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September 22, 2014

Don’t Give Companies a Free Pass for Tricky Ads

Filed under: Retail — Edgar (aka MrConsumer) @ 6:00 am

 MrConsumer has been a consumer advocate for over 35 years, and he is always astounded by the number of sneaky (and potentially illegal) practices that not only companies will use, but that shoppers will put up with, or even defend.

The comments on this blog are often a reflection of that attitude, and I find that troubling. It suggests that consumer advocates have not educated the public enough about what are acceptable practices and which ones cross the line.

Some consumers and too many businesses think that as long as they make a disclosure or disclaimer SOMEWHERE that that is all that is necessary.

The Staples story we brought you last week is a perfect example. It is not okay to run an advertisement for goods at a stated sale price but fail to mention IN THE AD that you have to buy other goods totaling $50 in order to get the goods at the advertised price. Too many commenters and the company itself thought it was enough just to let shoppers know before they checked out that there was a catch in the offer.

thumb dirve

That is not what the law says in Massachusetts (and probably in some other states). One of the primary principles in consumer law is the requirement of disclosing key facts upfront. What needs to be “clearly and conspicuously” disclosed? Anything that might mislead the prospective purchaser or induce him or her not to enter into the transaction.

“It is an unfair or deceptive act for a seller to fail to clearly and conspicuously disclose in any advertisement any material representation, the omission of which would have the tendency or capacity to mislead reasonable buyers or prospective buyers.”

“A disclosure is not clear and conspicuous if any material terms of the offer that affect the price of an item, impose conditions on acceptance of the offer, … are not disclosed in the advertisement itself…”

“Even though the true facts are subsequently made known to the buyer, the law is violated if the first contact … is secured by deception.”

Here are some examples of specific requirements of the law (at least in MA), and how they might apply to various advertising practices.

Example 1:

Under the law, important disclosures must be “clear and conspicuous.”

“Clear and conspicuous … means that the material representation being disclosed is of such size, color, contrast or audibility and is so presented as to be readily noticed and understood by a reasonable person to whom it is being disclosed.”

*MOUSE PRINT:

Proactiv

Is it clearly disclosed that by ordering ProActiv for $19.95 that you will also be signing up for regular monthly deliveries of the product? Is the average TV viewer likely to have even noticed that small disclosure for the few seconds it was on the screen?

Example 2:

“Clear and Conspicuous, is not clear and conspicuous unless such material representation … appears in type which is a minimum of eight point type;”

*MOUSE PRINT:

fine print

Burying key information in a fine print footnote is frowned upon. The above footnoted disclosures (note: the type size above may appear larger on your computer screen than it actually is) are actually part of a single paragraph where each line is 20 inches long, spanning two pages in a multi-page circular. The type size is five point type, not the minimum of eight point type required assuming there is something important in this footnote that is required to be clearly and conspicuously disclosed. Few if any human beings can read straight across a densely packed 20-inch line of type, with about 90 words per line, line after line, to understand what is trying to be conveyed. This is a perfect example of the belief that as long as a disclosure is made, no matter how or where placed, that that is sufficient.

Example 3:

A disclaimer can’t be used to change the meaning of the original claim.

“It shall be an unfair or deceptive act or practice for a seller to use a disclosure set apart from the primary claim to which it refers, such as by use of an asterisked footnote, if such disclosure imparts a meaning that contradicts or materially alters the meaning of the term, statement or claim to which it refers.”

*MOUSE PRINT:

entire store 50%

You’re across the street from this store and you see that everything in the store is half price. But as you walk closer, you see the disclaimer that certain items are excluded. Did you lose anything other than a few seconds, no. But stores can’t try to lure you in with a false claim, even if the truth is made known in an asterisked disclosure. The sale claim should have been worded to be true on its face.

The bottom line is this: you are entitled to full and clear disclosure upfront in advertising. Don’t settle for less. And don’t give advertisers a free pass when they fail to do this.

• • •

September 15, 2014

Oh, Did We Forget to Say You Need a $50 Minimum Purchase?

