Insights
Brand Protection & Advertising

Stay ADvised: 2025, Issue 2

Brand Protection & Advertising Law News
01.14.25
Print this page

In This Issue:

 

"Seek" and You Shall Find … That the FTC Is Closely Watching Potentially Deceptive Claims Designed To Entice Small Businesses

The FTC alleges that a company marketing itself as a leading provider of startup business loans misrepresented its services and used other unlawful tactics to fleece fledgling small businesses out of millions.

Seek Capital promised aspiring business owners it could get them business loans and lines of credit. Instead, according to the FTC's complaint, Seek merely turned around and applied for personal credit cards in the individual business owners' names. The FTC alleges that Seek falsely represented that it applied for business lines of credit on consumers' behalf, offered tailored funding solutions, or had an underwriting process that enabled it to approve consumers for any type of funding.

The FTC also accuses Seek of using high-pressure telemarketing tactics to acquire business. According to the FTC, Seek's sales representatives told the small-business customers that Seek is an expert at acquiring pretty much any loan that the they want. Need a loan for a startup? Seek specializes in funding startup businesses. Looking to start a trucking business? Seek can connect you with the "trucking specialist." These representations were false, says the FTC, as were the assurances that Seek could secure business loans, funding, and lines of credit to the fledgling small-business owners who were interested in the service.

Once consumers signed with Seek, the company allegedly submitted multiple credit card applications on the customer's behalf, primarily for personal credit cards. For this service, the company charged consumers 10% of the approved credit limit plus fees. The complaint further alleges that Seek sometimes signed up for credit cards in the name of the "co-signer" that Seek falsely convinced consumers was needed to apply for the "loan." 

Consumers only found out about this alleged scheme when they received an alert that their credit score had declined from an invoice from the company with the amount owed for obtaining the credit cards, or a credit card approval letter.

When consumers refused to pay the Seek invoice, Seek then threatened to send them to collections. If they canceled early, Seek slapped them with an exorbitant fee, said the FTC.

Seek also allegedly posted fake reviews of its services on third-party sites.

Key Takeaways

The complaint against Seek reads like the raison d'etre for the FTC's Bureau of Consumer Protection. And it shows: while consensus has been hard to come by on the Commission lately, all five commissioners voted to authorize the complaint in this instance. Expect the FTC to continue aggressive enforcement against predatory conduct targeting vulnerable small business owners.

 

Something Stinks—And It May Be the Claims—as NAD Nixes Most of Pooph's Claims

Following a challenge by Reckitt Benckiser, the National Advertising Division (NAD) found that a host of express and implied claims made by Ikigai Marketing Works about its Pooph Pet Odor & Stain Eliminator were unsupported.

A key issue concerned claims Ikigai made about Pooph's odor-elimination prowess—many of which NAD determined constituted absolute claims. Ikigai advertised various iterations of the claim that Pooph "Eliminates Pet Odors instantly" and is the "Pet Odor…Eliminator." Additionally, an infomercial advertised the variety of pet smells that the product eliminates "at a molecular level."

NAD, for its part, explained that it viewed a claim of odor "elimination" as both powerful and absolute, and considered a claim that the product does so at the "molecular level" even more so. In its decision, NAD explained these types of claims require more than just evidence that the product reduces smells. Ikigai submitted evidence showing how its product chemically interacts with odor molecules, arguing that because Pooph is unscented this type of evidence would be sufficient to substantiate the claims. But NAD disagreed, explaining that a claim of odor elimination also communicates a sensory message and therefore requires substantiation about the consumer perception of odor.

On the issue of sensory perception, NAD found that the studies submitted by the advertiser did not show that Pooph eliminated all perceivable odors. The only study Ikigai provided that tested Pooph lacked significant information that NAD required to determine whether the evidence was competent and reliable to support the claim. Other studies Ikigai offered included testing on a product called Biolargo that the company said used the same formulation as Pooph, but provided no information proving that that was the case. Taking all of this into account, NAD found the powerful odor elimination claims unsubstantiated. 

