In This Issue:
- The Third Time Is Not the Charm for Goli Nutrition's "Ashwagandha Gummies"
- Google Fiber Speed & Reliability Claims Lose Steam, Fast, at NAD
- Twitter Ordered to Pay Feds $150 Mil for Trading Account Security Data for Targeted Ads
- KLM Sustainability Claims Don't Sit Right With Environmental Groups—And They Plan to Sue
The Third Time Is Not the Charm for Goli Nutrition's "Ashwagandha Gummies"
Goli Nutrition Inc. (Goli) faced off (yet again) before the NAD with a rival dietary supplement company, this time regarding express and implied claims about the weight loss and sexual virility powers of its Ashwagandha Gummies. Once again, the NAD found Goli's claims for its Gummies not easily digestible, but it did give Goli a pass on its influencer marketing activities and declined to exercise jurisdiction over a narrow subset NAD agreed were part of pending litigation.
Church & Dwight, a rival gummy vitamin manufacturer, took issue with a kitchen sink's worth of express and implied claims Goli made about the Ashwagandha-root supplement gummies. There has been a trend at NAD toward shorter decisions; this was not one of them. In a lengthy 23-page opinion NAD provided an in-depth analysis of what was (largely) wrong with the evidence Goli presented for its ingredient and product-based claims, including the importance of determining the implied claims presented by its social media, e-mail marketing and website claims. The case even included claims regarding sales pricing and influencer marketing—giving NAD a lot to chew on.
NAD determined that Goli's evidence was "not a good fit" for many of its claims, given unqualified claims about the product's alleged benefits based primarily on the purported efficacy of the ingredients (i.e., ashwagandha), and not the efficacy of Goli's gummy product itself. For this and related reasons, NAD advised Goli to modify or cease making claims like "Supports Sexual Health in Both Men and Women" and other similar product efficacy claims.
Looking next at qualified claims about the efficacy of the product ingredients, NAD still determined that statements about the ashwagandha root's weight loss and weight management properties—that it is "clinically proven to…Reduce and maintain healthy body weight"—were also largely unsupported by reliable scientific evidence. These types of establishment health claims have a high evidentiary bar (regardless of whether for drug or homeopathic products), and NAD found that the studies Goli provided in support of its claims were flawed and thus did not rise to that level of proof required.
As one example, NAD determined one study used to support Goli's weight loss claims consisted of a small sample size of obese subjects. Goli, however, marketed its product to consumers across the weight spectrum, and so the study was not adequately representative of targeted consumers. Even given the study population, it nonetheless provided an insufficient difference in the percentage of weight loss between those who took Goli and those who took the placebo.
Regarding the sexual function claims, Goli advertised that its gummy supplement "has been shown…to improve sexual function and arousal," particularly in healthy women. But while considering the studies Goli provided in support, NAD found that, although the studies "bore the indicia of a well conducted study," they ultimately did not fit the bill.
NAD determined that Goli's claims "convey a broad message" about the supplement's "ability to produce material improvements across a wide range of aspects in sexual function," but the study's participants were not representative of the advertisements' target audience because the study tested only women suffering from sexual dysfunction. Further, one study did not show a relevant change in the study's subjects, while another study failed to analyze differences between the control and active groups, which NAD called a "fatal flaw." Finally, both studies were only preliminary or "pilot" studies, which further weakened their evidentiary value.
Goli's jurisdictional argument—that NAD should not have jurisdiction over the issue given pending litigation—gave Goli some relief. NAD created a fine line between specific claims and evidence it deemed not at issue in the litigation (over which it retained jurisdiction) and those it determined were subsumed by the litigation. In making its determination, NAD followed its general guidelines. As it explained, "NAD declines to retain jurisdiction over a challenged claim only when the specific advertising claims at issue are the subject of pending litigation, not merely that pending litigation relates to similar or adjacent issues or advertising." It further noted that the Federal Court complaint did not "call into question any of the evidence underlying the claims at issue in NAD's analysis."
Finally, NAD found most of Goli's claims about physical endurance unsupported due to the insufficiency of the evidence.