Filed under: Electronics,Internet,Retail — Edgar (aka MrConsumer) @ 6:28 am

  In the last few weeks, Staples.com appears to have begun misleading customers about the price of some of its back to school sale items. Here is one of their recent advertisements:

Staples ad

When one clicks on that thumbdrive, for example, it takes you to a page like this:

lexar thumbdrive

Wow, you think it must be your lucky day, it is actually only $7 instead of $8. You are promised “instant savings” of $12.99, so you add it to your cart.

Upon going to your cart to check out, you get a nasty surprise.

*MOUSE PRINT:

Staples cart

The price is almost three times what you expected. Why? It says you didn’t make the required $50 purchase. What $50 purchase? If you look carefully at the middle graphic above, you will see a box that states that the thumbdrive “special buy” only applies with a minimum $50 purchase. Where did that come from? It wasn’t in the original ad!

Similarly, the other paper items in the ad above are more expensive without the $50 purchase, as are a few others on its website.

That’s not all. Let’s say you had not seen the ad, but had just gone to Staples.com looking for a 16-gig Lexar thumbdrive. You search for it and find this product listing in the search results.

*MOUSE PRINT:

Lexar 3

You were even smart enough to click the “see details” link, and you’re told the item is $7 and there is no mention of any required $50 minimum purchase. So, you add it to your cart. And just as above, when you go to checkout, you will see that you are being charged $19.99, the full regular price, because you did not make a $50 minimum purchase that you were never told was required.

In our view, this practice is reprehensible, if done deliberately. We can only hope it was a careless oversight on Staples’ part.

Under Massachusetts law, sellers are responsible for clearly and conspicuously disclosing all material facts in their advertising the omission of which might mislead a consumer. “A disclosure is not clear and conspicuous if any material terms of the offer that affect the price of an item, impose conditions on acceptance of the offer, … are not disclosed in the advertisement itself, but require reference to an outside source..”.

It is certainly misleading in our view to fail to disclose upfront that a particular sale price only applies when a $50 minimum purchase of other goods is required.

We asked the company to explain why they created these misleading price representations and whether they would automatically refund money to customers who bought these items and unknowingly paid full price during the sale period.

Staples’ senior PR manager responded late yesterday:

“Staples works hard to ensure our customers have the information they need to make informed purchasing decisions. In the examples provided, the terms and conditions of our Less List offers were clearly displayed prior to the customer checking out.”

Staples indicated that it might update its comment today, so please check back here later today.

• • •

September 8, 2014

Honestly, Could They Make the Disclosure Any Smaller?

Filed under: Health,Internet,Retail — Edgar (aka MrConsumer) @ 5:36 am

 While watching TV the other night, MrConsumer saw a tiny disclosure at the end of a baby products commercial for The Honest Company. (That’s really their name.) It went by so quickly, and was so small and faint in color, it was very hard to read:

The Honest Company
Click ad to see commercial.

Here is what it says about their “free” trial.

*MOUSE PRINT:

*Only $5.95 for shipping and handling. You’ll be automatically enrolled in our monthly service. Cancel the service at anytime.

Their website gives more details.

*MOUSE PRINT:

*With your Discovery Kit, you’ll be enrolled as a member of The Honest Company. You have 7 days following receipt of your Discovery Kit to cancel your membership at any time, for any reason. We will remind you about your membership options. If you choose to not cancel, you’ll be charged $79.95 /month for the Diapers & Wipes Bundle, $35.95/month for the Essentials Bundle, or $39.95/month for your Health & Wellness Bundle (plus shipping & handling).

Basically, this company founded by actress Jessica Alba offers (among other things) a book-of-the-month-type service for baby supplies, shampoo and detergent, and vitamins. You will keep getting automatic deliveries every month, starting after seven days following receipt of your samples unless you cancel.

While their website makes clear that this is a monthly plan with monthly charges for these packages of goods, why do their TV commercials hide that fact particularly when they call themselves The Honest Company? Their television ad also seems to run counter to what their statement of principles claims:

Create a Culture of Honesty

We are serious about honesty – both as it applies to the integrity of our relationships and in being true to you. And, it’s a standard we encourage throughout our staff, stakeholders, and customers. But, that’s just the beginning. In all we do, we want to make each day a little more fulfilling, inspired, and downright better.

Mouse Print* asked the company twice to comment about their use of such a small disclosure and on this seeming contradiction of their corporate philosophy. We are still waiting for their response and will post it here… honestly.