NAD next analyzed claims relating to stains, including claims that Pooph is the "Pet…Stain Eliminator" and that the product "eliminates poop odors and poop stains." Ikigai promotes this claim in several places, said NAD, including as part of the name of the product and in product packaging claims that state it "utilizes proprietary technology that eliminates the toughest pet stains" and "eliminates poop stains." However, the study Ikigai submitted tested Biolargo's—not Pooph's—efficacy in removing stains. It lacked detail about the study's methodology for assessing stain removal beyond a "visual" examination. Even if the study had been reliable and relevant to the Pooph product, NAD found that it would not have been sufficient to substantiate claims because it did not remove 100% of two of the types of stains. 

Ikigai also made certain comparative claims on its infomercial, and NAD analyzed whether those claims were puffery. The infomercial featured an animated image of feces dancing with a green odor flying around it. A bottle of Nature's Breeze was sprayed on it, but that only brought up a depiction of flower petals on the pile still surrounded by the green fumes. At the end of the ad, a claim popped up: "IF IT'S NOT POOPH IT STINKS!"

Challenger Reckitt argued that the claim was disparaging of competing products and reasonably conveyed the message that all other products smell bad. However, NAD disagreed and concluded the claim was puffery for several reasons. First, it was made separate in time and content from other comparative claims. Second, the phrase "it stinks" reasonably would be understood in context to refer to the underlying odor. Third, the "extreme" language alerted consumers that this was wordplay about foul odors. Finally, the use of the sentence so close to the end of the infomercial would also serve as a clue to consumers that this was a slogan rather than a claim requiring substantiation.

Reckitt also argued that other comparative superiority claims in the infomercial were unsubstantiated, including "Why waste money on any product that doesn't totally eliminate the stink," "Other sprays just cover up odor," and claims implying that all other enzymatic pet or odor sprays are worthless, including Reckitt's. Here, NAD concluded that reasonable consumers would take away the message that Pooph is superior to all competing products, which are ineffective and just mask the bad odor. To substantiate these types of messages, Ikigai is required to provide evidence of head-to-head testing demonstrating superiority over 85% of the market, but it failed to do so. Ikigai's one study in support of this claim did not provide enough information, and its findings actually showed that there were products that worked better.

Interestingly, NAD did find that a claim that Pooph was safe to be sprayed in the mouth was substantiated. The informercial showed the actor ingesting the product only once, limiting the claim that the product was safe for humans to ingest. Moreover, all the ingredients in the product are classified as Generally Recognized as Safe (GRAS) under FDA regulations.

NAD also found that the claim "Patented Odor Eliminator Blend" was substantiated.

Key Takeaways

This case is the latest in a series of odor "elimination" claims that NAD has determined constitute absolute claims requiring advertisers to satisfy a very high burden of proof. NAD's decision regarding puffery, however, shows a bit of softening over prior decisions which may help some advertisers who argue their slogans should not be taken too seriously.

 

"Best in Class" Claims Can't Be Qualified With "Arbitrary" Comparisons, NAD Says

When making "best in class" comparisons, are advertisers free to choose whatever point of comparison they wish in their advertising if they do so clearly and conspicuously? Not so much, and not so fast.

Bissel and Shark recently went head-to-head at the National Advertising Division (NAD) over this issue as it pertains to vacuums and carpet cleaning claims. Bissel challenged Shark's claim that its CarpetXpert provides "The Best Deep Carpet Cleaning Among Full Sized Deep Carpet Cleaners," qualified with an asterisk that clarified that the claim is "based on ASTM F2828 vs. full-sized carpet cleaners above 14 lbs."

Bissel argued both that the claim was not substantiated, and that the qualifier after the asterisk improperly seeks to narrow the scope of comparison by including only carpet cleaners over 14 pounds—thereby excluding Bissel's own TurboClean PowerBrush.

Superior performance claims "against an entire category of products send a strong message to consumers and can weigh heavily on purchasing decisions," said NAD, adding they should reference a category of products that is both appropriately defined and recognizable to consumers.

Did Shark's point of comparison, those full-sized carpet cleaners over 14 points, fit this bill? Was it (a) appropriately defined, and (b) recognizable to consumers?

Bissel argued it was neither—and that Shark's claim was misleading because this was an arbitrary market segmentation, not one recognized by consumers. Bissel seemed to be implying that Shark deliberately chose this arbitrary designation to exclude its Bissell TurboClean PowerBrush (which Bissel and Shark agree outcleans Shark's product) from the comparison. This allowed it to make the "Best" claim and still hedge its substantiation behind the asterisk. 

