Takeaways:

  • The intended uses of products are relevant to their classification as a cosmetic and/or a drug.
  • Products can be regulated concurrently as both a drug and a cosmetic depending on intended uses.
  • Companies should be aware of claims of intended uses of products to ensure these products are properly classified under federal law.


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On August 7, 2019, the Federal Trade Commission (FTC) will host a public workshop to examine consumer protection issues related to the sale of “loot boxes” in video games.

For those unfamiliar with the phrase, “loot boxes” are often in-game rewards that players can buy that typically contain a random assortment of virtual “loot” items for players to use in the game (e.g., to help them succeed or to customize their in-game avatars). Although loot boxes contain virtual rewards, they are purchased with real money and are becoming an increasingly popular revenue source for game developers. However, class action lawsuits, U.S. senators,  and the FTC have questioned the techniques used to market loot boxes in video games and whether there is a risk that minors can become addicted or otherwise be exploited by these in-game offers.
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In 2016, UrthBox, Inc., a subscription-based service sending monthly snack boxes to customers, had only nine reviews on the Better Business Bureau’s website and all of them were negative. By 2017 UrthBox had 695 BBB reviews, 612 of which were positive.

According to a complaint from the FTC however, the cascade of positive reviews was the result of an incentivized review program. Specifically, in 2017 UrthBox offered to send customers an incentive (a free snack box) in exchange for submitting a positive review for UrthBox on the BBB website. However, the BBB requires customers submitting reviews to affirm they have not been provided any incentive from the business they are reviewing. UrthBox also offered incentives for customers who posted about their products on Twitter, Instagram, Tumblr, and Facebook but, according to the FTC, UrthBox did not monitor or provide instructions to consumers on how to comply with the FTC’s Guidelines on endorsement disclosures. Those Guidelines put the onus on businesses to make sure that customers posting reviews sufficiently disclose any compensation received from the business.
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On March 28, 2019, the Federal Trade Commission (FTC) joined the Food and Drug Administration (FDA) in sending warning letters to three companies that market products that contain cannabidiol (CBD), which the companies claim can treat a variety of serious physical and mental disorders.
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Last month, the Direct Selling Association (DSA) launched the Direct Selling Self-Regulatory Council (DS-SRC), a new enforcement agency charged with policing the direct selling industry. The DS-SRC will be administered by the Advertising Self-Regulatory Council, which operates under the Council of Better Business Bureaus.

Direct selling companies use independent sellers to market and sell products and services, typically outside of a fixed retail establishment. One form of direct selling that has received significant scrutiny from the Federal Trade Commission (FTC) is multilevel marketing (MLM), which distributes products or services through a network of independent salespeople who earn income from their own retail sales and from retail sales made by their direct and indirect recruits.
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It’s been a busy year in consumer protection law and during this holiday season, we’re taking stock of the past year and looking ahead to what’s next.  In 2018, we saw many class actions related to pricing practices, scrutiny of Made in USA claims, continued growth in popularity and the evolution of influencers (

On September 26, 2018, Christine S. Wilson was sworn in as a Commissioner at the Federal Trade Commission into the seat previously held by Maureen Ohlhausen.  Commissioner Wilson most recently held a senior legal role at Delta Airlines, previously was an antitrust partner at two large law firms, and during the George W. Bush Administration served as Chief of Staff to FTC Chairman Timothy Muris.

With the addition of Commissioner Wilson, the FTC now has a full slate of five commissioners at the helm, all of whom joined the agency within the last six months.  It is still early days at the FTC under the leadership of Chairman Joe Simons but there are already signs that change is afoot.  For example, the FTC has begun a broad review of whether it is using the full range of its remedial powers as effectively as possible, including whether there are new or infrequently applied remedies, such as monetary relief or notice to affected consumers in deceptive advertising cases. 
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As consumers shift towards “organic,” “natural,” and “clean” foods for themselves and their families, they are also making similar purchasing decisions when it comes to pet food. However, as sales of “premium” pet food have increased in recent years, so has the number of consumer class action lawsuits filed against pet food manufacturers, specifically those involving claims that marketing and labeling pet foods as “natural” is false and misleading when they contain artificial ingredients, synthetic ingredients, chemicals, heavy metals, and/or toxins.
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Key Takeaway:

Companies making Made in USA claims should adhere to Federal Trade Commission guidance and state law, as such claims are likely to draw attention from regulators and class action plaintiffs.  Additional detail on regulatory compliance can be found in our prior post.

Deceptive Made in USA advertising continues to draw attention from the FTC. The FTC recently settled with hockey puck producer Patriot Puck and recreational equipment sister companies Sandpiper and PiperGearUSA regarding their allegedly false Made in USA claims. This brings the total number of FTC enforcement actions arising from misleading U.S.-origin claims to 25 since 1999, with six of those actions having been initiated since April 2017.[1]
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Consumers notice and are more likely to buy products that are marketed as Made in USA, but companies face significant legal risk, negative publicity, and decades of government oversight if they overstate the extent to which their products are made in the United States.

  • Companies marketing their products without qualification as Made in USA