From 24/7 Wall St.: The Federal Trade Commission recently ruled that advertisements from juice maker POM Wonderful contained health claims that were misleading and unsubstantiated. This was not the first confrontation between the regulator and the company. In 2010, the FTC sued POM Wonderful for claiming that its drinks helped prevent heart disease and cancer.
The POM case is just one example of a slew of recent confrontations companies have had with regulators, customers and advocacy groups for false advertising and misleading labeling. Foods labelled as healthy or “all-natural” have been targeted most frequently. Other products at issue have ranged from shoes to cars. Based on recent reports, 24/7 Wall St. has reviewed the most misleading product claims.
Other government agencies, in addition to the FTC, have taken action against companies to protect consumers from misleading advertising. Last November, the Environmental Protection Agency publicly said that Hyundai and Kia, sister South Korean automakers, misrepresented the fuel efficiency of several of their models and required the company to change its advertising.
The majority of the cases on this list are related to food or drink products claiming to have benefits they do not have or, at the very least, that the company does not have the evidence to support. Diamond Foods, for one, was sued after it claimed its walnuts have heart benefits without having supporting evidence. General Mills’ Fruit Roll-Ups had pictures of strawberries and other fruits on the box, yet the product is made with pear concentrate, and with no strawberries of any kind.
One of the public interest groups that has been at the forefront of suits related to food or drink and health is consumer advocacy group the Center for Science in the Public Interest. The CSPI has been involved in several of the lawsuits on this list.
In an interview with 24/7 Wall St., Stephen Gardner, the Director of Litigation at CSPI, explained that there has been a major uptick in actions over food and beverage products and their health claims. Gardner explained that a major reason for this increase is a notable lack of clarity in FTC language on some kinds of food labeling. This extends to whether or not a company can label its product as “all-natural,” as well as claims about the healthiness of products.
“Eight years ago” Gardner noted, “there were, four, possibly three private lawsuits. When we showed this was a viable consumer lawsuit, many, many more people got involved.” Gardner added that this growth has been exponential.
24/7 Wall St. has identified the major government actions and private lawsuits directed at companies on the basis of “deceptive practices,” or false advertising. In order to be considered, a product had to be involved in some major action (a filing or a settlement) in the past year, or have a claim demonstrated as misleading through a scientific study. We excluded incidents that were related to services rather than specific products, such as cases of predatory lending.
These are nine of the most misleading product claims, according to 24/7 Wall St.:
Parent company: General Mills Ad changed: Yes Settlement amount: Money not part of settlement Strawberry Naturally Flavored Fruit Roll-Ups fell short in both its “strawberry” and “naturally flavored” claims. The maker of Fruit Roll-Ups, General Mills, settled a lawsuit late in 2012 over complaints that the snack contained no strawberries and that its ingredients were mostly synthetic. According to Consumer Affairs, while the snack contained no strawberries, it did contain “pears from concentrate, corn syrup, dried corn syrup, sugar, partially hydrogenated cottonseed oil, and 2 percent or less various natural and artificial ingredients.” The label on Fruit Roll-Ups still says “Made With Real Fruit,” but the company will have to disclose on its packaging the actual percentage of real fruit in the treat beginning in 2014. Read more more at 24/7 Wall St.
Parent company: Hyundai Motor Co. Ad changed: Yes Settlement amount: Inconclusive Drivers of new Hyundais and Kias may have paid a little more for gas than they were promised. In November, the EPA announced that Hyundai and Kia had overstated gas mileage for approximately 900,000 vehicles, or about 35% of the 2011-2013 models sold through October 2012. Kia and Hyundai overstated the mpg for most of the vehicles by one or two miles, with the Kia Soul overstated by as much as six miles. Both companies opted to reimburse drivers for the incorrect mileage claim with a prepaid debit card. Read more at 24/7 Wall St.
Parent company: Ferrero Ad changed: Yes Settlement amount: $3.05 million Nutella is a popular spread that combines hazelnuts with cocoa and skim milk. In early 2011, a mother in California sued Ferrero, the company that owns Nutella, alleging that it made misleading health claims by suggesting the product was a healthy breakfast option despite its high saturated fat content. Ferrero eventually settled the class-action lawsuit for $3 million. The company also agreed to change its marketing statements, both on television and online. Although Ferrero agreed to limit its health claims, the Nutella is still marketed on its website as a way “to turn a balanced breakfast into a tasty one.” This claim is now preceded by a notice stating, “But keep in mind, a balanced breakfast should provide the proper balance of protein, carbohydrates from whole grains, fat and the nutrients provided by either a serving of fruit or vegetables.” Read more at 24/7 Wall St.
