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Category archives for “Federal Trade Commission”

FTC issues revised Green Guides to address environmentally-based advertising claims

October 18th, 2012

The Federal Trade Commission (“FTC”) recently released its revised Green Guides, which provide guidance to marketers and advertisers regarding claims that a product is “environmentally-friendly” or has other “green” attributes. The revised guidance replaces the version of the Green Guides released in 2010, which we discussed here. The core of the Green Guides remains the same, requiring that suppliers substantiate terms such as “eco-friendly”, “biodegradable”, “nontoxic”, “compostable”, “recyclable”, “made of recycled materials”, “made using renewable energy” and “carbon neutral” when used to describe a product.

The new Green Guides elaborate on the use of the above-listed terms, and caution marketers not to make unqualified general environmental benefit claims because “it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims.” The new guidance stems in part from a recent FTC consumer perception study that concluded that such claims are often interpreted to suggest that the product has more far-reaching environmental benefits than can actually be supported. The new Green Guides provide guidance on how to substantiate such environmentally-based claims.

The guides also include new information on several other topics including: unqualified biodegradable claims; claims regarding a product being compostable, recyclable, or ozone-friendly; certifications and seals of approval; carbon offsets; “free-of” claims; non-toxic claims; made with renewable energy claims; and made with renewable materials claims. The new Green Guides can be found in their entirety here.

The new guidance is important for alcohol industry members, and is a reminder that environmental claims must be substantiated. Additionally, keep in mind that environmentally-based claims as they relate to alcoholic product labels are also regulated by the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), as we’ve discussed here.

Contact one of the attorneys at Strike & Techel if you have questions about advertising or labeling issues.

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

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

June 26th, 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 ·

TTB Maintains Strict Requirements for Organic Labeling Claims

August 24th, 2011

Ever wonder whether the claim that a wine uses “organic grapes” is really true?  Wine is one area where if such claims make their way onto a wine bottle, they are almost certainly valid, as the TTB and the National Organic Program (“NOP”) maintain extremely strict requirements for organic claims on the label.  The NOP has four primary categories for alcoholic beverages: 1) “100% Organic,” 2) “Organic,” meaning at least 95% organic and with no chemically added sulfites, 3) “Made with Organic [ingredients],” requiring at least 70% organic ingredients and may contain chemically added sulfites, and 4) for certain products that contain less than 70% organic ingredients, the ingredients statement may disclose the organic components.

In order to make any organic claims on a wine bottle or other alcohol label, TTB requires several sources of verification, making for a comprehensive but arduous application process.  Along with the items normally required for label approval, applicants must first provide a Processor’s or Handler’s Operation Certificate, which certifies that the winery uses accepted NOP standards. This is often referred to by the TTB as the “organic certificate.”  Notably, imported wines sometimes have difficulty meeting this requirement because foreign certifications are only sufficient if the foreign entity is also a USDA-Accredited Certifying Agent.  Next, applicants must provide an Accredited Certifying Agent Preview, which indicates that the label has been reviewed and found to be in compliance with TTB rules.  Additionally, applicants may need to provide a crop certificate that certifies that the agricultural produce used in the product were grown to NOP standards.

The TTB also has specific rules for the label itself, including requiring a “certification statement,” which includes the name of the accredited certifying agent.  These requirements must be repeated for each vintage year, as labels for new vintages must be resubmitted for approval.

Notably, despite these strict requirements for organic wine labels, other statements on wine bottles that pertain to farming techniques and other “green” claims are largely unregulated by the TTB.  However, this is a fast-evolving area, so stay tuned.

If you need assistance with organic labels, the attorneys at Strike & Techel are familiar with the process and able to help.

UPDATE: On June 12, 2012, the TTB announced a change to the organic documentation requirements. A copy of the organic certificate is no longer required to accompany COLA applications for alcoholic beverages with “100% Organic,” “Organic,” or “Made with Organic (ingredients)” on their labels.  The Accredited Certifying Agent Preview is still required. Please eee the TTB release, available here, for additional information.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2012 · All Rights Reserved ·

Am I Selling You Something Right Now?

April 21st, 2011

The United States is home base for pop culture and advertising. According to a 2007 New York Times article, people living in cities see up to 5,000 advertising messages a day, over twice as many as those living in cities 30 years ago saw. And that figure is four years old. Ever since Andy Warhol’s famous Campbell’s Soup Cans, the lines between art, advertising, entertainment, and social commentary have been continuously blurring. But, as the TTB recently reminded people, nowhere are those lines more defined and regulated than in the alcoholic beverage industry. On March 26th and April 7th, the TTB released industry circulars on the application of alcoholic beverage advertising regulations to media personality sponsorships and television advertising. The Code of Federal Regulations requires, among other things, that a responsible advertiser statement containing the name and address of the responsible party, appear in all advertisements for wines, malt beverages, and distilled spirits (See 27 CFR §§ 4.62, 5.63, 7.52). 

The TTB’s Industry Circular 2011-01 cautioned against the practice of media personalities who are compensated by alcoholic beverage companies, such as radio hosts, covering certain advertising talking points within a free form story told by the radio host (referred to as unscripted advertisements) without including the mandatory advertising language. The Circular also reminded the industry that such hosts should not make statements about alcoholic beverage products that are prohibited by the Federal Alcohol Administration Act (FAA Act) or TTB regulations. TTB Industry Circular 2011-02 addressed advertisements that are run by television stations more often than contractually required and in such instances often do not include the mandatory information required by the FAA Act and TTB regulations. On top of all that, there is the Federal Trade Commission, which prohibits deceptive and unfair advertising. Thus, if one is paying someone to say something nice about ones products that must be disclosed.

Which leads us to the question: What is an advertisement? The Code of Federal Regulations defines an advertisement as “any written or verbal statement, illustration, or depiction which is in, or is calculated to induce sales in, interstate or foreign commerce” (See 27 CFR §§ 4.61, 5.62, 7.51). The only exceptions from the definition are labels and things like press releases (“editorial or other reading material … in any periodical or publication or newspaper for the publication of which no money or valuable consideration is paid or promised, directly or indirectly, by any permittee, and which is not written by or at the direction of the permittee.”) That’s a pretty broad definition and it’s hard to see where the line exists in modern society. If Kim Kardashian (who reportedly earns $10,000 per tweet) mentions an alcoholic beverage company, does she need to fit the mandatory advertising language into 144 characters? Was Jay-Z’s “Show Me What You Got” music video an advertisement for Armand de Brignac? Whatever these projects are—Advertainment? Entertisement? (you heard the terms here first, unless you heard them somewhere else first)—marketers should remember they are still subject to the standard alcoholic beverages advertising regulations.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

Do Not Track

December 29th, 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 8th, 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 29th, 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 ·