Consumer Protection

Australian Regulator Issues Company Infringement Notice for False Affiliation
Asia Pacific

The Australian Competition and Consumer Commission (ACCC) has announced that “Greenthumbs Environmental Services Pty Ltd, trading has Green Energy Australia (GEA), has paid an infringement notice of $6,600 for misrepresenting in promotional material that it was affiliated with the Clean Energy Council”, the key body that represents the renewable energy sector. The misleading conduct involved an email sent out by GEA which “prominently displayed the Clean Energy Council’s logo followed by the words ‘programme partners’”.

ACCC’s media release (11 May 2012)
(Source: ACCC)

US FTC Obtains Court Order to Stop Deceptive Website

The US (United States) Federal Trade Commission (FTC) has announced that the District Court for the District of Arizona has ordered a stop to “an operation that allegedly lured consumers into spending thousands of dollars for Internet websites and advertising by misrepresenting that they could make lots of money by linking the sites to major retailers”. North America Marketing and Associates LLC (NAMA) and others have been barred from such deceptive conduct and have had their assets frozen pending further litigation. The FTC alleged that NAMA charged customers “fees ranging from [US]$100┬áto [US]$400 … [and] promised to build and host websites for consumers, who would earn commissions when Internet users clicked through the consumers’ websites to make purchases from “Fortune 500″ retailers such as Wal-Mart, Best Buy, and Starbucks”. Customers were also promised “free, full-time marketing expertise to help them make substantial profits”. However, the customers never received the free marketing and were instead targeted by NAMA in an attempt to get them to pay a further US$5,000 to US$20,000 for advertising packages which “did not generate any significant sales commissions”.

Further information from the FTC
FTC’s media release (14 May 2012)
(Source: FTC)

Shoe Company Ordered to Pay US$40 Million for Misleading Ads

The United States (US) Federal Trade Commission (FTC) has announced that Skechers USA Inc will pay US$40 million settlement, which will go towards customer refunds, due to misleading advertising regarding its “Shape-ups” shoes. The company represented that these shoes “would help people lose weight, and strengthen and tone their buttocks, legs and abdominal muscles”. The FTC also alleged that other Skechers toning shoes, such as the “Resistance Runner”, “Toner” and “Tone-ups” were falsely advertised as shoes that could help customers strengthen and tone certain areas of their body. FTC Bureau of Consumer Protection director David Vladeck notes that Skechers’ false claims extended to stating the shoes’ weight loss and cardiovascular health benefits. Mr Vladeck stated that “[t]he FTC’s message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims”. According to the FTC, Skechers made false claims about its products being independently tested, failing to disclose that an endorsement for its product came from a person who was in fact “married to a Skechers marketing executive, and that Skechers paid [him] to conduct the study”. The company was also alleged to have “cherry-picked results” relating to an increase in muscle-activation after wearing its Resistance Runner.

The FTC settlement bars Skechers from making unsubstantiated:

  • “claims about strengthening;
  • claims about weight loss; and
  • claims about any other health or fitness-related benefits from toning shoes, including claims regarding caloric expenditure, calorie burn, blood circulation, aerobic conditioning, muscle tone, and muscle activation”.

Further information from the FTC
FTC’s media release (16 May 2012)
(Source: FTC)

Companies Settle FTC Anti-competitive Conduct and Misleading Advertising Charges

The United States (US) Federal Trade Commission (FTC) has announced that it “has approved a final order settling charges that Star Pipe Products, Ltd [Star] engaged in illegal anticompetitive practices to protect its share of the market for ductile iron pipe fittings used in municipal water systems nationwide”. Star has agreed to discontinue such conduct in the future.

In related news, the FTC has announced that it has approved final orders settling charges that Billion Auto, Inc, Frank Myers AutoMaxx, LLC, Key Hyundai, LLC, Hyundai of Milford LLC, and Ramey Motors, Inc “made deceptive claims that they would pay off the remaining balance on consumers’ trade-ins, no matter what they owed”. In fact, these companies “actually rolled the negative equity on the trade-ins into customers’ new car loans”.

FTC’s media release (11 May 2012)
(Source: FTC)

US Healthcare Providers Settle HIV Discrimination Cases

The United States (US) Department of Justice (DoJ) has announced that Mercy Medical Group Midtown Clinic (Mercy) in Sacramento, California, and Knoxville Chiropractic Clinic North (Knoxville) in Knoxville, Tennessee, have settled HIV discrimination claims brought by the DoJ. Mercy allegedly denied an HIV patient surgery because “the podiatrist incorrectly told the patient that he could not perform the surgery because of a risk that he would contract HIV from the patient during surgery”. Mercy and CHW Medical Foundation will pay US$60,000 to the complainant as well as a US$25,000 civil penalty. Knoxville will pay US$10,000 as a civil penalty for its discriminatory conduct, which involved turning away an HIV patient by informing him that “the doctor would not see him because they could not treat people ‘like him’”. Both healthcare providers breached the Americans With Disabilities Act of 1990 and DoJ Civil Rights Division assistant attorney general Thomas Perez stated that “[i]t is critical that people with disabilities, including HIV, not be denied equal access to goods and services, especially to health care services” and warned companies against discriminating “based on unfounded fears and stereotypes about HIV”.

DoJ’s media release (11 May 2012)
(Source: DoJ)