your straps? Do your underwires dig into your skin? … Isn't it time you stopped your daily struggle with uncomfortable bras that prevent you from looking your best?"
Touting the benefits of the Genie Bra as "the most comfortable, conform-fitting bra you have ever worn", the infomercial included testimonials from actors who encouraged consumers to order the product online or by phone for just $19.99, plus shipping and handling. Those who did so within 20 minutes would get a second bra free.
Neither the audio nor video of the infomercial disclosed the amount of processing and handling fees, the AG said, which "in some cases were as much as half the amount charged for the product." The company also failed to mention that consumers would be charged a separate processing and handling fee for each bra.
Schneiderman faulted the ordering process which included "a number" of deceptive and misleading features such as neglecting to provide consumers with an opportunity to confirm or edit their order at the end of the process to ensure its accuracy, and upsell offers that did not "clearly and promptly" provide consumers with the option to decline the offer.
For example, one consumer responded to the Total Pillow "Buy One, Get One" offer touted as $19.99 plus shipping and handling—and was charged $91.73 as a result of unclear upsells and shipping and handling charges, the AG alleged.
In addition to the payments ($700,000 for Tristar and $175,000 for Product Trend), the companies are required to clearly and conspicuously disclose all material terms of an advertised offer as well as the amount of any processing and handling fee for the second item in a "Buy One, Get One" offer. They must also disclose the amount of any processing and handling fees during the ordering process. Consumers must be provided with the opportunity to confirm the details and total price of an order before it is processed, and those that place orders by phone must receive an order summary via email with a breakdown of processing, handling, or other charges.
All hyperlinks must be labeled to clearly convey the consequence of clicking on them and consumers must receive a checkout page with the ability to make changes or edit their order before it is final. Adequate staffing—to avoid long hold times—was also required by the New York AG.
To read the Assurance of Discontinuance in In the Matter of Investigation … of Tristar Products, click here.
Why it matters: In a press release about the settlements, AG Schneiderman noted that the actions against Tristar and Product Trend were "part of a wider investigation into deceptive advertising and sales practices allegedly used by the direct marketing industry" based on consumer complaints. The settlements "bring much needed reforms to two major players in the direct marketing industry and insure that consumers will have a clear understanding of the charges before they place an order."
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Judge Bags Pricing Suit Against Dooney & Bourke
Providing a defense victory in the burgeoning litigation at outlet stores, a California federal court judge granted Dooney & Bourke's motion to dismiss, albeit with leave for plaintiff to amend.
Monica Rael asserted that the purported "discount" prices listed on products at the defendant's outlet stores were not based on actual retail prices but were in fact "phantom markdowns" in an effort to trick consumers into thinking they were saving more money. Rael claimed she saw a handbag at a D&B factory store advertised at "40% off," or $136.80 instead of $228, and decided to buy it because she believed she was receiving a price discount.
She later sued, alleging violations of California's Unfair Competition Laws, False Advertising Laws, and Consumer Legal Remedies Act, among other causes of action. Dooney & Bourke moved to dismiss the suit. The defendant argued that Rael lacked factual support for her allegations, did not allege a misleading price comparison, and that her suggestion that price comparisons against nondiscounted retail channels are prohibited was wrong as a matter of law.
U.S. District Court Judge Jeffrey T. Miller agreed.
Although Rael alleged that the pricing scheme was deceptive because the "sale" price was compared to a false "original" price, she neglected to include facts "to illustrate why the 'original' purchase price or any other D&B product sold at the outlet was false or misleading," the court said. A declaration from her counsel was insufficient in that it simply restated conclusory statements and added "no factors or substance" to the complaint.
"[E]ven assuming [the lawyer's] submission is competent and relevant, [he] does not in any way specify the details of his investigation," Judge Miller wrote. "Did he visit any D&B retail or outlet stores? Did he visit the D&B website, and if so, on which dates? Which products, if any, are discounted beyond the 90-day period? Did he attempt to search for the handbag purchased by Plaintiff to determine if its pricing was false and if so, on what basis?"
The plaintiff's suggestion that the falsity of the scheme was established by the fact that all the items sold in the D&B outlet stores are defendant's own merchandise—meaning the only basis for what constitutes an "original" or "market" price are the prices at which the defendant regularly sells its outlet store products—was unpersuasive, the court added.
