Consumer Advertising Law Blog

Government Attempts to Stop Facilitating Identity Theft

A recent bipartisan bill, known as the Social Security Number Privacy and Identity Theft Protection Act of 2009 (H.R. 3306), is the latest Government attempt to curtail identity theft. The bill would prohibit Federal, State and local governments from selling Social Security numbers (SSNs), displaying SSNs to the general public, displaying SSNs on checks issued for payment or on identification cards issued to employees, employing prisoners in jobs that provide them with access to SSNs, and transmitting the SSNs over the internet without encryption. The bill would also forbid the private sector from doing all the same things, and limit truncated SSNs to the last four digits.

The punishments for violating this potential law would be quite harsh. Repeat offenders who try to sell, purchase or misuse the SSN could face up to ten years in prison, and Social Security Administration employees who sell or transfer SSNs potentially face prison sentences of twenty years. But why all this fuss about social security numbers?

Well, although originally a humble group of nine digits designed to track individuals for retirement benefits, the social security number has now become a de facto national identification number, required to obtain a driver’s license, submit a loan application, apply for a job, donate blood, and a host of other things. Because SSNs are so frequently used by businesses to authenticate identity, a thief that manages to get his hands on an individual’s SSN may be able to wreak havoc. The stories of identity theft victims tell of mysterious credit card bills, loans taken out in their name, difficulties repairing credit, and substantial, continuing anguish. To make things worse, in many cases, the Government might have been an unintentional accomplice.

Despite the SSN being a portal into identity theft, Federal, state and local governments have been often making SSNs easier to steal. Until recently, the Social Security Administration displayed the recipient’s full SSN on the millions of benefit statements mailed each year. Tens of millions of ID cards for Medicare, the Department of Defense and Veterans Affairs display the social security numbers of the card holders. State and local governments are even worse. The GAO estimates that 85% of the largest counties in the US either display records that may contain SSNs online, or offer them in bulk sales. These records include divorce settlements, property liens, and mortgage documents, all with the consumer’s SSN potentially in full display. Why bother trolling through someone’s dumpster to steal an identity when the government has so graciously provided all the tools you need online?

Every year, up to 10 million Americans are victims of identity theft, costing consumers $50 billion dollars annually. Identity thieves employ a variety of methods to steal identities, from simply swiping mail or dumpster diving to “phishing,” where thieves solicit personal information through emails disguised as coming from the consumer’s financial institution. But no matter the method, identity thieves everywhere benefit from the ubiquity of the social security number. Whether or not this bill will change that remains to be seen.

- Nancy Perkins

No Preemption Protection in Pomegranate Case

A recent court order in the case of Pom Wonderful LLC v. Ocean Spray Cranberries Inc. is notable for more than advancing the nascent field of pomegranate juice jurisprudence. The July 17th order, issued by Judge Pregerson of the U.S. District Court for the Central District of California, is a reminder to companies that courts are not willing to preclude a claim on preemption grounds merely because the claim involves an area regulated by the FDA.

The case involves false advertising and unfair competition claims made under the Lanham Act and California law by Pom Wonderful (a pomegranate juice purveyor) against Ocean Spray (purveyor of many juices). At issue is Ocean Spray’s “Cran-Pomegranate” juice drink. Pom complains that Cran-Pomengranate, unlike its own juice, contains less pomegranate, yet still claims all the health benefits. Pom believes that it is at a disadvantage because Ocean Spray can charge less for its product because it is a blend and alleges that consumers are misled into believing the products are the same. This is hardly the first time Pom has made such claims against competitors.

In response, Ocean Spray filed a motion to dismiss, arguing that Pom’s Lanham Act claims were preempted by the Federal Food, Drug and Cosmetic Act (FFDCA) and FDA regulations. In its July 17th order, the court disagreed. Under precedent, Lanham Act claims are barred when private litigants ask the court to determine “how the FDA will interpret and enforce its own regulations.” However, if the essential claim is “readily verifiable” by the court, without a factual determination or regulatory interpretation by the FDA, it can proceed.

The court felt that Pom’s claims fell into the latter group. Despite the FDA’s numerous regulations on the labeling of food items, Judge Pregerson stated that “determining the primary ingredients of the [Cran-Pomegranate] and whether [Ocean Spray’s] representations are misleading is not contingent on a decision of fact by the FDA or the enforcement of its regulations.” Judge Pregerson was influenced in this conclusion by the lack of an official FDA definition for a “false or misleading” label. The court also dismissed claims that the FFDCA preempted Pom’s claims under California law.

