NAD Watches Paint Dry, Sides With Advertiser
By Jeffrey S. Edelstein, Partner, Advertising, Marketing and Media
The Sherwin-Williams Co. does not need to change the name of its “CoverMaxx” spray paints, the National Advertising Division of the Better Business Bureau said after determining that the advertising challenged by competitor Rust-Oleum Corp. did not communicate a message of superior paint coverage requiring substantiation.
Rust-Oleum argued that marketing materials and product labels featuring language such as “maximum coverage,” “ultimate coverage” and the product name “CoverMaxx” were unsubstantiated claims that the entire line of Sherwin-Williams’ general-purpose spray paints provides superior paint coverage to Rust-Oleum’s and other leading competitors’ general-purpose spray paints.
In support of its position, the challenger pointed to recent decisions from NAD and the National Advertising Review Board (NARB) where the self-regulatory body found the product name of Rust-Oleum’s Painter’s Touch Ultra Cover 2X line of spray paints communicated an “express performance claim” that its paints delivered twice the coverage of competing brands’ paints—including Sherwin-Williams’. In affirming the NAD decision, NARB recommended that Rust-Oleum change its product name.
The advertiser took the position that the claims challenged by Rust-Oleum constituted puffery and did not communicate a superiority message, but were “fanciful” and a form of hyperbole that consumers would understand was not advertising claims.
To back up its argument, Sherwin-Williams reviewed 45 years of NAD decisions. The self-regulatory body has never found that products whose names incorporate the term “max” communicate a superiority message, the advertiser said, while “ultimate” claims have repeatedly been found to constitute puffery.
After noting that “whether a claim is puffery is more an art than a science,” NAD sided with the advertiser with regard to the “ultimate coverage” claim. The accompaniment of four product attributes (“Rust Protection,” “Paint + Primer,” “Fastest Dry Time” and “Durable Adhesion”) didn’t provide a context of comparison either.
“The claim itself is vague and fanciful and does not make any objective representation about the product’s comparative paint coverage,” NAD wrote. “Further, none of the product attributes listed on the product label or website convey a meaningful or measurable message about the product’s paint coverage. … As such, a reasonable consumer likely would understand the ‘ultimate coverage’ claim to be hyperbole rather than a comparative performance claim. For these reasons, NAD found that the ‘ultimate coverage’ claim as it appears in the context of the challenged advertising is puffery and does not require substantiation.”
Turning to the product name, NAD distinguished the Ultra Cover 2X decision, as well as a similar decision involving a product named All-Day Energy. In those cases, the product name communicated a clear, specific and objectively provable statement. NAD analogized these decisions to a decision involving Crest Sensi-Stop Strips, where the use of the prefix “sensi-” (short for “sensitive”) underscored that the name is not a specific claim to be taken literally.
“Here, NAD determined that the CoverMaxx product name is not likely to be interpreted as an express claim that the product delivers superior paint coverage compared to other leading spray paint products,” the self-regulatory body wrote. “In contrast to the product names Ultra Cover 2X and All-Day Energy, the CoverMaxx name is vague and does not convey a clear, specific and measurable message about product performance. Moreover, like the term ‘Sensi’ in Crest Sensi-Stop Strips, the shortened and imaginative use of the term ‘Maxx’ also demonstrates that the CoverMaxx product name is not a literal expression of spray paint performance.”
Sherwin-Williams’ advertising, including the product name, packaging and other marketing materials, taken together, did not reasonably convey the message that the CoverMaxx product provides better coverage than do competing brands of spray paint, NAD concluded.
“Given the absence of extrinsic evidence that consumers are misled by the CoverMaxx name, NAD’s finding that the name standing alone does not convey an express performance message, and the non-comparative context of the surrounding advertising, NAD determined that there was no basis to recommend a product name change.”
To read NAD’s press release about the decision, click here.
