Stay ADvised: What's New This Week, November 11

Articles

• NAD Recommends Air Purifier Co. Clear the Air on Ad Claims
• Apps Amend Privacy Practices in Response to BBB’s Digital Accountability Program
• Happy Cows No More? Ben & Jerry’s Faces False Ad Class Action
• Kellogg’s Settles False Ad Suit Over Cereal Sugar Claims for $20 Mil
• Judge Clips Claims in Apple False Ad Class Action Suit

NAD Recommends Air Purifier Co. Clear the Air on Ad Claims

The National Advertising Division (NAD) has recommended air purifier manufacturer Molekule discontinue a long list of marketing claims following a challenge by a competitor, Dyson.

Molekule manufacturers the MH1 Air Purifier (MH1), which it markets on its website and on social media. Dyson, a leader in the vacuum cleaner category, also sells air purifiers, though it uses a different type of filtering than Molekule.

The first of Dyson’s challenges concerned Molekule’s claims about the MH1’s pollution elimination abilities. Molekule claimed that its “pre-filter” and Photo Electrochemical Oxidation (PECO) filter completely “eliminates” or “destroys” all indoor air pollution, including bioaerosol (certain unwanted particles in the air) and VOC (volatile organic compounds) that can pollute the air.

The company advertised charts showing how the MH1 completely eliminates these pollutants and claimed that “independent lab results have shown that PECO destroys VOCs quickly and efficiently” and that “Molekule is able to completely replace the air in a 600 square foot room … once an hour.”

However, NAD found Molekule’s evidence unconvincing and insufficient to provide a “reasonable basis” to support the marketed performance based on “issues in the testing submitted by Molekule” that raised questions about whether the MH1 would actually function as claimed in real-world situations.

A second challenge concerned Molekule’s claims that favorably compare its PECO air filtration technology to Dyson’s High Efficiency Particulate Air (HEPA) technology. Molekule advertised PECO’s superiority by claiming “HEPA filters can’t trap small pollutants. Many harmful pollutants such as VOCs are smaller than 0.3 microns. HEPA filters can’t remove them.”

NAD concluded that the evidence Molekule provided was insufficient to substantiate performance claims of either filtration system and certainly did not support the claim that the filtration system used by Dyson was inferior to that used by Molekule. “The advertiser,” noted NAD, should “avoid any language characterizing the use of HEPA air purifiers as dangerous or deleterious to consumer health or reasonably conveying such unsupported messages.”

Dyson further challenged claims that Molekule provides asthma and allergy symptom relief, which appeared on the company’s website and via customer and doctor testimonials. For example, Molekule advertised that study “results point to the potential for Molekule to immediately improve allergy sufferers’ quality of life.”

As with the other challenged claims, NAD found Molekule’s evidence proffered to support the claims of allergy symptom relief insufficient, particularly because those studies used too small a sample size to support such broad claims.

NAD thus sided with Dyson and recommended that Molekule discontinue the challenged claims. In response, Molekule said it plans to appeal to the National Advertising Review Board many of NAD’s findings, in particular its suggestion that “the advertiser [should] avoid any language characterizing the use of HEPA air purifiers as dangerous or deleterious” and discontinue comparison of its air purification technology with Dyson’s.

Molekule noted that it “did not intend to make claims about specific devices of competitors, particularly those that combine the use of HEPA with other technologies” but “intended only to explain that its PECO technology destroys pollutants whereas HEPA technology collects pollutants and has particle-size and other limitations—a distinction that is important for consumers to understand.”

Key Takeaways

For advertisers, this matter provides two main takeaways. First, advertisers of products that claim to affect consumer health must be precise with their marketing claims. As the NAD noted early in its analysis, “consumers purchasing air purifiers seek to improve indoor air quality by removing airborne pollutants like pollen, bacteria, and mold and it is critical that they receive accurate information about the devices they purchase—particularly in matters that impact their health.”

Second, this case is a reminder that studies used in support of advertising claims must be precise, targeted, and contain adequate sample sizes to withstand scrutiny.

Apps Amend Privacy Practices in Response to BBB’s Digital Accountability Program 

Two popular mobile apps have changed their tune on data privacy practices following review by the Better Business Bureau’s (BBB) Digital Advertising Accountability Program (DAA). The DAA monitors mobile apps to determine whether targeted ads comply with its data privacy principles. According to the self-regulatory organization, the goal of these principles is to provide online users with greater transparency and autonomy about how their data is used in targeted ads.

The DAA review revealed that WiFi Map, a popular crowdsourcing app, and Ipnos Software, a Canadian wellness app developer, each allowed third-party ad tech companies to collect user data in ways that failed to meet industry standards and the DAA’s privacy principles.