A prior, nearly identical case, reached a similar outcome but employed an entirely different rationale. In Pom’s lawsuit against Coca-Cola (Pom Wonderful LLC v. The Coca-Cola Company), another court denied Coca-Cola’s motion to dismiss because it felt Pom’s Lanham Act claims touched upon advertising and marketing, which were beyond the scope of FDA regulations, but also indicated, in dicta, that Pom’s labeling claims might be preempted by FDA regulations.

The fact that courts in two similar cases used differing rationales to dismiss FDA preemption claims should be noted. These cases are hardly Wyeth v. Levine, but they show that, at least when pomegranate juice is involved, courts are less willing to swallow the FDA preemption argument.

BCP Director on Guides Revisions, Advertising Enforcement

On Wednesday, the FTC’s BCP Director, David Vladeck, testified before a Senate subcommittee responsible for consumer protection issues about deceptive advertising and the FTC’s enforcement and education efforts. We think of particular interest to our readers, the Director’s oral testimony provided updates on the state of the FTC’s revisions of its Endorsements and Testimonials Guides and Green Guides. (Click here for video of the entire hearing.)

The Director addressed two controversial issues that have emerged from the Endorsements and Testimonials Guides revisions (which we have previously blogged about here, here, and here). First, he explained that eliminating the “results not typical” safeguard will simply place advertisers using testimonials on equal footing with other advertisers who currently cannot take advantage of the safe harbor. Thus, advertising using testimonials will have to meet the same substantiation standards as any other advertising. Second, the Director briefly addressed the proposal that consumer bloggers be required to disclose any compensation they receive from advertisers. Although he stated that he believed this was the right rule, he did not strongly commit, stating that the FTC will carefully consider comments before finalizing the new guides.

The Director also provided a brief update on the status of the Green Guides revisions. The FTC recently got clearance from OMB to conduct its proposed consumer perception study, the results of which are expected in the Fall. With this baseline data on how consumers interpret green claims, the proposed revised Guides may be out by the end of the year.

The Commission’s prepared written testimony provides a good overview of its advertising agenda, which will focus on a few areas of particular concern:

• Health and safety claims, such as weight loss, cold prevention, and cancer cure claims;

• Endorsements and testimonials;

• Green claims; and

• Scams exploiting the economic downturn.

 Of note, the testimony states that deceptive weight loss claims would continue to be a top priority and that the FTC would increase its scrutiny of health claims in food advertising.

The written testimony also laments that the FTC’s funding has not kept pace with the increasing complexity of advertising claims and media, but praised Staff for their ability “to do more with less.”

- Matt Shultz

Read This Blog and Save Up To an Unbeatable $700!!!

If you aim to woo consumers and their recession limited spending dollars with low prices, take extra care with substantiating your comparative pricing ads, make sure any needed disclaimers are clear and conspicuous and verify that any survey evidence is reasonably current.

The National Advertising Division recently reviewed the complaints of one of Wal-Mart’s local competitors about several of Wal-Mart’s value-focused ad campaigns: one of the challenged ads told consumers they could save $700 a year by purchasing their groceries at Wal-Mart, and another slogan referred to the store’s “unbeatable prices.” After considering the complaints, the NAD recommended modifications to the “unbeatable prices” campaign and the discontinuation of the $700 savings claims.

“Unbeatable Prices”
(along with the disclosure: “We’ll match the price of any local competitor’s printed ad for an identical product. See manager for restrictions.”)

The challenger (H.E.B.) conducted a double-blind survey of Texas (where H.E.B. is located) shoppers, from which its survey expert concluded a statistically significant number of respondents took away a false message that Wal-Mart’s prices were the lowest. Setting aside problems with the survey method (e.g., it was limited to Texas while the Wal-Mart ads were national), the levels of confusion the survey showed were typically about 12%. NAD disagreed with the challenger’s position that where the test group demonstrates a higher level of confusion than the control group that a false message is conveyed. NAD stuck to its general presumption that studies must show a 20% or greater confusion rate for a conclusion that an ad is misleading. After it set aside H.E.B.’s survey as unreliable, NAD used its own expertise to step into the shoes of a reasonable consumer and concluded the plain meaning of Unbeatable Prices is a parity message, not a lowest price message, though it recommended the disclosures regarding price matching appear in larger size font with more contrasting background and placement closer to the main claim.

“Let’s say you spend $100 a week at the supermarket on these kinds of items. If you bought these kinds of groceries at Wal-Mart, you could save on average over $700 a year.”

