Advertising lawyers are warning retailers about the legal dangers of selling products that make bogus advertising claims, stressing that they can be held liable even though they didn’t make the product.
Their warning comes on the heels of a recent settlement in which Rite Aid Corp. agreed to pay $500,000 in consumer refunds to settle claims that its Germ Defense tablets were falsely promoted as being able to prevent and treat colds and the flu. The retailer also agreed to post refund notices in the cold-and-flu aisle at each of its stores for 60 days starting Oct. 1.
While Rite Aid did not make or package the tablets, the Federal Trade Commission charged the retailer with false and deceptive advertising because of the way it marketed the product in its stores.
According to the FTC, Rite Aid marketed the Germ Defense tablets by touting their similarity to “Airborne” products in their ability to prevent and treat colds and the flu. The FTC held that there is inadequate evidence to support such claims. It also charged the tablets’ supplier — Improvita Health Products, Inc. — with false and deceptive advertising. That case is pending in the Northern District of Ohio.
Lawyers, meanwhile, are cautioning retailers to be careful in how they promote the products on their shelves, particularly their store brand products.
“As a retailer, you can’t keep your head in the sand and ignore what is being said by the companies that make the products that you sell,” said Ronald Urbach, of New York’s Davis & Gilbert, an advertising and marketing law firm.
Urbach said retailers being held liable for the advertising claims of a third party is a growing trend. He cited the recent FTC administrative complaint against K-Mart, in which the retail giant was accused of making false and unsubstantiated claims that its American Fare paper products were “biodegradable.” K-mart settled the claims on June 9.
Urbach said these FTC actions serve as a warning to retailers. “It reminds the retailers or the sellers that, ultimately, the historical reliance upon indemnity to protect you against the economic consequences of a problem [with a product] isn’t going to be helpful against a regulatory action,” Urbach said.
He said that the question retailers should ask themselves when confronted with deceptive advertising claims is this: Are you merely a passive receptacle, or are you an active participant in the marketing of the product?
Advertising law attorney Brian Heidelberger of Chicago’s Winston & Strawn offers similar advice to retailers, noting that federal regulators are now pursuing both retailers and manufacturers for deceptive advertising.
“Where it’s been coming into play more recently is in the health and safety area, where regulators are going after retailers, instead of just the manufacturer,” Heidelberger said.
Heidelberger advises retailers to “think twice before carrying a product which may include false and deceptive claims.”
“Even if that product makes you money, it might not, given the liability that might be attached to it,” Heidelberger said. “You can’t simply rely upon the messages provided to you by manufacturers if you know — or should have known — that it was false or deceptive.”
In the Rite Aid case, the pharmacy chain yanked the Germ Defense tablets off the shelves.
“We cooperated completely with the FTC and we no longer offer the Germ Defense product,” said Rite Aid spokesperson Ashley Flower. She offered no further comment.
Tresa Baldas can be reached at [email protected].
