Behind the Scenes

Arent Fox's advertising law blog - latest news and trends in advertising, data security & privacy, and fashion & entertainment.

Behind the Scenes
Advertising
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FuelBand Advertising Claims Spark Settlement Agreement

Nike Inc. (Nike) recently agreed to pay more than $2.4 million to settle a class action lawsuit related to the Nike FuelBand activity tracker. The lawsuit, Levin v. Nike, was filed May 17, 2013, in California Superior Court in Los Angeles County. The Plaintiffs alleged violations of California unfair competition and false advertising laws, as well as breach of warranty.
 
The FuelBand Advertising Claims

The Plaintiffs’ allegations center around claims made in connection with the Nike FuelBand, which is a wristband activity tracker. Specifically, advertising for the FuelBand suggests that the product is capable of tracking every calorie burned and step taken by a FuelBand user. The complaint singles out the following claims:

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Payment Processing, Electronic Fund Transfers & Mobile Payments
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Chips or No Chips? Retailers and Merchants Must Implement New Payment Card Standards or Face Fraud Charges

Major US credit card associations including Visa, MasterCard, American Express, and Discover have set October 1, 2015, as the deadline for merchants to implement the Europay, MasterCard, and Visa (EMV) standards. EMV standards include requirements for physical card terminals and a shift from magnetic stripe cards to chip-embedded cards. In order to comply with these standards, banks have been sending out compliant chip-embedded credit and debit cards to their customers. These chip-embedded cards are more secure than traditional magnetic swipe cards since each use of the chip-embedded card creates a unique transaction code that cannot be used to process another transaction or create a fraudulent card. Merchants and retailers also have to take action by updating their card reader terminals and technology if it is not EMV compliant already. This push for compliance will bring the U.S.

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Advertising
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False Ad Plaintiffs Out of Joint and Out of Luck in Fourth Circuit

The Fourth Circuit has recently made it more difficult for false advertising plaintiffs to survive a motion to dismiss where their claims are based on an allegation of “literal falsity.” In the suit, plaintiffs, purchasers of certain joint health supplements, alleged that GNC and Rite Aid engaged in false advertising and violated various state consumer protection laws, deceptive advertising, and express warranty statutes in marketing joint health supplements containing glucosamine and chondroitin. Specifically, plaintiffs alleged that the joint health representations on defendants’ product packaging were false because the “vast weight” of scientific evidence has shown that those ingredients are not more effective than placebos at treating osteoarthritis. 
 

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Advertising
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Industrial Parts Manufacturer Rockwell Accuses Unauthorized Distributor of Lanham Act Violations

Rockwell Automation, Inc. (Rockwell), a leading industrial parts manufacturer, recently sued industrial parts distributor Radwell International, Inc. (Radwell), alleging numerous violations of the Lanham Act, including claims of trademark infringement and false advertising, as well as multiple violations of state unfair competitions laws.  According to the complaint, Radwell has sold various Rockwell-branded products without authorization, while falsely claiming that these products are warranted by Rockwell.  The case, Rockwell Automation, Inc., v. Radwell International, Inc., No. 1:15-cv-05246 (D. N.J. filed July 6, 2015), is currently pending in New Jersey federal district court.
 

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Promotions, Sweepstakes & Contests
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FTC Stops Deceptive Risk-Free Promotions of Skincare Products

On June 25, 2015, the FTC announced that it had taken action to stop a group of approximately 15 companies and 7 individuals from using allegedly deceptive “risk-free trial” offers to sell skincare products online. At the FTC’s request, the U.S. Federal District Court, Central District of California, issued a temporary restraining order against the defendants, halting their marketing practices, freezing their assets, and appointing a receiver over their business.
 

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Payment Processing, Electronic Fund Transfers & Mobile Payments, Privacy & Security - US & Abroad, Song-Beverly Act
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California Court Clarifies Scope of Song-Beverly

California’s Song-Beverly Credit Card Act does not prohibit retailers from collecting email addresses after a credit card transaction has been concluded, according to a recent ruling by a California appellate court. The decision provides some welcome clarity for retailers who engage in point of sale data collection.
 
What is the Song-Beverly Act?

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Advertising, Mobile Marketing
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September 1st Looms as Key Enforcement Deadline for Mobile Advertisers

What’s the News?
Beginning September 1, 2015, many companies that engage in mobile advertising will be subject to a new level of scrutiny by industry watch dogs. On that date, the Digital Advertising Alliance (DAA), an industry self-regulatory organization, will begin to actively enforce its guidelines for online behavioral advertising (also known as “interest-based advertising”).
 
Who Does this Apply To?

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Promotions, Sweepstakes & Contests
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Running a Prize Promotion? Don’t Run Into Trouble
What’s the News?
 
The Federal Trade Commission (FTC) recently obtained a temporary injunction to stop a Florida-based sweepstakes operation that has taken more than $28 million from consumers in the United States and abroad. The defendants used deceptive practices to defraud consumers in connection with false prize notifications.
 
FTC & Prize Promotions
 
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Promotions, Sweepstakes & Contests
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FTC Takes on Fraudulent Crowdfunding Campaign

What’s the News?
 
The Federal Trade Commission (FTC) recently announced the settlement of a complaint alleging deceptive trade practices in relation to a crowdfunding campaign. According to the FTC, the campaign’s organizer failed to live up to various promises made during the campaign, including promises pertaining to the rewards that individuals contributing funds (commonly known as “backers”) would receive in return for their contributions and how donated funds would be used. The case—the FTC’s first involving crowdfunding—is a clear signal to those engaging in the popular fundraising strategy of the importance of making good on all promises and representations made to backers.  
 
More on Crowdfunding and the Settlement
 

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Supreme Court to Decide Whether Victim of Privacy Breach Can Recover Damages Without Showing Harm

There is a split among circuit courts over whether a company faced with a privacy breach is subject to liability where a consumer suffers no discernible harm. The Supreme Court will hear a case this fall, Spokeo, Inc. v. Robins, that will settle this important issue. The Court’s decision in Spokeo, expected in 2016, will likely have far-reaching implications for consumer privacy and data breach lawsuits filed under a number of federal statutes.
 
Plaintiff Thomas Robins filed a putative class action against Spokeo in federal court in California under the Fair Credit Reporting Act (FCRA), claiming that Spokeo willfully violated the FCRA by disseminating inaccurate information about him on its website. The district court dismissed Robins’s complaint for lack of standing, reasoning that Robins failed to allege any actual harm that was traceable to Spokeo’s alleged statutory violations. 
 

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