This claim was based on a Global Insights study (Study available here) from a 2007 survey of packaged food and compared prices for categories of goods, not particular products (e.g., toilet paper of any variety, not just Charmin prices). It was not limited to pricing in supermarkets but included small and specialty retailers. For all of these reasons, NAD recommended discontinuation of this claim. The disclaimer of “local savings may vary” and the promise of “average” savings did not save Wal-Mart here, as NAD concluded that use of the word “you” “conveys the message that the advertised savings are obtainable by any given viewer now (not in 2007) regardless where he or she happens to live.”

So are you not sure if this blog post actually saved you $700 or that it was unbeatable? Even so, if we save you some time from defending an NAD pricing claim challenge, we think that we can substantiate that it is a real bargain!

The Current State of Play for BA

In an earlier blog entry, we reviewed the FTC’s Online Principles for Behavioral Advertising, and came to two conclusions: the FTC was continuing to rely on industry self-regulation, and it appeared likely either a new FTC would reverse course, or Congress would enter the fray. Five months, three more Congressional hearings, a new FTC Chairman, and another industry effort at a self-regulation regime later, and the only question left appears to be what legislation is going to look like.

First, for background, Behavioral Advertising (BA), is the “tracking of a consumer’s activities online - including the searches the consumer has conducted, the web pages visited, and the content viewed - in order to deliver advertising targeted to the individual consumer’s interest.” (as defined by the FTC). In 2007, the FTC issued a draft set of principles for industry self-regulation. The House and Senate held a series of hearings in 2008 decrying some of the bad apples in the online BA world - those using Deep Packet Inspection (DPI) to potentially review the content of what a user sends or receives in order to better target advertising. The Industry, or at least the Network Advertising Initiative (NAI), responded by tightening the principles underlying its self-regulatory code of conduct, in December, 2008, beating the FTC to the punch by barely two months.

Since then, a lot has happened that suggests Congress will be taking its turn by issuing general privacy legislation addressing the issue, which may provide some absolute protections, and give both the FTC and FCC greater authority to regulate in this area. So, what happened?

Pet Joint Spray: It’s a Pain in the Ads, But NAD Stickler for Substantiation Prior to Making Claim

For the second time, an NAD compliance proceeding was held to evaluate the advertising of Dr. Frank’s Joint Pain Relief for Dogs and Cats.  In July 2008, NAD concluded that Dr. Frank’s did not provide adequate evidence substantiating its claims that a simple spray of the product in pets’ water would alleviate their joint pain.  NAD recommended that various claims made by Dr. Frank’s about the efficacy of the product be discontinued.  Dr. Frank’s agreed to implement NAD’s recommendations.

In an initial compliance proceeding, NAD noted that Dr. Frank’s ads were still being shown on television and were still unchanged on the website.  Dr. Frank’s informed the NAD that compliance was in progress.  NAD accepted the explanation and closed the compliance proceeding.

Fast forward several months.  Imagine the surprise of NAD when an unaltered Dr. Frank’s commercial appeared on television.  In response, NAD instigated a second compliance proceeding.  Dr. Frank’s stated that the commercial was actually “new” because it was based on new scientific developments and a recent study. 

In its case report, NAD noted that it did a side-by-side comparison of the two advertisements, and that they were, in fact, identical.  NAD also pointed out that it is “black letter advertising law” that substantiation must exist at the time ads are disseminated (and cited six of their own cases for the proposition).  Therefore, Dr. Frank’s after-the-fact study was useless for purposes of NAD compliance.  As a result of the advertiser failing to change its ads as promised, NAD stated that it would refer the matter to the appropriate government agencies for potential enforcement action. 
 
Advertisers should take special notice of NAD’s position:  even if an advertiser is able to substantiate a claim going forward, it doesn’t matter for purposes of NAD enforcement and recommendations for government intervention if the ad ran prior to the availability of the substantiation.  Similarly, the FTC’s policy statement regarding advertising substantiation states that firms should have substantiation before disseminating a claim and that “as a matter of law, firms lacking a reasonable basis before an ad is disseminated violate Section 5 of the FTC Act and are subject to prosecution.”  The FTC maintains that additional substantiating evidence may be considered, but cannot be used as a substitute for an advertiser’s prior substantiation.  

Federal Court Refuses To Redeem Gift Card Complaint

In an important win for companies that issue gift cards in California, a United States District Court recently threw out a class action complaint alleging that it was a violation of California law to refuse to redeem a gift card for cash. The plaintiff had sued under California’s notorious Unfair Competition Law, which allows a plaintiff to sue for any “unlawful” business practice by “borrowing” violations of other laws, even if the underlying law does not provide for a private right of action. The law that plaintiff “borrowed” to try to support his claim was California Civil Code section 1749.5(b)(1), which provides that “any gift certificate…is redeemable in cash for its cash value, or subject to replacement with a new gift certificate at no cost to the purchaser or holder.”