Why it matters: NAD took the opportunity to provide advertisers with a reminder about puffery. “Whether a claim is puffery depends on the total context of the advertising,” the self-regulatory body wrote. “Obvious hyperbole, exaggerated displays of a manufacturer’s pride in its product and other non-provable claims, the truth and accuracy of which cannot be determined, have been found to constitute puffery.” NAD also reiterated the importance of extrinsic evidence that indicates consumer confusion before it will require an advertiser to change the name of a product. As Rust-Oleum did not provide any reliable extrinsic evidence that consumers were confused or misled about the name “CoverMaxx,” there was no basis on which to recommend a product name change.
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Second Circuit Affirms Dismissal of Data Breach Suit
By Jesse M. Brody, Partner, Advertising, Marketing and Media
The U.S. Court of Appeals for the Second Circuit found that the plaintiff failed to establish standing and affirmed the dismissal of a consumer class action filed based on data breach at Michaels Stores, Inc.
Mary Jane Whalen made purchases with her credit card at a Michaels store on December 13, 2013. About two weeks later, her credit card was presented for payment to a gym in Ecuador for a charge of $398.16; the next day, it was presented for payment to a concert ticket company in Ecuador for a charge of $1,320.
Whalen canceled her card on January 15 and was not liable for either of the Ecuador purchases. On January 25, Michaels issued a press release acknowledging that the retail chain may have suffered a data breach of its system involving the theft of customers’ credit and debit card data. In a subsequent press release, the company noted that there was no evidence that other information was at risk and offered 12 months of identity protection and credit monitoring services to affected customers.
In response, Whalen filed a putative class action in New York federal court asserting claims for breach of an implied contract and violation of the state’s General Business Law Section 349. A district court judge granted Michaels’ motion to dismiss the suit for lack of standing.
Whalen appealed, asserting three theories of injury to establish Article III standing to pursue her claims: her credit card information was stolen and used twice in attempted fraudulent purchases, she faces a risk of future identity fraud, and she has lost time and money resolving the attempted fraudulent charges and monitoring her credit.
None of her arguments persuaded the court, which unanimously affirmed dismissal in a summary order.
“Whalen does not allege a particularized and concrete injury suffered from the attempted fraudulent purchases … she never was either asked to pay, nor did pay, any fraudulent charge,” the Second Circuit wrote. “And she does not allege how she can plausibly face a threat of future fraud, because her stolen credit card was promptly canceled after the breach and no other personally identifying information—such as her birth date or Social Security number—is alleged to have been stolen.”
As for time and money spent resolving the fraudulent charges and monitoring her credit, “Whalen pleaded no specifics about any time or effort that she herself has spent,” the court said, alleging only that “consumers must expend considerable time” on credit monitoring and that she “and the Class suffered additional damages based on the opportunity cost and value of time that [she] and the Class have been forced to expend to monitor their financial and bank accounts.”
Since Whalen did not seek leave to amend her complaint to add anything more substantial, the panel dismissed the lawsuit.
To read the summary order in Whalen v. Michaels Stores, Inc., click here.
Why it matters: The panel distinguished the “shortcomings” in Whalen’s complaint from other cases that involve vendor data breaches, including class actions against Neiman Marcus and P.F. Chang’s. In both cases, the Seventh Circuit found that in reversing summary judgment in favor of the defendants, the plaintiff’s fear of future harm stemming from the breach was sufficient to establish standing.
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Targeted Ads Violate DPPA, New Suit Alleges
By Jesse M. Brody, Partner, Advertising, Marketing and Media
Solicitations to purchase vehicle warranties targeted to the owners of specific makes and models led to a new putative class action in a Wisconsin federal court.
After receiving two notices in the mail that the manufacturer’s warranty on her vehicle was about to expire, Linda Kundinger sued CarSure, LLC, for violating the Driver’s Privacy Protection Act (DPPA). The federal statute makes it “unlawful for any person knowingly to obtain or disclose personal information, from a motor vehicle record, for any use not permitted” by the law.
Congress intended to provide drivers with a privacy interest in the personal information that they provide to state departments of motor vehicles, Kundinger told the court, when it enacted the DPPA to provide a private right of action to protect those privacy interests. While the statute contains exemptions for permissible uses of drivers’ personal information, it does “not permit such information to be obtained, disclosed, or used for marketing or solicitation purposes—which is precisely what CarSure does,” according to the complaint.
