Topic: Federal Trade Commission

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Update: FTC gets $13.4 million judgment against BlueHippo


Updating a prior post, on May 2, 2016, the Federal Trade Commission (FTC) announced its receipt of a $13.4 million judgment against the CEO of BlueHippo, after the Second Circuit overturned the district court’s determination that BlueHippo’s damages were limited to $600,000 in 2014.

BlueHippo marketed computers and electronics to consumers regardless of their credit history, using an installment payment method. If a consumer missed an installment payment, BlueHippo represented that consumers could convert installments already paid to credits, with which they could buy other products from BlueHippo’s online store. The catch is that allegedly, consumers’ use of … Continue Reading

FTC aims to modernize warranty requirements

The FTC has recently proposed amendments to the Disclosure Rule and Pre-Sale Availability Rule it issued under the Magnuson-Moss Warranty Act, the federal law governing warranties on consumer products. These amendments come in response to the E-Warranty Act of 2015, which President Obama signed into law in September 2015.  Click through to the full discussion that my colleagues, Jeff Webb and Patrick McMillin, have authored.

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President Obama signs new online warranty law

President Obama has signed the E-Warranty Act of 2015 (PL 114-51).  The new law amends the federal Magnuson-Moss Warranty Improvements Act (15 USC § 2302(b)) by permitting (not requiring) consumer product warranties to be made available online.  If a consumer product manufacturer elects to make product warranties available online, the manufacturer will be subject to a few requirements:

  • The online warranty on the product manufacturer’s site must be available “in a clear and conspicuous manner” and
  • The product, product packaging, or product manual must provide the consumer with two types of information:  (1) the manufacturer’s web site address where the
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Court rules California “Made In USA” claims not actionable if only on product websites

We have been following California’s “Made in the USA” standard and recent cases interpreting it. While courts so far have been reluctant to dismiss claims at the pleading stage, last week a federal judge dismissed a class action claiming Lands’ End violated California’s “Made in the USA” standard.

In Oxina v. Lands’ End, Inc., plaintiff filed a false labeling claim because she ordered a necktie from the Lands’ End website described as “Made In USA”, but received a necktie that was identified as “Made In China.” The court granted Lands’ End’s motion to dismiss (with leave to amend) on the … Continue Reading

UPDATE: Recent jeans case confirms harsher “Made In USA” standards exist in California

A California federal district court judge recently provided some clarity on the apparent disparity between California’s “Made in the USA” law and the standard set forth by the Federal Trade Commission.

The Southern District Court of California’s recent decision in Paz v. AG Adriano Goldschmied confirms that California’s “Made in the USA” standard sets forth more stringent requirements than the FTC standard.

In Paz the plaintiff filed a class action complaint against AG Adriano Goldschmied and retailer Nordstrom, alleging that AG falsely labeled its jeans “Made in USA.” The plaintiff alleged that AG’s jeans actually contained fabric, thread, buttons, rivets, … Continue Reading

Don’t tell bloggers about NAD wins

If a company sues a competitor about an advertisement that the company believes is false or misleading about the company’s product, a court victory is frequently cause for a press release, as well as announcements on social media and to bloggers.  When the complaint is made to the National Advertising Division (NAD) of the Council of Better Business Bureaus; however, those announcements can violate NAD procedures and can result in unfavorable press releases from the NAD.

Many of our readers may not be familiar with the NAD, which is run by the Council of Better Business Bureaus (CBBB), the national … Continue Reading

The FTC & Bitcoin mining computers

On September 18, 2014, a federal trial court in Missouri granted the Federal Trade Commission’s ex parte motion for a temporary restraining order, asset freeze, and appointment of a receiver for Butterfly Labs.  Butterfly Labs made claims on its web site and on social media that its computers enabled consumers to “mine” a type of cryptocurrency known as Bitcoins.  According to the court order, Butterfly Labs charged consumers between $149 and $29,899—payable upfront via PayPal, wire transfer and, yes, Bitcoins—for these computers but never delivered them or else delayed delivery so substantially as to render the computers obsolete for the … Continue Reading

California closely scrutinizes “Made in the USA” claims

Labeling products as “Made in the USA” has seen increased popularity recently, as retailers and manufacturers attempt to capitalize on consumers’ desire to support domestic jobs and US-made goods. Despite the seeming cachet of these statements, they may open companies up to false and misleading advertising claims, particularly in plaintiff-happy California.

“Made in the USA” representations are regulated in both the federal and state-law spheres.

According to the Federal Trade Commission, for a product to be marketed as “Made in the USA,” “all or virtually all” of the product must be made in the U.S, meaning that all significant parts … Continue Reading

FTC and presumption of consumer reliance

Question:  What’s the difference between $600,000 and $14 million in a contempt action?  Answer:  Presumption of consumer reliance, according to the Second Circuit Court of Appeals in Federal Trade Commission v. BlueHippo Funding, LLC.

The case began in 2003, when BlueHippo first began marketing computers and electronic products to consumers regardless of their credit history.  BlueHippo offered the following deal to consumers: if a consumer made 13 consecutive installment payments and signed an installment contract, BlueHippo would ship the computer and permit the consumer to finance the remaining balance.  If the consumer missed a payment, the consumer would not … Continue Reading