StayADvised: What's New This Week
- What’s That Smell? NAD Deems "Beautiful" Fragrance Claims Puffery
- Striking a Balance: FTC Staff Emphasizes the Agency’s Role in Enforcing Consumer Privacy
- Hold the Line: Collections Calls for Federal Debts Still Exempt from TCPA Consent Rules
- Sides Clash in Battle over FCC Text Message Reclassification
- FCC Joins Interagency Initiatives to Fight Robocalls
What’s That Smell? NAD Deems "Beautiful" Fragrance Claims Puffery
In reviewing advertising and packaging claims asserting that a company’s body wash fragrances are "as beautiful as" a competitors, the National Advertising Division (NAD) of the Better Business Bureau ruled that such statements are puffery, thus requiring no substantiation.
The matter involved a challenge by L. Brands, Inc., the maker of Bath & Body Works brand body wash products, to claims made by Unilever United States, Inc., manufacturer of Suave Essentials Body Wash products, that the Suave products offered fragrances "as beautiful as Bath and [sic] Body Works" and were even the "same great fragrance as" those contained in Bath & Body Works products. The claims in question appeared both on the packaging of the products and in Unilever’s online advertising.
The NAD concluded that the claim that Suave Essentials products are "as beautiful as" the Bath & Body Works products constituted mere puffery, not requiring substantiation. It determined that in the context of "generalized comparison" between the products, consumers would not perceive the "as beautiful as" characterization as reflecting consumer opinions. Rather, the NAD found the phrase served only to state Unilever’s opinion about its own products and did not constitute a claim that consumers preferred one brand over another.
As for the claim that Unilever’s Suave Essentials products have the "same great fragrance" as the Bath & Body Works products, Unilever notified the NAD that those claims are in the process of being discontinued. The NAD noted that, for compliance purposes, it will treat those voluntarily abandoned claims as though the NAD had recommended discontinuance and Unilever had agreed to comply. However, voluntary discontinuances are not considered an admission of any wrongdoing.
This is not the first time Unilever and L. Brands have tangled at the NAD. In a previous action, the NAD reviewed claims by Unilever that Suave Essentials Body Wash products included "fragrance as appealing as" specific Bath & Body Works products, listing them by name. The claims were included both in digital ads and on product packaging. In its review, the NAD considered whether the advertising claims indicated a consumer preference of one product over another, and whether any preference claims were substantiated by empirical data. (In these kinds of cases, the NAD considers the "totality or overall impression" created by the ad as a whole, including both words and aesthetic elements.) The NAD found that "as appealing as" is a preference claim and the evidence supporting such a claim was insufficient. Accordingly, the NAD recommended Unilever discontinue these claims. In contrast, in the current proceeding the NAD determined that the word "beautiful" referred to "a more ethereal quality of a product that is not a measure of consumer preference."
Brands may be able to use descriptive words to indicate a generalized comparison between their products and those of their competitors, but should use great caution when making comparisons to competing products that involve reference to empirically provable qualities of the products.
Striking a Balance: FTC Staff Emphasizes the Agency’s Role in Enforcing Consumer Privacy
The staff of the Federal Trade Commission (FTC) recently weighed in on questions related to consumer data privacy in response to a Request for Comment (RFC) issued by the Department of Commerce’s National Telecommunications and Information Administration (NTIA). In their comments, FTC staff emphasized the FTC’s history of enforcement action relating to privacy and data security in which the FTC has applied a "balanced approach that weighs the risk of data misuse with the benefits of data to innovation and competition."
The RFC, issued by NTIA in September, called for comments on ways to advance consumer privacy while also protecting prosperity and innovation. Specifically, the NTIA requested feedback on a proposed approach to privacy based on (1) "[a] set of user-centric privacy outcomes" that NTIA asserted should be the focus of federal policy-making and (2) a number of "high-level goals for Federal action" in this area.
The outcomes proposed by NTIA included increased transparency; reasonable controls for users regarding the "collection, storage and disclosure" of private information; and access and correction mechanisms. For companies collecting data the NTIA also suggested policies calling for: minimization of the amount of data used and stored; increased security requirements; risk management mechanisms; and increased accountability. As for high-level goals, NTIA recommended efforts to increase harmony in regulatory efforts; encourage clear laws and innovation; allow for application across all data collection efforts; employ balancing tests to weigh risks against outcomes; provide compatibility with international standards and systems; increase incentives for privacy research efforts; and allow for collaborations with the FTC for enforcement initiatives –taking into account the sizes and scopes of businesses when tailoring policies.
