Category archives for “Federal Trade Commission”

Deceptive Retail Discounts: How Much is that Wine Really Discounted?

June 26, 2012

Among the brouhaha surrounding JCPenney these days is a proposed class action complaint that was recently filed in the Central District of California. In the complaint, the plaintiff alleges that she purchased items from JCPenney because the items were advertised as being on sale, but the prices were inaccurately advertised as discounted because the “original” price advertised was not the prevailing market retail price for the goods. As in many states, false and misleading claims in advertising are prohibited in California. See Cal. Bus & Prof. Code §§ 17500, 17508(a). California consumer protection law further state that:

No price shall be advertised as a former price of any advertised thing, unless the alleged former price was the prevailing market price as above defined within three months next immediately preceding the publication of the advertisement or unless the date when the alleged former price did prevail is clearly, exactly and conspicuously stated in the advertisement. Cal. Bus & Prof. Code § 17501.

Here the plaintiff asserts that the “original” prices, to which she compared the “sale” prices in order to make her decision to purchase numerous items, weren’t the prevailing market prices for the items at JCPenney for the three months immediately preceding the advertisement.

Pricing has become more difficult in this day and age of the “bargain.” Many people have come to expect an item to be always on sale or for there to always be some way to buy an item for less than what others are paying. While the pressures this creates on retailers are often great, retail prices cannot be amorphous. Advertising false “sale” prices could lead to lawsuits like the one filed against JCPenney. The Federal Trade Commission offers guidance about proper advertisements on its website, which can be found here. Regarding deceptive pricing, the FTC offers the following:

One of the most commonly used forms of bargain advertising is to offer a reduction from the advertiser’s own former price for an article. If the former price is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time, it provides a legitimate basis for the advertising of a price comparison. Where the former price is genuine, the bargain being advertised is a true one. If, on the other hand, the former price being advertised is not bona fide but fictitious—for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction—the ``bargain’’ being advertised is a false one; the purchaser is not receiving the unusual value he expects. 16 C.F.R. § 233.1.

It’s hard to be a consumer goods retailer in any industry these days, but the wine industry in particular has seen substantial changes in consumer pricing expectations given the economic situation over the last few years. While trying to meet this consumer demand, it’s important to remember that when creating pricing structures, there’s a fine line between providing value and creating false value.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

Do Not Track

December 29, 2010

The FTC issued a report on online privacy earlier this month. The report suggests sweeping changes to current practices of internet consumer data collection, including the creation of a “Do Not Track” registry equivalent to the “Do Not Call” registry. It also advocates that companies collect less information from consumers and provide a clear, non-legalese disclosure to consumers before they are asked to provide data online. The full report can be viewed”>here, and public comments on the report will be accepted through January 31, 2011.

Alcoholic beverage companies should audit their collection and sharing of online consumer data and make sure adequate measures are taken to protect consumers.

Some policies and practices to consider:

* Protection of consumer information should be an integral part of data collection.

* Only collect consumer information that is reasonably needed.

* Be transparent when collecting data. The consumer should know what information you are collecting and for what purposes it will be used.

* Consumers should be alerted before their data is collected and given a clear choice to opt out before providing sensitive data.

* Update your privacy policy. Strike & Techel can provide model language for your use, upon request.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010 · All Rights Reserved ·

New Year’s Prediction: Geo Location and Alcohol Advertising

December 08, 2010

We’ve posted about alcohol and social media before, but are revisiting the issue to discuss geo location and location-based advertising.

Websites and mobile apps like Foursquare, Shop Kick, and Facebook Places allow advertisers to identify the location of their audience members and then send an offer based on the consumer’s location. The marketing potential for alcoholic beverage suppliers and retailers is epic. Presume a social media savvy consumer, Joe, who checks in everywhere he goes and provides personal information across a variety of web platforms. Joe likes craft beer, and he likes to drink it in San Francisco’s Haight district. These geography-based applications will allow the brewers, bars and restaurants that Joe interacts with online and via the geo apps to know when Joe is in the Haight and send him a coupon for a discounted pint of craft beer, expiring in only a few hours. The opportunities for a personalized call to action are profound.

Though the technology is very cool, there are plentiful legal pitfalls. Leaving aside regulatory acronyms all mobile advertisers should heed (e.g. MMA, FCC, FTC, TCPA, CTIA), there are alcoholic beverage law issues with geo targeting. The rules on alcohol discounts vary by state and by the party selling the alcohol. How will these programs ensure that the underlying offers are legally compliant? How will the geo location sites identify users who are underage or have a chronic drinking problem? What about states where solicitation requires a license, or is prohibited? We expect to see alcohol advertising tiptoe into geo location in 2011, and expect to see regulators follow quickly.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010 · All Rights Reserved ·

Eco-Friendly Alcohol

November 29, 2010

The FTC released a proposed guide on the use of environmental marketing claims in October. The Green Guide, also known as the Environmental Marketing Guides, requires substantiation when using terms such as, but not limited to, “eco-friendly”, “biodegradable”, “nontoxic”, “compostable”, “recyclable”, “made of recycled materials”, “made using renewable energy” and “carbon neutral” to describe a product. Companies currently making generalized green claims will need to revise their marketing to avoid the risk of FTC enforcement action.

Any alcohol supplier using green marketing tactics, whether on the label, on the web, or in television advertisements, should review the proposed Green Guide immediately. General claims like “eco-friendly” will no longer be permissible unless qualification of the claim is provided to the consumer “in close proximity” to the environmental claim. As applied to alcohol, that may mean a lengthy addition to your label explaining why your product is environmentally friendly. If you are currently labeling your wine as environmentally friendly because you wear hemp clothes when you bottle, donate to Surfrider at the holidays, and compost your dinner scraps, those (laudable) actions may not support environmental labeling claims.

Public comment on the Green Guide is due December 10, with a finalized Green Guide expected to issue in 2011. They are not expected to change significantly before implementation. Alcohol producers are advised to audit their marketing now and take steps to remove or revise any environmental claims.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010 · All Rights Reserved ·


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