Shark countered that advertisers can choose the object of comparison and that its advertising clearly and conspicuously identified that object—full-sized carpet cleaners over 14 pounds. Although an advertiser can choose its own point of comparison for the advertised benefit, this must be done in an accurate and non-misleading way, said NAD. A "class of products used as a point of comparison should be defined consistent with consumers' reasonable understanding … informed by advertising manufacturers, third-party publications, and consumers' common sense."

Did the point of comparison between vacuums on the basis of weight meet those criteria, as Shark argued? Ultimately, NAD found that it did not. Shark argued that a Bissel ad comparing lightweight vacuum cleaners proved the industry used weight as a tool of comparison, but NAD was unpersuaded that the industry classified carpet cleaners by weight, or by "full-size" versus "lightweight." Rather, for the most part, advertising for carpet cleaners did not make a distinction between these two categories.

Shark had not provided any persuasive evidence of industry or media usage to support its claim that consumers compare vacuums by weight, or that consumers understand that the weight of a vacuum cleaner impacts its cleaning capabilities. Additionally, Shark failed to explain why 14 pounds had any meaning for consumers as a weight distinction for vacuums.

Given the lack of relevance to consumers of the weight point of comparison, the disclaimer did not cure the unsupported message that Shark's vacuum outperforms all other full-sized carpet cleaners. Instead, the disclosure "attempts to redefine the class of full-size carpet cleaners and contradict the main message of the claim." NAD recommended Shark discontinue the "Best in Class" claim.

Key Takeaways

This case is in line with a number of previously decided "best in class" claims (several in the automotive space) and provides important guidance to advertisers who seek to make such claims. What constitutes a "class" will vary by industry and product, and NAD once again made clear that evidence of how consumers, industry, and/or relevant third parties define a class can be important for advertisers seeking to make such claims.

 

9th Circuit Affirms "Fruit Naturals" Label Not Deceptive Because Its Meaning Clarified by Back Label

In a fruitful victory for Del Monte, the 9th Circuit recently rejected a claim that Del Monte's "fruit naturals®" brand name contained artificial bits of deception. Sometimes a trademark is just a trademark, the 9th Circuit concluded, and consumers know the difference.

In that matter, the appeals court reviewed the lower court's dismissal of a class action lawsuit. That lawsuit alleged that Del Monte falsely advertised its "fruit naturals®" fruit cups as natural even though they contain synthetic preservatives. The plaintiff argued that the phrase "fruit naturals®," which appeared on a label on the front of the fruit cup, misled consumers into believing all fruit cup ingredients were natural. The lower court found that any ambiguity could be resolved by looking at the back label, however, which discloses the presence of the many synthetic ingredients in the fruit cups.

The key was the question of ambiguity. In the absence of ambiguity—there would not be reason to look to the back label and the front of pack claim would be deceptive. On appeal, the 9th Circuit agreed with the District Court, however, and found the front panel ambiguous because everything on the front label suggested that the phrase "fruit naturals®" was not descriptive. First, the word "naturals" in the phrase "fruit naturals®" is a noun, not a descriptive adjective. Likewise, the registered trademark symbol after "fruit naturals®" implies that the phrase is the name of the product and not a description. Further, following the picture and name of the fruit cups is the phrase "in extra light syrup," conveying that although the fruit may be natural, the syrup might not be.

The plaintiff argued that a survey showed that the label is deceptive, but the 9th Circuit found that the survey was unreliable because it did not ask consumers what they thought about the noun "naturals," focusing instead on the adjective "natural." The survey also asked the wrong question: what should natural mean, rather than what consumers thought natural actually meant as used on the label.

Because the plaintiff could not establish that the front label was "unambiguously deceptive," a reasonable consumer would try to resolve the ambiguity by looking at the back label. And there, in plain sight, were accurate representations of all the synthetic ingredients. 

Key Takeaways

It is one of advertising law's most prevailing, existential questions: when should the reasonable consumer look to the back label? And the key of late seems to be in the ambiguity. Here, the appeals court panel breaks down some of what makes a front panel ambiguous. It is ambiguous when "reasonable consumers would necessarily require more information before they could reasonably conclude" that the front label makes a factual claim—at least in the 9th Circuit, reasonable consumers should turn the package over (or around).

Related Articles