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FTC to Send Refund Checks to Oreck Customers

5 Jun, 2012 By: Gregory J. Sater

Last week, the Federal Trade Commission (FTC) announced that it is sending out more than 27,000 checks totaling nearly $700,000 in restitution to customers whom the agency has identified through Oreck’s sales records as having purchased either an Oreck Halo vacuum cleaner or an Oreck ProShield Plus portable air cleaner during the time period when, according to the FTC, Oreck’s advertisements for those products were false or deceptive.

The Oreck Halo is an upright vacuum cleaner with a HEPA filter and a light chamber that generates UV light onto the floor that is being vacuumed. The Oreck ProShield Plus is a portable air cleaner containing an electrostatic precipitator that can trap airborne particles. Oreck advertised these products through long-form infomercials, short-form spots, and Web and print ads.

Oreck also sent materials to retail stores, for the stores to use with the public, thereby allegedly giving those stores the “means and instrumentalities” by which to commit deception.

According to the FTC, Oreck’s advertising and marketing materials had misrepresented, either “expressly or by implication,” that these products would prevent or at least substantially reduce the risk of catching the flu, that they would prevent or at least substantially reduce other illnesses caused by viruses, bacteria, molds, and allergens, and that they would eliminate all or virtually all common germs and allergens.

The FTC also alleged that, in its ads, Oreck had conveyed the claim (i.e., as an “establishment claim”) that some of the foregoing benefits actually have been proven by scientific lab testing. According to the agency, however, Oreck’s testing was not “competent and reliable scientific evidence.” Better testing would be needed.

Unfortunately, for those who would like to learn from what Oreck did or didn’t do, the problem is that, when the FTC settles with an advertiser like this, the agency usually doesn’t tell the world what kind of testing the advertiser did have; nor does the agency tell the world exactly why, in the eyes of the agency, the advertiser’s testing wasn’t good enough. That’s the case with the Oreck settlement, as well: it just doesn’t say.

All we know is that the testing behind Oreck’s claims, such as its claim that its Halo light chamber “killed up to 99.9 percent of bacteria exposed to its light in one second or less,” whatever that testing was, apparently wasn’t good enough for the FTC. (Oreck’s use of a specific percentage like that, in its ads, likely made the quality of Oreck’s testing more of a target for the agency.)

The FTC also didn’t like all of Oreck’s references to diseases such as the flu, including an Oreck print ad that showed someone wearing a scary germ warfare type mask along with the tag line, ”Want a New Way To Help Battle The Flu?”

As a result, for each item that was purchased, every identified bona fide customer now stands to receive a refund of about $25. It’s less than the affected customers paid Oreck to buy these products, but it’s a start.

I’m sure many of you are wondering, what happens if money is left over and goes unclaimed? As is customary, the consent decree provides that the FTC is free to deposit any remaining funds with the U.S. Treasury as disgorgement of profits.

Gregory J. Sater is a partner in Venable LLP‘s Advertising, Marketing and New Media Group. He can be reached at (310) 229-0377 or [email protected].

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