DAA found that WiFi Map allowed ad tech companies to collect “extremely precise” user location data in violation of DAA’s data privacy principles. Although it asked users for consent to collect their information, the DAA found the company did not let users know that third parties might use their data for targeted ads and failed to provide an easy opt-out tool or any notice that location data was being collected.

In response to the DAA inquiry, WiFi Map updated and strengthened its privacy practices and provided a notice to consumers about available opt-out tools. Those improvements included “robust” up-front disclosures and a statement added to its privacy policies that WiFi Map complies with the DAA’s principles.

Ipnos Software had similar issues with its handling of user data. DAA found that the Canadian wellness app developer collected data from users for targeted ads but provided no notice of this to users either up-front or in its privacy policies. It also did not inform consumers how to opt out of targeted ads.

Ipnos also changed its tune after the DAA reached out, committing “to full compliance with the DAA principles.” The company updated its privacy policy to provide notice of the use of data for ad tech purposes, and it implemented an easy opt-out tool, both of which are easily accessible via the company’s privacy links and app settings.

Jon M. Brescia, Vice President of the DAA Program, summarized these developments by noting that “Today’s case follows a long line of cases outlining the requirements for app and website publishers to provide users with enhanced notice about third-party data collection occurring on their properties. First parties must provide a timely, up-front notice to users about this background data collection. When first parties authorize third parties to collect data through their mobile app, they must accurately disclose this collection. Additionally, when mobile app publishers also provide a website to users where third parties collect visitor data for IBA, they must provide enhanced notice of this fact.”

Key Takeaways

The lesson for advertisers: “Don’t doze on data privacy.” These matters provide a roadmap for companies on the basic data privacy safeguards they should have in place when collecting user data for targeted ads in order to avoid running afoul of the DAA.

At a minimum, that means taking the same kinds of remedial steps as Ipnos and WiFi Map did here: providing prominent notice to users about the types and manner by which it collects user data, and an easy way to opt-out. The DAA also noted in its press release that “companies would do well to review their privacy policies and practices—particularly around sensitive data like location—and to reach out to the Accountability Program before it contacts you.”

Happy Cows No More? Ben & Jerry’s Faces False Ad Class Action

Ben & Jerry’s, purveyor of iconic ice cream flavors like “Cherry Garcia” and “Half Baked,” has been hit with a class action lawsuit alleging the company’s ad claiming that its ice-cream is made from “happy cows” are deceptive.

Environmentalist and Vermont politician James Ehlers filed the proposed class action lawsuit in Vermont federal court against Ben & Jerry’s and parent company Unilever, alleging that claims that Ben & Jerry’s products are made using humane and sustainable dairy farming practices are false, and that it knowingly makes the claims to sustain the brand’s image as a provider of natural and environmentally friendly products.

The lawsuit alleges violations of the Vermont Consumer Protection Act along with breach of warranty and unjust enrichment claims.

According to the complaint, Unilever sought to capitalize on Ben & Jerry’s goodwill and reputation as “socially and environmentally conscious that [the company] built prior to Unilever’s acquisition.”

Following the acquisition, Ben & Jerry’s continued to market itself as a values-driven company that uses “cage-free” eggs and other fair trade products. This marketing extends to every aspect of the brand, from its website to the product packaging, which features the presumably “happy” cartoon cows.

The lawsuit centers on the company’s marketing of its products as made entirely from the milk of “happy cows” raised in “Caring Farms,” “a unique program that’s helping farmers move toward more sustainable practices.”

But in fact, the complaint alleges, only some of the milk sourced for Ben & Jerry’s ice-cream comes from the “Caring Farms” program, and Unilever knows this. Most of the milk used for the ice-cream, the complaint alleges, is obtained in factory-style dairy operations where less than 25 percent of the milk is verified as “Caring Dairy.”

Plaintiffs further assert that consumers purchase Ben & Jerry’s ice-cream because they trust the brand and believe strongly in its mission. By making these misrepresentations, Unilever and Ben & Jerry’s have misled consumers into buying a product in large part because they believe it aligns with humane and environmental values.

Instead, because of the deceptive advertising customers are actually “supporting” factory farming, avers the complaint.

“The Ben & Jerry’s brand spent years cultivating a reputation as an environmentally and socially conscious brand, with its founders crediting the brand’s success to its socially conscious practices. Since acquiring Ben & Jerry’s Homemade Inc., Unilever has been able to benefit from that reputation, and from the consumer trust it engenders, without necessarily operating the brand as [the founders] would or did,” notes the complaint.

The suit seeks an injunction to stop the company from making the alleged misrepresentations that the product is made from “happy cows” on “Caring Farms,” as well as damages.

Key Takeaways

From its beginnings in Vermont, Ben & Jerry’s has cultivated an image that publicizes its caring, humane and environmentally sound practices, and the allegations in the complaint have the potential to tarnish the company’s brand. This is not the first time the company has been accused of deceptive marketing. In a 2018 lawsuit the Organic Consumers Association made similar allegations, with the suit surviving a motion to dismiss by the defendants earlier this year.