• • •

September 1, 2014

Some Online Stores Make Shoppers Buy Vitamins Blindly

Filed under: Food/Groceries,Health,Retail — Edgar (aka MrConsumer) @ 5:57 am

 A few months ago we stressed the importance of reading the ingredients statement on vitamin bottles because some store brands that claim to be comparable to the name brand simply are not. (See our CVS vs. Bausch + Lomb story.)

While it is relatively easy to compare bottle labels in a store aisle, the same cannot always be said about shopping online for vitamins. A review by Consumer World and Mouse Print* of major online retailers that sell vitamins reveals that several of the biggest companies publish little or no information about the ingredients in their products.

EquateFor example, Walmart sells the Equate brand as their store brand. If you were interested in getting their version of Centrum Silver because it is $10 a bottle cheaper, you would find it impossible to know in advance whether it really was equivalent because Walmart does not publish the ingredients listing. All Walmart says on their website with respect to ingredients for Equate Multivitamin Active Adult 50+ is (*MOUSE PRINT:) “This multivitamin supplement contains vitamin D, K, B12, as well as calcium.” The real Centrum Silver has about 30 vitamins and minerals. While the Equate version may or may not have all the vitamins in the same amounts as Centrum Silver, you would have to make a trip to store to find out.

And even if they published the so-called “Supplement Facts” for Equate — the box on the back of vitamin bottles showing each vitamin, the amount in each pill, and what percentage of the daily requirement was provided — you couldn’t compare it to the list for Centrum Silver because Walmart’s website doesn’t disclose that brand’s contents either.

Walmart is not alone in failing to publish these ingredients lists. A brief review of Target’s website and that of Rite Aid reveals they are missing complete vitamin ingredients labels in many cases too.

For example, Target’s Up & Up store brand of Gummy Prenatal Multivitamins claims to be comparable to Vitafusion Prenatal. All it says in the description is that it “Contains 800 mg of Folic Acid as well as 50 mg of DHA per serving.” Target’s website does not disclose the ingredients in the brand name either other than to say it contains folic acid and DHA. The real Vitafusion Prenatal product has these ingredients according to the company’s own website:

*MOUSE PRINT:

supplement facts

Some other vitamins on Target’s website, like the Up & Up version of Centrum Silver, seemingly lists all the ingredients, but only for three of the over 30 ingredients does it disclose how much of that particular vitamin or mineral is contained in each pill.

Moving onto the big three drug chains in the United States, while both CVS and Walgreens disclose all the “supplement facts” for their vitamins, Rite Aid does not. Their store brand of Centrum does not disclose even one of the vitamins in the bottle, but it does disclose all the inactive ingredients/fillers:

*MOUSE PRINT:

Microcrystalline Cellulose, Gelatin, Croscarmellose Sodium, Stearic Acid, Polyvinyl Alcohol, Titanium Dioxide, Polyethylene Glycol, Magnesium Stearate, Silicon Dioxide, FD&C Yellow 6 Lake.

For Centrum itself, Rite Aid’s website offers this helpful information:

*MOUSE PRINT:

Centrum

We asked Walmart, Target, and Rite Aid why they don’t always disclose the content of vitamins they sell online, and whether they would begin doing so to help shoppers know what they are buying and enable them to compare one product to another.

Walmart responded:

[paraphrasing] Suppliers did not always provide the ingredients to us, but our company is committed to getting complete ingredient information on the website. — Walmart.com spokesperson

Target responded (in disappointing, non-apologetic PR speak):

“At Target, we strive to comply with all applicable regulations. We continually evaluate and make enhancements to the product assortment and information provided on Target.com.” — Target spokesperson

Rite Aid responded:

“Improved product descriptions, including ingredient listing, is a section of our website that we have already identified as an area for improvement. We are currently in the process of developing additional solutions, which we expect to launch in the near future, that will provide more product details to our online shoppers, enhancing their shopping experience and allowing them to make informed purchases.” — Rite Aid spokesperson

The Food and Drug Administration does not require “supplement facts” disclosures on websites, saying, “The FDA does not generally specify how online sellers of dietary supplements should display information about dietary ingredients in their products on websites.”

When examples of online sites failing to make full disclosure of vitamin contents were shown to the FDA, their spokesperson indicated it would probably take an act of Congress to get the agency to require ingredients listings online.