Goli managed to come away with one or two small victories however. NAD reviewed its sales practices in light of C&D's charges of fictitious sales and deceptive pricing and found that " the challenged implied messages concerning the limited duration of Goli's sales were not misleading. Although Goli's sales are quite frequent, they do not amount to a continuous sale, particularly because the discounts offered appear to change frequently."
Finally, in connection with the claims that Goli failed to disclose that many of its social media partners receive compensation for their social media posts. As a result, the challenger argued that the posts conveyed unsupported messages, but NAD was satisfied that Goli's compliance program adequately addressed these concerns. Goli showed NAD copies of explicit instructions it provides its influencers and brand ambassadors to adhere to FTC guidelines and requirements. It also explained that it monitors posts for compliance and takes action when influencers do not follow the guidelines.
Key Takeaways
The case provides many practice pointers regarding many issues that frequently arise before NAD. It is a good read.
Google Fiber Speed & Reliability Claims Lose Steam, Fast, at NAD
The National Advertising Division (NAD) held that Google's superior speed and reliability claims about its internet service Google Fiber were unsupported, and asked the company to discontinue or modify a number of claims.
Google Fiber competitor Charter Communications brought the challenge before NAD, saying that Google's claims that it has about "up to 77x faster uploads," "up to 12x faster downloads," is "faster in every direction" and has superior upload and download speeds as compared to Charter were not backed up by the evidence.
On the speed claims, Charter argued that Google's assertions about faster uploads and downloads were apples-to-oranges comparisons because Google based the claims on a report that compared median internet speeds across different speed tiers. "If two companies offer similar products, consumers would reasonably expect that any comparison would be of the two products that are most directly in competition with one another, including in terms of price, availability, target market and functionality," wrote NAD. In the internet space, this means that internet service providers would compare similar speed tiers using similar types of metrics. A comparison of different speed tiers would constitute an apples-to-oranges comparison, which would have to be conspicuously disclosed.
In Google's case, the ads conveyed the message that the speed difference related to comparable speed tiers when in fact the claims compare Google's 1 Gbps and 2 Gbps tiers to Charter's lower tiers. In response, Google argued that the faster tier speeds were not available to most Charter consumers, but Charter's data showed otherwise, said NAD.
As for "faster in every direction," Google argued that this claim about upload and download speeds was comparative as against competitors only in the market where the ad appeared, but Charter argued it must be substantiated against all U.S. cable competitors. Though NAD agreed with Google on this point, it found that the data submitted in support of this claim did not show that Google Fiber had the fastest speeds compared to competitors in every market in which it operates. It asked Google to discontinue the claim or modify it "to clearly and conspicuously disclose the market or relevant time periods" in which it has the fastest speeds.
Regarding the claim that "[w]hen you have up to 77x faster upload speeds than cable internet, everything you do goes much faster," NAD first found that this claim did not convey a disparaging message that cable doesn't allow consumers to perform everyday tasks. It also found that Google Fiber does indeed offer faster upload speeds. However, NAD was concerned that the use of the word "everything" would leave consumers with the impression that "everything" requires faster upload speeds. It urged Google to modify the claim to clarify that it applied to everything that requires faster upload speeds, not to everything one can possibly do on the internet.
Last but not least, NAD recommended that Google discontinue the claim that Google Fiber provides "superior reliability" and that cable service providers are unreliable and prone to outages. NAD determined that when read in context, the comparison of Google Fiber to "old fashioned copper lines" could reasonably be interpreted as a comparative claim regarding cable providers. Google argued that its evidence showed that fiber is superior to cable, but NAD found the evidence not a good fit. "[C]laims of superior reliability or fewer outages should be supported by evidence, not citing to technology differences," wrote NAD. To support such a claim, Google would have had to present evidence demonstrating that its service is more reliable compared to competitors, but NAD found it had not done so.
Key Takeaways
Internet service providers advertising their superior speeds must measure themselves against comparable services in order to avoid a misleading apples-to-oranges comparison. Further, any evidence presented in support of a service provider comparison must compare that service in the areas where a particular service is available, not generally in the U.S.
Twitter Ordered to Pay Feds $150 Mil for Trading Account Security Data for Targeted Ads
Department of Justice (DOJ) and Federal Trade Commission (FTC) have ordered Twitter to pay $150 million for allegedly using account security data to send targeted advertisements to consumers.
