False Advertising And TCPA Litigation: Class Action Trends To Watch In 2023
The number of consumer class action lawsuits increased in 2022, and this trend is likely to follow in 2023. As the number of such cases increases, it is important for companies to stay abreast of the latest trends, including the types of products and methods plaintiffs are using. This article is the second in a two-part series detailing trends in consumer class action lawsuits in 2023.
Class actions for false advertising
"Beauty from within"
In 2021, the nutraceuticals market was valued at approximately $6.9 billion and is projected to reach $13.7 billion by 2030. The huge capital in this industry reflects the growing trend among consumers that they value edible cosmetic products and ingredients such as collagen, which are "beauty from the inside". The increase in consumer demand has led to a similar increase in lawsuits related to the advertising of cosmetic products. For example, in September In 2022, a federal judge in New York denied a motion to dismiss a class-action lawsuit alleging that the cosmetics giant made "widespread false and misleading advertising" claiming that two of its topical collagen products would help smooth wrinkles. cosmetics brand argued that a reasonable consumer would understand after reading the packaging that topical collagen does not penetrate the skin or stimulate collagen production, the judge disagreed, finding the plaintiffs' claim reasonable.Those who make and sell cosmetic products should reconsider their claims about beauty and make sure they have enough scientific po dtrymku to protect itself from class actions and regulatory actions.
Try PFAS
Throughout 2022, applicants increasingly challenged product safety claims or failed to disclose the presence of harmful substances such as per- and polyfluoroalkyl substances (“PFAS”). Traditionally, PFAS lawsuits have been filed exclusively against the chemical companies that produce PFAS. Now, every company somehow involved with PFAS, from the manufacturer to the retailer, appears to be facing a lawsuit. In 2022, grocery chains were accused of selling products containing PFAS, restaurants were accused of having PFAS in their packaging, and cosmetics giants were accused of using PFAS in their beauty products. Additionally, pet food manufacturers have recently attracted the attention of plaintiffs with claims about the quality and safety of their products. Additionally, one of the recent targets of consumer class action lawsuits has been against products containing titanium dioxide ("TiO2"), an artificial color additive allegedly unfit for human consumption. In 2022, TiO2-related class action lawsuits were filed against a number of companies, including a tampon brand, a chewing gum company, and a pill company. Despite FDA approval for TiO2, these class-action lawsuits allege that false and misleading marketing practices overshadow the safety concerns associated with TiO2. Companies should carefully review their advertising and labeling practices related to product safety, as we expect this trend to continue into 2023.
online shopping industry
As e-commerce continues to permeate American culture, the iBuying industry faces challenges from both plaintiffs and regulators. Entrepreneurs and companies that offer online platforms to sell products and services that offer better alternatives to the status quo need to think carefully about their marketing needs. For example, in October 2022, an online company that buys and sells residential real estate agreed to pay $62 million to settle Federal Trade Commission (FTC) charges. The FTC said the online company engaged in false advertising, claiming its cutting-edge technology would save sellers money by providing market value offers and reducing transaction costs. In fact, according to the FTC, the Internet company inflated consumer spending and cut below-market deals. We expect regulators to pay more attention to iBuying's real estate segment and other e-commerce businesses in 2023.
taste disputes
2022 also sees a growing trend of class-action lawsuits challenging the advertising of natural flavors in products containing malic acid, an artificial ingredient. In September 2022, the beverage maker faced a class-action lawsuit alleging that the beverage's "100% natural flavor" claim was false, misleading, and deceptive because the beverage contained DL-malic acid. Similarly, another class-action lawsuit alleged that the product's "lemon flavored chili" product label was misleading because it failed to state that the seeds were artificially flavored with DL-malylic acid, suggesting that the " lemon flavored chili" was more exact taste. " " required: read Another class action lawsuit has been filed against a consumer products company for labeling a pancake mix as "all natural" even though it contains carbon dioxide.
In cases involving a product's flavor profile, defendants typically argue that DL-malic acid should not be included in flavor claims because it does not affect the product's flavor profile. However, even if these arguments are ultimately successful, these findings often have factual issues that preclude early dismissal, resulting in significant legal costs. Companies should actively check whether their labeling or marketing promises natural fragrances. In particular, companies must determine whether any of their "natural" products contain artificial ingredients such as carbon dioxide or malic acid and make appropriate disclosures or other labeling to reduce the risk of litigation.
TELEPHONE CONSUMER PROTECTION ACT (TCPA) Disputes
Business received good news in 2021 when the US Supreme Court ruled against Facebook, Inc. Dugid , 141 S.Ct. 1163 (2021), which uses a narrow definition of automated telephone dialing system that makes it more difficult for plaintiffs to bring claims under the TCPA. After Duguid, plaintiffs changed their strategy, and in 2022, class actions under state mini-TCPA laws, which are sometimes more stringent than the federal TCPA, became more common. Florida was a pioneer in June 2021. In June 2021, Florida enacted the Florida Telephone Solicitation Act (FTSA). The FTSA offers a right of private action that allows named parties to recover at least $500 for each violation, which can go up to $1,500 in court if the court determines that the defendant willfully or knowingly violated the FTSA. Since its inception, plaintiffs have filed hundreds of lawsuits, most of which are class action. Oklahoma and Washington passed their "mini-TCPA" bill in June 2022, and other states are expected to follow suit. Therefore, companies that serve consumers in states with mini-TCPA laws should familiarize themselves with the various compliance requirements and look for states that may follow suit. In 2022, plaintiffs aggressively filed class actions under the mini-TCPA laws, and we expect this trend to continue in 2023. Taking proactive enforcement measures will be key to reducing the risk of litigation.
While the mini-TCPAs have received a lot of attention over the past year, the plaintiffs' order continued to focus on the state's TCPA claims that might have been considered minor just a few years ago. Specifically, the TCPA states that telephone solicitations directed to "private" telephone numbers were identified 1) when those numbers were on the National Do Not Call Registry and 2) when the calls were made without adequate internal do-not-call procedures. See 47 CFR 64.1200(c)(2) and (d). We expect that they will continue to lead the development of standards across the country. See, for example: B. Chennett v. Porch.com, Inc. , 50 F.4th 1217 (9th Cir. 2022) (describing factors that Ninth Circuit courts may consider in determining whether a commercial telephone line is eligible for the National Do Not Call Registry). Given their prevalence and plaintiffs' attempts to link these federal claims to state mini-TCPA claims, best practices include continuing to obtain written consent before calling and following appropriate telemarketing policies and procedures.
Conclusion
Organizations should familiarize themselves with the new compliance requirements and immediately review their disclosure, labeling and marketing practices to reduce the risk of litigation. 2023 should be the year the courts provide much-needed clarification on consumer class actions. We will continue to monitor this area as many consumer class actions are pending in 2023 and more states are likely to enact their own mini-TCPA laws.
In addition to serving as the Chief Executive Officer of Mintz's Los Angeles office, Joshua Brions served as lead counsel in more than 600 alleged nationwide class actions in state and federal courts across the country. E. Crystal Lopez defends companies at all stages of litigation against putative class actions in state and federal courts across the country. He also acts as a trusted advisor to corporate clients who require advice on privacy, marketing, advertising and other consumer communications. Sofia Nuno litigates a wide range of litigation, including securities disputes, class-action defenses, regulatory investigations, insurance disputes and complex commercial disputes. She also maintains an active pro bono practice, drafting legislation and representing victims of human trafficking in criminal and post-trial proceedings.
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