Parent company: Johnson & Johnson Ad changed: N/A Settlement amount: N/A Splenda is an artificial sweetener that promises the taste of sugar but with zero calories. Splenda Essentials, the brand’s higher-priced label, offers products fortified with fiber, B vitamins, or antioxidants. Last year, the CSPI filed a lawsuit against McNeil Nutritionals — the Johnson & Johnson subsidiary that manufactures Splenda — alleging the additions of fiber, vitamins and antioxidants gave customers the false impression that “Splenda Essentials will help one lose weight, avoid disease, or confer other health benefits.” McNeil Nutritionals was also sued several years ago by Merisant Co. — makers of rival product Equal — over its claim that Splenda was “made from sugar so it tastes like sugar.” The two sides eventually settled for an undisclosed amount. Splenda’s website notes that the product is made by altering sugar’s chemistry and is not natural. Read more at 24/7 Wall St.
Parent company: Apple Ad changed: N/A Settlement amount: N/A Apple’s website states that Siri, the company’s voice-recognition and personal assistant software, “understands what you say. And knows what you mean.” But since its debut, most reviews of the service would seem to suggest that Siri is tin-eared. So much so that multiple disappointed Apple customers have filed lawsuits against the company. These lawsuits allege that the advertising campaigns touting Siri present a product with far greater capabilities than that sold to consumers. In a motion to dismiss one of the class-action complaints, Apple noted that claimants provided “only general descriptions of Apple’s advertisements, incomplete summaries of Apple’s website materials, and vague descriptions of their alleged — and highly individualized — disappointment with Siri.” Read more at 24/7 Wall St.
Parent company: Diamond Foods Inc. Ad changed: Yes Settlement amount: $2.6 million Diamond Foods recently went too far when it claimed on its website and labels that the omega-3 fatty acids contained in its California Shelled Walnuts had positive health effects. According to the company, the fatty acids found in the walnuts prevent strokes and curb depression, among other things. But the FDA argued that such claims would make walnuts drugs, since only medications can make such health claims. In 2012, Diamond Foods agreed to pay $2.6 million to settle a separate class-action suit accusing the company of false advertising and agreed to discontinue the “heart health” statements on its packaging and website. Read more at 24/7 Wall St.
Parent company: Living Essentials Ad changed: No Settlement amount: Lawsuit not settled Advertisements claim that 5-Hour Energy drink will give an energy boost with “no crash later.” However, a recent study showed that 24% of participants consuming the drink experienced a “moderately severe crash that left them extremely tired and in need of rest, another drink or some other action.” When contacted by The New York Times, the manufacturer, Living Essentials, pointed out that the fine print on the bottle states that “no crash later” merely indicates no sugar crash. Of course not — the drink contains no sugar. This isn’t the first problem with 5-Hour Energy. It has also been in the news as the FDA investigates a series of 13 deaths over the past four years that may be linked to the product. Read more at 24/7 Wall St.
Parent company: Skechers USA Ad changed: Yes Settlement amount: $40 million Skechers line of Shape-Up shoes was just too good to be true. In May, the company agreed to pay $40 million to settle charges by the FTC and the attorneys general of 42 states. The FTC argued that advertising for Shape-Ups, along with Skechers’ similar Tone-Up and Resistance Runners, misled consumers into believing the shoes would help them slim down and tone their figures. One of the company’s misleading tactics involved a chiropractor who, in a TV ad, endorsed the shoes’ effectiveness based on a study. However, the company paid for the study and the chiropractor was married to a company’s marketing executive. Read more at 24/7 Wall St.
Parent company: POM Wonderful LLC Ad changed: Yes Settlement amount: Money not part of settlement POM Wonderful ads promised consumers they could “cheat death” if they sipped the pomegranate juice. The drink, the ads said, “can help prevent premature aging, heart disease, stroke, Alzheimer’s, even cancer. Eight ounces a day is all you need.” Already in 2010, the FTC told the company to stop its deceptive advertising. POM Wonderful sued, but this month the FTC upheld the earlier decision that POM Wonderful made deceptive claims about the health benefits of its products and barred the manufacturers from making such claims. The FTC notes that in order for a food or drink manufacturer to make claims about health benefits, it would have to produce evidence from two randomized controlled trials, which the makers of POM have not done. Read more at 24/7 Wall St.