Much of FTC staff response consists of a description of the FTC’s historical approach to enforcement of consumer protection laws in the privacy context, calling it a "flexible, risk-based approach" that "balance[s] business needs, consumer expectations, legal obligations, and potential privacy harms," among other considerations. The staff response asserts that this approach of "balancing risk of harm with the benefits of innovation and competition" through mechanisms of "enforcement, education and policy work" should continue to be the basis for future governmental policy and actions to protect consumers.
In its response, FTC staff also offered specific comments in four areas – "security, transparency, control, and FTC enforcement." However, many of the comments were focused on reiterating that the FTC (which the comments characterize as "uniquely situated to balance consumers’ interests in privacy, innovation, and competition") already has been active in data security and privacy enforcement. Reasserting its commitment to protecting consumer privacy rights while also encouraging advancement, the FTC staff indicated FTC’s intent to continue using Section 5 of the FTC Act to police deceptive and unfair acts in this area. FTC staff also called on Congress to pass privacy legislation that "balance[s] consumers’ legitimate concerns about the protections afforded to the collection, use, and sharing of their data with business’ need for clear rules of the road, consumers’ demand for data-driven products and services, and the importance of flexible frameworks that foster innovation."
The FTC reaffirmed its commitment to support policies and take actions that will protect consumers; to encourage the use of balancing tests to weigh potential risks against desired outcomes; and to assert that the FTC should take a principal role in governmental enforcement.
Hold the Line: Collections Calls for Federal Debts Still Exempt from TCPA Consent Rules
A federal court once again ruled that debt collectors placing auto-dialed calls to consumers in order to collect on a federal debt are exempt from the Telephone Consumer Protection Act (TCPA) consent requirements. In Green v. Solutions (N.D. Ala. Nov. 29, 2018), the court granted defendant Navient Solutions’ motion for summary judgment, holding that these calls were expressly carved out by Congress from TCPA liability.
The suit was initially brought by a student loan borrower who obtained a federal loan in 2005. The loan was a Federal Consolidation Loan funded pursuant to the Federal Family Education Loan Program, an initiative by the U.S. Department of Education, which serves as a guarantor of such loans in the event of consumer default. After making a number of payments on the loan, the plaintiff ceased making payments, and the plaintiff’s loan was placed in default status. Subsequently, Navient Solutions, the loan servicer for the plaintiff’s loan, made repeated calls to plaintiff’s cell phone using an automatic dialing system in an effort to collect on the delinquent loan.
At some point, the plaintiff requested that representatives from Navient cease calling her, and eventually the calls did stop. However, the plaintiff later filed suit in the Northern District of Alabama alleging violations of the TCPA for failing to obtain her consent to place the collection calls. Navient moved for summary judgment, and the district court ruled in favor of Navient.
In its decision, the court first noted that the text of the TCPA (as amended in 2015) expressly specifies that calls "made solely to collect a debt owed to or guaranteed by the United States" are not subject to the TCPA’s express consent requirement. The plaintiff argued, however, that despite the statutory language, a Report and Order issued by the FCC in August 2016 "clarified" that callers seeking to collect a debt owed to the United States are permitted to call only until consent is revoked by the consumer and that callers attempting to collect such a debt accordingly must stop calling at the consumer’s request. The court determined that the proposed regulations contained in the Report and Order never went in to effect because they were expressly subject to approval by the Office of Management and Budget, and such approval never was provided.
This decision follows previous actions of this nature which met similar fates, including Schneider v. Navient Solutions, Inc., No. 6:2016cv06760 (W.D.N.Y. 2018). In Schneider, the court opined that the statutory language excluding collections calls for government-backed debt is perfectly clear and complete, and while the FCC was permitted to impose additional regulations for debt collection measures, the agency was not actually required to do so, and in fact, did not do so.
Collections calls placed to borrowers regarding student debts guaranteed by the Department of Education do not require consumer consent, and suits alleging violation of the TCPA that hinge on this consent issue will likely be ruled in favor of the defendant at the summary judgment stage.
Sides Clash in Battle over FCC Text Message Reclassification
The Federal Communications Commission announced in November that at its December Open Meeting it would consider whether or not to designate text messages as a Title I "information service," an act that would allow service carriers to determine which messages should reach consumers and which should be filtered out as spam messages. At its December 12 meeting the agency confirmed that SMS (short message service) qualifies as information services under Title I of the Communications Act of 1934 and not "telecommunications services," resulting in text messages retaining their current status, and thus allowing wireless providers authority to "stop unwanted text messaging through robotext-blocking, anti-spoofing measures, and other anti-spam features."