 

The Defendant, a consumer product company that issues gift cards, filed a motion to dismiss, and the court granted it for two reasons. First, the court rejected plaintiff’s argument that the consumer had the option of either getting cash back or a replacement card, and instead held that the issuer had this option. Second, the court held that even if plaintiff could establish a violation of the statute, he lacked the injury necessary to maintain a claim under the UCL. The court held that plaintiff did not lose any money or property due to the claimed violation, because he still had a gift card with which he could buy merchandise in an amount equal to the full value of his gift card.

 

The court’s ruling, while not binding on other courts, should nevertheless be helpful to other consumer companies. It resolves in defendants’ favor the previously unresolved question of whether section 1749.5(b)(1) requires companies to essentially act as ATM machines for anyone holding a gift card. And it provides a federal court’s view on an important UCL issue: Whether a person suffers a loss of money or property sufficient to bring a claim under the UCL whenever he parts with money due to a UCL violation, or whether he must also establish what plaintiff could not prove here, which is that he did not receive a product of equal value in return for his money. This issue is currently before the California Supreme Court in Kwikset.

- James Speyer

Proposed Consumer Financial Protection Agency: Taking Over from the FTC and a Whole Lot More

Several weeks ago, on June 17, 2009, the Obama Administration unveiled details of its proposal to reform financial regulation. The proposal, which has been highly publicized, recommends that Congress and regulatory agencies adopt a comprehensive series of changes that would increase the role of the federal government in almost every aspect of the financial services industry. For example, if adopted as proposed, the proposal would:

• Create several new federal agencies, offices, and councils, including a new Consumer Financial Protection Agency (CFPA), dedicated to policing consumer financial products and services
• Install the Federal Reserve as an overarching regulator for any type of financial firm identified as being systemically significant, giving it authority over certain entities that historically have been subjected to little or no oversight
• Impose heightened consolidated supervisory standards, including capital, liquidity, and prudential requirements, on all large interconnected financial firms
• Drastically scale back the preemption powers of federally chartered financial institutions
• Regulate the markets for over-the-counter (OTC) derivatives and impose requirements on the securitization of debt
• Require Securities and Exchange Commission (SEC) registration of advisers to hedge funds, venture capital funds, and other private investment funds

The first part of the proposal to be fleshed out was the proposed new CFPA through the release by the Administration on June 30 of proposed legislation to establish the agency. The CFPA is designed solely to regulate the offering of consumer financial products and services (except as to instruments regulated by the SEC or CFTC). Its proposed authority is very broad, with a proposed mandate to promulgate, interpret and enforce rules implementing all existing federal consumer financial services and fair lending laws. More importantly, its authority would extend not only to banks, thrifts and credit unions, but also to mortgage lenders, title insurers, money service businesses, marketers and issuers of prepaid cards or stored value, consumer reporting agencies, debt collectors, certain lessors, certain investment advisors, and those that engage in financial data processing. To do that, the proposed legislation transfers all of the authority over these products and services from the federal bank regulatory agencies and the FTC to the CFPA. While the FTC would retain some back up authority (as would the bank regulators) this will be a substantial change in the regulatory landscape.

Privacy Lawsuit Stimulates Discussion

A registered nurse has filed a class action lawsuit in the Southern District of New York claiming that certain provisions of the American Recovery and Reinvestment Act (“ARRA”) (the new stimulus legislation enacted in February) violate the privacy rules laid out in the Health Insurance Portability and Accountability Act (“HIPAA”) and the federal Privacy Act.The complaint can be found here.

Beatrice Heghmann of Durham, North Carolina claims that, pursuant to ARRA, the White House Office of Health Reform is working with the Department of Health and Human Services (“HHS”) to design a new system that would create electronic health records for millions of Americans by 2014. According to Heghmann’s complaint, this planned system poses a major threat to individual privacy: she claims individuals’ personal health information (“PHI”) could be just a “mouse click away from being accessible to an intruder.”

Heghmann takes issue with ARRA’s provision allowing HHS to determine what constitutes the “minimum necessary” amount of PHI allowed to be disclosed under HIPAA, as well as how best to implement “de-identification” of protected information. According to Heghmann’s complaint, HHS Secretary Kathleen Sebelius is “empowered to totally vitiate the privacy provisions under HIPAA and link medical information contained in Plaintiff’s personal health record directly to Plaintiff and all others similarly situated.” Heghmann argues that the $22 billion earmarked for the electronic registry is merely a vehicle to obtain access to this confidential health care information.

Heghmann is seeking certification for a class of similarly situated individuals and is requesting an injunction to prevent the government from disbursing the $22 billion budgeted for the Electronic Health Records System.