The items at the outlet store may be discounted or overruns but it did not establish the products were somehow inferior, the court said, and Rael "seems to ignore the function of outlet stores and the consumer expectations tied to it."
"If Plaintiff's contention is that it is generally illegal to move an item from a retail store to an outlet store and mark it as reduced compared to the retail price, Plaintiff has provided no legal authority to support it," the court said. "If, on the other hand, Plaintiff's argument is more specific to Defendant's own outlet pricing scheme, the complaint contains no facts to illustrate how the pricing scheme is false or misleading aside from the blanket conclusion that all outlet merchandise is, by definition, substandard."
At oral argument, the plaintiff attempted to clarify her position by asserting that a consumer may not know she is in an outlet (as opposed to a retail) store, so it would be reasonable for a consumer to see a "40% off" price tag and conclude the product is a retail product sold concurrently at its regular price at other D&B stores or sold at the regular price at the same outlet store within 90 days of that sale. But Rael failed to plead any of these factual allegations, Judge Miller wrote.
The court dismissed the plaintiff's suit in its entirety, granting her leave to file a second amended complaint.
To read the order in Rael v. Dooney & Bourke, click here.
Why it matters: Outlet stores and allegations of deceptive pricing have been a recent target for consumer class actions. The Rael order was a welcome ruling for defendants, with Judge Miller reminding plaintiffs that factual allegations are necessary to move the suit forward.
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Yelp Warns Consumers About Legal Threats From Companies
Businesses that have filed suit against consumers for posting negative reviews are now being highlighted by Yelp.
A pop-up box appears on the page of companies that have taken action against customers, reading: "Consumer Alert: Questionable Legal Threats. This business may be trying to abuse the legal system in an effort to stifle free speech, including issuing questionable legal threats against reviewers. As a reminder, reviewers who share their experiences have a First Amendment right to express their opinions on Yelp."
Consumers who visit the Yelp page for a Manhattan dentist who sued five different patients in the last four years over negative reviews now see the message, as do those who visit the page for a Texas pet sitter and Superior Moving & Storage in Florida. Prestigious Pets filed a $1 million complaint against a couple that posted a review saying the company overfed their pet goldfish while the Pompano Beach moving company took legal action after a consumer review awarded just one star.
Yelp decided to post the warnings in an effort to level the playing field. "Consumers don't necessarily know that these threats are sometimes empty or meritless (and often both!), so the threat of legal action is enough to scare them into silence," Yelp Senior Vice President Vince Sollitto wrote in a blog post announcing the addition of the alerts. He noted that the company was founded on principles of consumer free speech. "We don't think that's right."
Congress is currently considering legislation that would ban companies from using non-disparagement clauses prohibiting negative reviews and would ban the assignment of a copyright interest in a consumer review, two tactics used by businesses as the basis for lawsuits over negative reviews. The Consumer Review Fairness Act, H.R. 5111, was reintroduced in the House of Representatives after failing to pass last year.
To read the Yelp blog post about the consumer warnings, click here.
Why it matters: Yelp's new consumer warning also puts businesses on notice that the use of non-disparagement clauses or assignment of copyright interest with regard to online reviews is frowned upon by the site.
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News and Views
Law360 quoted Ivan Wasserman, partner in Manatt's advertising, marketing and media practice, in an article about new federal regulations for consumer products, and a new law that sets a federal standard for labeling food that contains genetically modified ingredients. "With comprehensive federal regulation of GMO labeling, class action lawsuits alleging deceptive GMO-related labeling claims will likely be much harder to bring," said Wasserman. To read "Product Liability Regulation & Legislation: Midyear Report," click here.
Richard Lawson, partner in the Manatt's consumer protection practice, authored an article for Response Magazine titled "In Case of Negotiation Breakdown, Always Be Trial Ready." Lawson discusses the ins-and-outs of negotiations with enforcement authorities that can result in litigation. "Regardless of whether there is going to be a bench trial or a jury trial, negotiations with enforcement authorities always carry with them the risk that if talks break down, you have to go to court. A recent Federal Trade Commission (FTC) case shows that even in settings like consumer protection investigations, you need to prepare and handle the case as if it may go to trial." To read the article, click here.
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