CarSure obtains sales leads from third-party data suppliers that provide “personal information,” including names, addresses, and vehicle make and model numbers, and then directly solicits consumers, Kundinger claimed. She received two letters in the mail that implied they were sent from a dealer or manufacturer and that contained statements such as “FINAL ATTEMPT” and “IF [THE WARRANTY] HAS EXPIRED YOU WILL BE RESPONSIBLE FOR PAYING FOR ANY REPAIRS” that were designed to induce her to contact CarSure about purchasing a vehicle services contract.
The complaint cited a warning from the Better Business Bureau (BBB) “urg[ing] consumers to use caution when considering doing business” with CarSure, as it has “received numerous complaints” about the company, and 95 percent of the customer reviews on the site are negative. Kundinger also included a laundry list of complaints from the BBB’s site (“THIS IS A SCAM and should be investigated and punished for what it is” and “The advertising mailer for this company is completely misleading,” for example).
Seeking to certify a nationwide class of consumers whose names and mailing addresses were obtained from a motor vehicle record and acquired and used by CarSure for purposes of marketing and/or solicitation dating back four years, the complaint requested injunctive relief as well as punitive and monetary damages, including the $2,500 statutory award under the DPPA.
To read the complaint in Kundinger v. CarSure, LLC, click here.
Why it matters: Relying in part on a negative rating from the BBB and other consumer complaints for support, the Wisconsin federal court complaint alleged that CarSure violated the DPPA with its targeted ads.
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‘Buy One, Get One Free’-Style Offer Hit With Class Action
By Richard P. Lawson, Partner, Advertising, Marketing and Media
Puritan’s Pride, Inc., deceived consumers with a “buy one, get one free”-style marketing campaign for its supplements, a new putative class action filed in California federal court alleged.
Although consumers were told that if they purchased one or more products they would receive additional items for free, the defendant built the cost of the “free products” into the price of the products being purchased, Meg Larson and Diane Cabrera said. For example, Larson claimed that she made multiple purchases of items such as garcinia cambogia and vitamin D3 using the buy one, get two free offer and paid a premium price for the one item to cover the cost of the two purportedly free ones.
“Defendants engage in the … systemic and continuous practices of disseminating false, deceptive, and misleading information about the Products via an extensive and comprehensive nationwide marketing campaign, consisting of internet postings, blast emails, targeted emails,” and other media, which is “intended to induce unsuspecting consumers, including Plaintiffs and members of the Class, into purchasing millions of dollars worth of Puritan’s Pride branded Products at a premium price,” the plaintiffs alleged.
Adding to the misleading advertising, Puritan’s Pride misrepresented that the buy something, get something free promotion was available only for a limited time, the complaint alleged, with statements such as “SEMI-ANNUAL EVENT … BUY 2 GET 3 FREE” or “THE BEST SALE OF THE YEAR IS BACK! BUY 1 GET 2 FREE.” In fact, the promotion was ongoing.
“Defendants conceal that their marketing and advertising campaign promising ‘free’ Products is permanent, and intend to induce consumers to make expedited purchases by falsely representing that they can only obtain ‘free’ products if they act quickly,” according to the plaintiffs. “There has been no time in the preceding four years when Defendants were not purportedly giving Products away for ‘free’ under the promotion.”
The plaintiffs alleged violations of California’s Consumer Legal Remedies Act, False Advertising Law and Unfair Competition Law, and requested injunctive relief and monetary damages (including disgorgement and restitution) for a class of California consumers dating back four years.
To read the complaint in Larson v. Puritan’s Pride, Inc., click here.
Why it matters: Consumers (and plaintiffs’ attorneys) have recently turned their attention to price advertising, beginning with class actions against outlet stores, accusing them of misleading pricing. Lawsuits targeting promotional deals like Puritan’s Pride’s buy one, get two free could be the next wave.
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