Kellogg’s Settles False Ad Suit Over Cereal Sugar Claims for $20 Mil

There’s nothing sweet about shelling out $20 million dollars to settle a lawsuit, as the Kellogg Company recently learned firsthand when it agreed to settle allegations that it falsely advertised the sugar content of its cereals.

If approved, the settlement would resolve allegations from a 2016 class action suit claiming that a host of Kellogg’s products, including Smart Start, Frosted Mini-Wheats, Nutri-Grain Bars, and Raisin Bran, were branded as “healthy,” “wholesome,” and “nutritious” when in fact they contained a very high sugar content.

The lawsuit alleged that the Battle Creek, Michigan, company falsely marketed the cereals with product labels that read “lightly sweetened” or “wholesome goodness.” In reality, plaintiffs averred, the implication that these products were low in sugar was false, and in fact the products sometimes contained up to forty percent added sugars.

In addition to the monetary component, the settlement would require Kellogg’s to alter its marketing by refraining from making representations touting the healthfulness of high-sugar cereals.

To recover, class member consumers will have to visit a website and calculate an estimated “base refund” which will be redeemable as cash or vouchers for Kellogg’s products. The deal reserves $12 million in monetary compensation to consumers, with an additional $8.25 million for consumers to redeem as vouchers for Kellogg’s products.

Attorneys for the plaintiffs have called the proposed settlement “hard-fought.” Indeed, when class certification was granted in August 2018, U.S. District Judge Lucy Joh granted it only to consumers who bought any of the above three Kellogg’s cereals—Smart Start, Frosted Mini-Wheats, or Raisin Bran—but not to those who purchased breakfast bars.

A lengthy sanctions fight and mediation followed, and the parties finally reached a settlement on September 16 of this year. However, consumers affected by the allegedly misleading claims will have to wait a bit longer for any recovery. A hearing on preliminary approval of the settlement is set for February 6, 2020.

It is unclear as of this writing how much of the $12 million cash fund portion of the settlement will go towards attorneys’ fees and costs.

Key Takeaways

Given the potential number of class members, the monetary portion of the settlement might end up being rather small. However, if approved, the real significance of this settlement lies in the changes Kellogg’s will be obligated to make to either its marketing of the cereals or to their sugar content.

As with the Ben & Jerry’s class action above, this is one of many recent suits challenging representations by food manufacturers about the healthfulness or wholesomeness of their products. If the trend is any indication, companies should be mindful that such claims are heavily scrutinized and litigiously pursued by consumers and their attorneys.

Judge Clips Claims in Apple False Ad Class Action Suit

A California state judge has thrown out several causes of action in a proposed class action accusing Apple of false advertising of its family app-sharing feature. Filed in Los Angeles Superior Court, the suit alleges Apple’s advertising of its family app-sharing plans misled plaintiff Walter Peters and other similarly situated consumers into believing the plans entitled everyone in the family to access third-party app subscriptions purchased through the Apple App Store.

According to the lawsuit, Plaintiff downloaded the Headspace app from the App Store and made an in-app purchase because Apple ads gave him the impression the family sharing feature entitled him to share the app and in-app purchases with his family. When plaintiff discovered that was not the case, he sued Apple, alleging causes of action including false advertising and violations of the California Unfair Competition Law and the Consumer Legal Remedies Act.

Judge Elihu M. Berle rejected plaintiff’s claims for violations of the Consumer Legal Remedies Act, a California consumer protection law that forbids unfair competition or deceptive acts in transactions for the sales or leases of goods and services. The judge ruled the claim fails as a matter of law since the statute, which covers only work, labor, services or tangible goods, does not apply to the app that lies at the heart of plaintiff’s claims because “software is intangible.”

Judge Berle also threw out plaintiff’s claims for intentional misrepresentation, negligent representation and negligence.

Still, not all is lost for the plaintiff. The false advertising claim and California Unfair Competition cause of action remain, and he may amend the complaint.

Apple argued that plaintiff’s allegations conflate an app download with a subscription to an in-app purchase, while Apple’s family-sharing apps apply only to app downloads or purchases, not to in-app purchases. These are separate and distinct, argue the defendants.

Further, Apple argues that its terms and conditions clearly state that its family sharing plan does not include in-app purchases.

Plaintiff argues the case actually rests on the meaning of the word “use,” since Apple represented that customers can “use” any downloaded app. However, based on Apple’s arguments, “use” would mean only opening and closing the app without utilizing any of the app’s capabilities, including those provided by in-app purchases.

Key Takeaways

This recent development is an instructive reminder to advertisers faced with suits under the California Consumer Legal Remedies Act that if those suits concern intangible goods, including software, defendants may succeed in having that cause of action dismissed.