Stay ADvised: What's New This Week, December 13
In This Issue:
- NY AG Throws Hat in Ring of Negative Option Enforcers
- Initially Savory Suit Against Morton Salt Dries Up
- Class Action Lawsuit Alleges Wing Slinger Buffaloed Customers With Heartburn-Inducing "Delivery" Fees
NY AG Throws Hat in Ring of Negative Option Enforcers
In the midst of the rise in negative option offers that the Federal Trade Commission (FTC) has vowed to rigorously scrutinize, New York Attorney General Letitia James is also putting out the word about negative option offers. Her office recently issued an alert to New Yorkers "reminding them to take precaution when presented with deceptive marketing offers that may unwittingly result in recurring charges."
The alert reminds New Yorkers that negative option marketing involves arrangements under which a consumer's failure to take action or to cancel an agreement is taken by the marketer as acceptance of the offer, such as in "free" trial offers that convert into paid subscription services.
The alert summarizes the FTC's recently issued guidance on the subject, its Enforcement Policy Regarding Negative Option Marketing, which provides consumers with the agency's interpretations of federal laws and regulations in this area. AG James' alert also notes that New York's Automatic Renewal Statute became effective earlier in 2021, providing the AG's office with further tools to combat "dark patterns" in negative option marketing.
Though negative option offers are not per se illegal, as we've explained in Stay ADvised, the concern is that businesses are not doing enough to inform consumers that they are signing up for repeat payments, obtaining informed consent, or providing clear information on the cancellation process—not to mention a clear and simple way to cancel, at least as easy as it was to sign up.
The alert references the December 2019 letter in which AG James and with 22 other attorneys general urged the FTC to adopt regulations to prevent consumer deception in negative option marketing. It notes that the FTC has not yet implemented these recommendations, but the FTC did commence the rule-making process on point in 2019.
New York's Automatic Renewal Law authorizes the AG to seek injunctions and fines from companies that fail to obtain affirmative consent or clearly and conspicuously disclose offer terms, and it is clear that James is poised for action. Businesses should take a close look at their marketing copy to ensure it remains in step with New York law as well as applicable federal law and guidance.
Initially Savory Suit Against Morton Salt Dries Up
A lawsuit alleging that Morton Salt Inc. misled consumers about the origins of some of its products has burned out faster than you can say "pass the salt," after plaintiffs voluntarily dismissed the false advertising matter without prejudice.
The complaint, filed this past September, alleged that Morton falsely marketed its Coarse Himalayan Pink Salt and Morton Fine Pink Salt as derived from Himalayan salt deposits. According to the now-withdrawn complaint, Morton claimed on the product packaging that its salts were "harvested from ancient sea deposits deep within the Himalayas."
The trouble with that is that Morton's pink salt products were not "mined in the pristine Himalayan Mountains, which are rich in iron" and for which consumers are willing to pay more, claimed plaintiffs. Rather, it was sourced from salt mines in Pakistan.
Plaintiffs further argued that these alleged misrepresentations violated consumers' reasonable expectations about the product they were purchasing. According to the plaintiffs, Morton knew that the salt was not from the Himalayas but it chose to proceed anyway because it did not believe customers would know the difference.
Plaintiffs noted that most salt on the market promoted as Himalayan pink salt is actually mined in Pakistan, and that the pervasiveness of these misrepresentations industry-wide has even led the Pakistani cabinet to seek registration for its Khewra salt with international trade bodies, "ensuring that the product's true origin is not obfuscated by misleading advertising."
Prior to the voluntary dismissal, the lawsuit had sought to make claims for violation of California's Consumer Legal Remedies Act (CLRA), Unfair Competition Law, (UFL), and False Advertising Law (FAL).
For now, this suit is shelved. Nonetheless, Himalayan sea salt has inspired other suits including challenges to claims that it has curative powers, and that Himalayan salt lamps have health-improving properties. These food-related actions are increasingly on the menu for the class action bar, so stay tuned.
Class Action Lawsuit Alleges Wing Slinger Buffaloed Customers With Heartburn-Inducing "Delivery" Fees
Service fee, delivery fee, what's in a name? Deception, according to a recently filed proposed class action lawsuit which asserts that popular chicken wing purveyor Buffalo Wild Wings (BWW) is falsely advertising a low-cost "flat delivery fee" for customers ordering its products for delivery. The complaint alleges that since early 2020, BWW has advertised a low-cost delivery fee on its app and website, but that its claims of a $1.99 flat delivery fee offer are bogus because the restaurant chain actually assesses an additional "service" charge on all delivery orders.
According to the lawsuit, filed in Arizona federal court, plaintiff Michelle Wheeldon purchased a delivery order from BWW in March 2021, based on the restaurant's advertisement on its website of a $1.99 "Delivery Fee," but was charged an additional $3.00 "Service Fee." Plaintiffs allege that the restaurant charges this "Service Fee" exclusively to delivery customers and not to in-store customers or even customers who order online for pick-up, and that it is in fact a disguised additional delivery charge assessed by BWW.
The "Service Fee," says plaintiff, "is by definition a delivery fee." The complaint alleges that the wing chain prominently featured "low-cost delivery promises" on its digital platforms while omitting material facts about the costs of its delivery service. "The actual "Delivery Fee"—the extra charge for having food delivered as opposed to picking it up—is the listed "Delivery Fee" plus the hidden "Service Fee" markup applied exclusively to delivery orders," reads the complaint.
Plaintiff goes on to allege that BWW misrepresented its delivery fees to capitalize on the rising consumer demand for food delivery resulting from the COVID-19 pandemic, which has led some consumer groups to call for greater fee transparency in delivery services. In the wake of an increasingly crowded and competitive food delivery marketplace, BWW sought to differentiate itself from its competitors by promising these low delivery fees while failing to live up to that promise, the complaint states.
Plaintiff argues that BWW's misrepresentations give it an "unfair upper hand on competitors" that disclose their true delivery charges. The complaint alleges violations of Arizona's consumer protection law and seeks monetary damages as well as an injunction preventing BWW from chickening out of accurate representations about its delivery fees.
This case is not the first of its kind and it won't be the last. The same law firm that filed this lawsuit also made similar claims against other restaurant chains This is not a pandemic-only issue, either.