The FCC’s initial announcement of the meeting provided the basis for this review, highlighting that robotexts "appear to be a growing concern for American consumers" and that various legislative and regulatory groups, including 20 state attorneys general, have petitioned the FCC to retain wireless carriers’ current ability to monitor potential spam and/or robotexts prior to consumer receipt. In a statement accompanying the FCC’s decision, Chairman Pai cited the AG’s letter, noting "[w]e believe, and our citizens desire, that this unique wireless service should be kept ‘spam free.’ We therefore urge the Commission to maintain the status quo, rather than imposing new regulatory structures that would open the spam floodgates."
The initial announcement of the hearing met with resistance from other interested groups. First to come forward in opposition were parties such as Twilio, a text messaging platform, and the public advocacy group Public Knowledge. These groups voiced concerns that the proposed measures would be too vast in scope and could restrict legitimate texts, such as opt in updates from advocacy groups. Opponents of the FCC proposals decried the possible reclassifications, arguing that current classification as a Title II telecommunications service would still allow for sufficient filtering of spam, but would not open the door to dangerous, unlimited abilities to censor consumer content, at the sole discretion of service providers. Further, they hold concerns that blocking will encourage discrimination and prevent valid competition in industry.
Despite these concerns, the FCC ultimately ruled that SMS and multimedia service messaging (MSM) messages are properly classified as information services –not telecommunications services – allowing carriers to develop solutions to prevent texting spam. In doing so, the commission rejected petitions by stakeholders who, as Chairman Pai characterized, would "want the FCC to classify text-messaging as a telecommunications service under Title II of the Communications Act, which would open the floodgates to spam texts." Pai noted in this statement that "[t]oday, we reject this request and instead side firmly with consumers by classifying SMS and Multimedia Messaging Service (MMS) as information services and empowering wireless providers to continue taking action against unwanted text messages."
By confirming that SMS and MSM messages are Title I information services rather than Title II telecommunications services, the FCC left intact wireless carriers’ ability to monitor and control what messages may be passed through their networks. While the FCC claims that this outcome will encourage carriers to develop solutions for preventing text spamming, Commissioner Jessica Rosenworcel, in a scathing dissent, disagreed, claiming that "[i]n [today’s ruling], the [FCC] continues its quest to dismantle the regulatory frameworks that protect Americans and that were intended to make phone, cable, and internet service more fair and more affordable." After reflecting on how the FCC ruling mirrors the current divisive environment in Washington, D.C., Rosenworcel concludes "So here it is: Today’s decision offers consumers no new ability to prevent robotexts. It simply provides that carriers can block our text messages and censor the very content of those messages themselves. Calling this decision anything else is just doublespeak. I dissent."
FCC Joins Interagency Initiatives to Fight Robocalls
Federal and state agencies are now working together to collaborate and propose intersecting regulations targeting illegal robocalls and telemarketing scammers. These efforts follow thousands of complaints flooding the offices of the Federal Communications Commission, the Federal Trade Commission and dozens of state attorneys general.
In November, Senators John Thune of South Dakota and Ed Markey of Massachusetts introduced a bipartisan bill called the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act ("TRACED Act"). The Act would alter the current telemarketing landscape in multiple ways so as to target companies employing robocall technologies as well as other actors who intentionally violate laws intended to protect consumers from telephone scams. In part, the intent of the initiative is to address not only telemarketers who may inadvertently violate telemarketing rules, but also scammers who prey on consumers. Robocalls currently constitute the primary source of complaints filed with the FCC and represent a significant consumer protection concern.
The proposed Act would provide for several changes to current law. Most importantly, it would arm regulators with strong firepower to go after violators, granting the FCC authority to seek fines up to $10,000 per call for intentional violations. It would also extend the time permitted for FCC enforcement from one year after an allegedly violative call was actually placed to three years. The Act also includes provisions addressing call authentication and options for call blocking.
For many years Robocalls have proven to be a significant menace to consumers and regulators. Attempts to stop these unwanted and, in some instances, costly annoyances with current laws have proven generally fruitless, particularly when these calls originate from offshore locations. Whether or not new laws with stronger teeth will stop these calls remains to be seen, the concerted legislative efforts that transcend the partisan aisle are a good sign.