Let’s hope that online companies will recognize the inexplicable disservice they are currently offering and that they all begin making full ingredient disclosures to shoppers voluntarily.

• • •

August 25, 2014

When Good Rebates Go Bad, Part 2

Filed under: Internet,Retail — Edgar (aka MrConsumer) @ 5:58 am

 At the beginning of July, we told you about a major rebate snafu at Newegg.com (see original story). In short, Newegg advertised a crazy low price (after rebate) for a reconditioned Samsung HDTV. The form for the $30 rebate, however, listed an incorrect UPC code for this television, which would likely mean that all consumers who bought the TV would have their rebate submissions denied.

MrConsumer swung into action, writing to the PR folks at Newegg, hoping that they would notify the rebate fulfillment house of the error so as to avoid the inevitable rebate denials that would follow. Newegg stepped up to the plate, and sent reassuring emails to all purchasers of this TV that their rebate would be honored despite the fact that the UPC code on their box didn’t match the number requested on the rebate form.

End of story.

In true Ronald Reagan “trust but verify” mode, MrConsumer submitted the rebate form, managing somehow to remove the huge UPS sticker the Newegg shipping department had placed over the TV’s actual UPC code. As expected, that UPC code did not match what was stated on the rebate form.

Several weeks later, the rebate fulfillment house sent MrConsumer an email entitled “Newegg Eligibility Confirmation.” Good news, right? Not so fast.

The email said that my submission had been processed and that I should receive their “response” by September 17. What do you mean “response,” don’t you mean your “check” was mailed? A call to the rebate fulfillment house revealed that the rebate had been rejected because the UPC submitted did not match the UPC requested on the rebate form. No kidding, but that was supposed to have been fixed, right? Not.

*MOUSE PRINT:

Newegg rejection

The customer service person at the rebate fulfillment house said she is getting calls like this every day, and instructing people to call Newegg because they will send out the correct UPC for resubmission. Both a call and a chat session with Newegg customer service was met with shrugs, with them not knowing anything about sending out a correct UPC. Enough.

MrConsumer emailed the PR guy at Newegg, explaining the situation, noting that Mouse Print* was going to do a follow-up story on the company failing to live up to its promised correction. Apparently that email sent shock waves throughout the company. By the end of the business day, Newegg explained what happened in a most candid way, and outlined how it was going to fix the problem, and put in place procedures to prevent its recurrence:

Your note really shook us up and we pulled together a number of teams to make sure this doesn’t happen again. Here is our plan of action and how we plan to never let this kind of thing slip through again. As always, we do appreciate your notes. Customer satisfaction is something we proclaim, so when we fall short, we like to know about it and get it resolved. In today’s process, we learned there was a critical communication gap between our product managers and our customer service team that led to this problem. Once we understood the problem (a technical way in which rebate codes get passed from product managers to customer service reps so the reps can validate them), which cut off about a third of the certificates that were being given to customer service–we set about making good for our customers and then updating our process so it doesn’t happen again. Here is our plan.

1. We learned that 3 rebate periods needed to be adjusted
* 5/20-6/8 $30
* 6/20-6/23 $30
* 7/4-7/21 $40

2. We will check the following for those periods
* Submitted rebate
* If rebate submitted with wrong UPC, honor rebate and notify customer of processing.

3. In the event that no rebate was submitted
* For those customers who have not submitted a rebate, we will contact them and have them submit it with the UPC code that they have.
* For those customer who state the shipping label is covering the UPC code or do not have a UPC code, we will honor the rebate either as a Newegg GC or credit back to original payment

We will make sure that all denied customers get their rebate.

Now to make sure this never happens again, our customer service team has set up a meeting with our product management team to review the proper application of rebates and how to make sure they appear in the customer service agents’ validation work flow.

This outline of steps is being put into action now. We are crafting the email being sent and it should go out this week. The new process and meetings should also take place this week. I will keep you posted on our progress.

Wow. In reply, we thanked Newegg for their swift action, but gently pointed out other related lapses they hadn’t acknowledged. We urged the company to incentivize their customer service agents to spot and report problems raised by individual consumer complaints that might be affecting other customers. That way a global solution could be implemented, and complaints reduced.

• • •
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