Hunton Retail Law Resource

This past week, several consumer protection and regulatory actions made headlines:

FTC Announces Substantial Maximum Civil Penalties Increases Due to “Catch-Up” Cost-of-Living Adjustment

Pursuant to the Federal Civil Penalties Inflation Adjustment Act of 2015, the FTC has approved new maximum civil penalties for 16 law provisions governed by the Agency. Many of the maximum penalties had not been adjusted in decades and are increasing substantially under the statutorily mandated “catch up” cost-of-living adjustment.

For many consumers, online reviews play a role in the decision to make any purchase. Before making dinner reservations, choosing a hotel, hiring a service provider or even buying a toaster, consumers often look to online reviews as an assessment of the product, service or experience they want to buy. In a market where a negative online review or rating from a dissatisfied customer can influence countless other potential buyers — not just people the dissatisfied customer knows in real life — companies have a strong incentive to maintain a positive reputation online. However, in a desire to separate themselves from the competition with strong reviews, some companies have taken the race for positive online reviews too far, and the Federal Trade Commission is watching.

Recently, Washington D.C. councilmembers unanimously voted to increase the city’s minimum wage to $15.00 an hour by the year 2020 for non-tipped hourly workers, many of whom work in the retail industry. The news comes just before Washington D.C. is scheduled to increase its minimum wage rate from $10.50 an hour to $11.50 an hour on July 1, 2016. The move makes D.C. the third jurisdiction behind California and New York to increase minimum wages to $15.00 an hour.

A recent change to the U.S. regulations governing the Cuban embargo has expanded the categories of Cuban-origin products that may be imported into the U.S. Additional textiles and textile articles and, for the first time, coffee, have joined the list of Cuban-origin products authorized to be imported into the U.S. Such products, however, must be produced by Cuban entrepreneurs and the U.S. importer must receive satisfactory documentation of such producer’s independence from the Cuban government.

On June 28, 2016, in two related settlements, German auto-manufacturer, Volkswagen AG (“VW”), has agreed to pay $14.7 billion to resolve allegations that the company cheated diesel emissions tests for nearly 500,000 2.0 liter diesel vehicles sold over six years. One settlement partially resolves EPA allegations for alleged violations of the Clean Air Act’s federal emissions standard; the other partially resolves FTC claims that VW violated the FTC Act by deceptively and unfairly advertising its “clean diesel” vehicles. VW also will pay damages to 44 states, Washington, D.C., and Puerto Rico. The announced settlements do not resolve pending civil claims concerning VW’s 3.0 liter diesel vehicles, or potential criminal liability.

This past week, several consumer protection and regulatory actions made headlines:

FTC Issues Closing Letter in Bedrock “Made in USA” Labeling Investigation

On June 16, 2016, the FTC issued a closing letter in its investigation of Bedrock Manufacturing Company, the parent of Filson and Shinola. The FTC had raised concerns regarding Bedrock’s unqualified use of the phrases “Made in USA” and “Built in USA.” Despite using these labels, many of Shinola and Filson’s products were made with materials mostly or entirely sourced from outside of the US. The FTC closed its investigation as a result of Bedrock’s self-imposed corrective actions, including replacing hangtags and information cards for various products, updating employee training materials and advertising materials, and changing labelling integrated on the products themselves.

Information posted to social media accounts can be highly relevant in suits brought by individuals, but too often requesting parties ask for “any and all” content, rendering their requests overly burdensome and subject to objection. Especially now, with the December 2015 changes to the Federal Rules of Civil Procedure, courts are grappling with how social media discovery fits into this new world of proportional discovery. In the recent case of Rhone v. Schneider Nat’l Carriers, Inc., No. 4:15-cv-01096-NCC, 2016 WL 1594453, the court settled this question with a unique approach.

On June 22, 2016, the Federal Trade Commission announced a settlement with Singaporean-based mobile advertising network, InMobi, resolving charges that the company had deceptively tracked hundreds of millions of consumers’ locations, including children, without their knowledge or consent. Among other things, the settlement orders the company to pay $950,000 in civil penalties. 

On June 14, 2016, two lawyers in Hunton’s Insurance Coverage Counseling and Litigation practice, Syed Ahmad and Jennifer White, published an article in Risk Management Magazine about how commercial general liability (“CGL”) policies may help policyholders looking to recover attorney’s fees or fund settlements in trademark infringement litigation. Historically, CGL policies were the wrong place to look for coverage, and insurers raised often successful defenses to covering such trademark infringement cases under CGL policies. Or, policyholders would avoid CGL ...

On June 21, 2016, the Federal Trade Commission settled claims against the purveyors of the “Doctor Trusted” seal certification program. The FTC’s action was against defendants SmartClick Media LLC, d/b/a Doctor Trusted, and the company’s owner. According to the FTC’s complaint, defendants marketed the “Doctor Trusted” certification and seal to health-related websites claiming that it was “one of the most effective ways to increase sales with the least amount of effort.” Despite representing to consumers that websites carrying the Doctor Trusted seal were “carefully evaluated by an independent medical doctor who reviewed its medical information, claims, products, terms of service, and policies,” the FTC alleged that the certification review was a sham. In fact, the Doctor Trusted review process consisted of two freelance physicians who only gave a cursory review of member websites, with no scientific evaluation of the sites’ health claims.