In the complaint, the federal agencies alleged that Twitter violated the FTC Act by falsely representing to consumers that it was collecting account security data—information used to set up and log in to a Twitter account such as phone numbers and email addresses. Instead, the social media giant allegedly used the data it collected to send targeted ads to the very customers from whom it collected the information without their authorization.
According to the complaint, Twitter's actions violated the FTC Act and the European Union-U.S. and Swiss-U.S. Privacy Shield Frameworks, which prohibit the use of customer information in ways not authorized by consumers.
Crucially, the government alleges that this isn't the first time Twitter has misused user data and violated the FTC Act. The complaint asserts that the company's actions also violate the terms of a 2011 order previously issued by the FTC, stemming from previous allegations that Twitter misrepresented account safeguards protecting nonpublic user information. The 2011 FTC order prohibited Twitter from misrepresenting its privacy and security practices.
Now, say the feds, Twitter's up to its old tricks. This time, the DOJ and FTC allege that Twitter used the information provided by more than 140 million Twitter users just trying to set up account security features (such as two-factor authentication) to sell ads to companies by targeting specific groups of Twitter users based on their user data. Put another way, Twitter solicited information from its customers under the pretense of making their user accounts more secure, and then shared that data without user permission to sell ads, which contributed to Twitter's bottom line, according to the complaint.
Aside from the $150 million civil penalty, the new proposed order would implement multiple compliance measures, including maintaining a privacy and information-security program and requiring that Twitter undergo regular testing of its data privacy safeguards, with the FTC and DOJ sharing joint responsibility for ensuring compliance. The order also prohibits Twitter from again misrepresenting the extent to which it protects users' private information.
Key Takeaways
As the DOJ said, the $150 million penalty reflects the seriousness of the allegations against Twitter, and the substantial new compliance measures to be imposed as a result of today's proposed settlement will help prevent further misleading tactics that threaten users' privacy." As for Twitter, it enters into this settlement at a crucial time, with Elon Musk's pending sale still hanging in the balance. So perhaps the relevant question is whether Musk will tweet that he has doubts about the sale due to the settlement.
KLM Sustainability Claims Don't Sit Right With Environmental Groups—And They Plan to Sue
Environmental groups have put Dutch airline KLM on notice that they intend to file legal action against the company over what they say is false and misleading "greenwashing" marketing.
Netherlands-based environmental groups Fossielvrij NL and ClientEarth assert that KLM's "sustainability marketing practices" are false and misleading. The groups say that KLM's environment-themed marketing campaigns give consumers the false impression that flying KLM does not contribute to climate change.
At the heart of the allegations is KLM's "Fly Responsibly" campaign, which markets the airline as a sustainable way to travel with claims such as "Join us in creating a more sustainable future." As part of the ad campaign, the company claims that it is committed to meeting the aviation industry goal of achieving zero carbon emissions by 2050, and that to do so it has several programs in place including carbon offsetting and replacing fossil fuel with "sustainable aviation fuel."
The environmental groups allege that such claims are merely greenwashing. They say the company is not on target to meet its emission reduction goals, which the groups contend are in any event not sufficient to mitigate the risks of climate change. "The advertising creates the overall misleading impression that KLM and the aviation industry are making flying sustainable," they write.
The groups further claim that KLM's carbon "compensation" product CO2ZERO misleadingly conveys the false impression that consumers can fly as much as they want and not contribute to climate change. The program is billed as offering the possibility of "compensation" through carbon credits that allow consumers to reduce their impact" through "sustainable aviation fuel" and "reforestation." The environmental groups allege that none of these practices mitigate the effects of aviation on climate change. But that "the effect of all this marketing is to encourage people to fly with KLM in the mistaken belief that they are thus acting sustainably in accordance with climate targets."
According to the demand letter, KLM's false marketing statements violate European and Dutch law. The groups seek to compel KLM to cease making what they say are false statements, or face legal action "to close the gap between [KLM's] marketing statements and its current strategy of growth and lobbying, which clearly contradicts those statements."
Key Takeaways
If the environmental groups file the lawsuit, it would be among the first to target airlines for allegedly false or misleading statements about carbon offsets and achieving "net zero" carbon emissions.