Class-Action Lawyers Are Often a Forgotten Lion27 Jan, 2011 By: Gregory J. Sater
As a direct response marketer, you’re probably acutely aware of the Federal Trade Commission (FTC) and of the fact that it can make your life miserable by coming after you for false advertising. If you’re really dialed in, maybe you also try to keep up with the latest FTC cases as they come out. You’re like the gazelle that keeps a watchful eye on the cheetah 100 yards away. But did you know that, actually, you stand a much greater chance of being sued for false advertising by a private class action plaintiff’s attorney than you ever have of hearing a peep from the FTC?
It’s true. There are only a few attorneys at the FTC, but there are countless class action plaintiff’s attorneys out there, eagerly watching TV, listening to the radio and scouring Web sites for any advertising claim that they can allege to be false or deceptive. What’s in it for them? Significant legal fees. When they win such a case, or settle one, that’s what they get because it’s deemed that they’ve “benefited the public interest.”
Everyone knows The Beatles’ song “All You Need Is Love.” I think consumer class action lawyers sing a different tune: “All you need is one.” What I mean is, the way class actions work, all they need is one person who bought the product to be the “class representative” and testify that they bought it after seeing or hearing and relying on your advertising claim.
Let’s say the customer paid $19.95. No big deal. But if you multiply that by all consumers in the class, each of whom potentially could be awarded restitution (meaning what they paid for the product) or damages – then add in legal fees for the plaintiff’s law firm and your legal fees – and now you’ve got a major threat in front of you. These people aren’t reporting up the ladder to appointed Commissioners, like the FTC is, and they aren’t as interested as the government is in getting you to stipulate to an injunction to set a precedent for other marketers to see. These people want your money! I suggest you take a look at www.classactionconnect.com for example. You were so worried about the cheetah, you forgot about the lion.
Not a day goes by without one of these cases being filed. Want an example? One was just filed against New Balance. Like several other shoe companies, it sells “toning” shoes. You’ve probably heard of these shoes: They have a novel shape that, according to the ads, causes greater muscle activation than a regular shoe. New Balance says its shoes cause “14-percent increased calf activation,” “16-percent increased hamstring activation” and “10-percent increased calorie burning.” In the class action, one person, Bistra Pashamova, is named as the class representative. She says these advertising claims were not properly substantiated, and she seeks millions of dollars in restitution or damages for everyone who bought them.
So remember, don’t just keep an eye on the FTC. There are other big cats out there, too.
Gregory J. Sater is a partner in the Advertising, Media and Intellectual Property Group at Los Angeles-based Rutter Hobbs & Davidoff. He can be reached at (310) 286-1700 or via E-mail at [email protected]