As our readers might remember, we’ve blogged before about the importance placed on the handling of PHI and HIPAA’s privacy provisions (related blog post here). In ARRA, Congress did impose significant new privacy and security requirements on HIPAA-covered entities and their business associates, precisely to protect against the kind of risks Heghmann’s complaint highlights. Whether such a complaint could create a barrier to the Administration’s goals for electronic health records will be an important question; at the very least, the complaint will like cause HHS to lean further toward strict implementation of ARRA’s privacy provisions in its forthcoming regulations.

- Nancy Perkins

FTC Helps Vulnerable Consumers Declare Independence From Fraud

Several articles recently have addressed how mainstream advertisers have become more aggressive as they compete for a shrinking pool of consumer dollars.  The same is true it appears for outright fraud where there were some enforcement fireworks this week.  On July 1st, the four FTC Commissioners voted to put their John Hancocks on a series of enforcement actions (15 FTC cases, 44 actions initiated by the Department of Justice, and the involvement of 13 other states and the District of Columbia) given the codename "Operation Short Change."

The enforcement actions cover a wide variety of allegedly fraudulent activity.  Several companies and individuals have been accused of marketing get-rich-quick schemes and false job opportunities.  Additionally, several other companies are accused of conning unsuspecting individuals by offering alleged opportunities to get the government to give them lots of Franklins, Washingtons, Jeffersons, Hamiltons and Madisons.  Finally, the FTC has targeted a debt reduction scam that uses the Google brand to convince people to divulge personal financial information and then takes liberty with that information after they have purchased cheap consumer goods.

Expect more aggressive and quick action by the FTC in coming days.  And, ever wonder about some of those opportunities that pop up or spam you and Blockbuster happens to be all out of copies of Born on the Fourth of July?  You can check out this classy  FTC video which flags some common warning signs and gives an insider look at Get Rich Quick schemes.

Happy Independence Day!

NAD Referees Dell-Apple Battle Over Green Claims

NAD recently issued a decision regarding Dell’s complaints about Apple’s green claims for its MacBook computers (the press release can be found here). The decision came after Dell instigated a battle with Apple, first in the blogosphere, then in the more formal forum of NAD. Dell’s complaint centered around Apple’s claims of having “the world’s greenest family of notebooks” and being the “world’s greenest.” Dell also had an issue with Apple using EPEAT ratings as the basis for their claims.

NAD issued a “halvsies” decision for both Dell and Apple. NAD acknowledged EPEAT as “recognized industry methodology” and that the information Apple touted should be freely communicated to consumers.

In a win for the Dell team, NAD did suggest that Apple alter its “world’s greenest family of notebooks” claim to make clearer that the basis of the comparison is between MacBooks and competitors’ notebooks rather than a comparison of entire product lines. Additionally, NAD suggested that Apple stop calling itself the “world’s greenest,” gently noting that the Toshiba Portégé notebooks actually have higher EPEAT ratings than the MacBooks. The NAD's decision once again demonstrates how difficult it can be to substantiate broad environmental claims.

The complaint by Dell comes on the heels of several green issues making headlines. A recent House subcommittee hearing entitled “It’s Too Easy Being Green” sought to address the onslaught of environmental marketing. At the hearing, FTC Bureau of Consumer Protection’s enforcement director James Kohm cautioned that, while there are plenty of valid, substantiated green claims out there, there is also a whole group of greenwashing bad apples.

FDIC Cranking Up the Consumer Credit Crack Down on Unfair and Deceptive Practices

The FDIC has stepped up its enforcement efforts of state-chartered institutions alleged to be engaged in unfair and deceptive practices in connection with credit card solicitations, recently announcing the issuance of two cease and desist orders - one against American Express Centurion Bank and the other against Advanta Bank Corp.

The order issued against American Express Centurion Bank alleged that the bank failed to provide timely notices to card-holders that their credit lines were being reduced at the same time that the bank sent the card holders convenience checks (the press release can be found here). Consequently, when consumers tried to use the checks, believing they had credit limit room, they were dishonored, resulting in the consumers incurring bounced check fees, which the FDIC alleged was an unfair practice under Section 5 of the FTC Act. The bank agreed to make restitution of $160 per dishonored check, or an aggregate of approximately $3 million, as well as to implement new procedures for reviewing credit limits and notifying consumers of changes to their limit. The bank also agreed to implement procedures whereby a customer could obtain preauthorization to use a convenience check for a specified dollar amount for a specified time period. In addition, the bank was ordered to pay a civil money penalty of $250,000.

The order issued against Advanta Bank Corp. (which ceased issuing cards in May 2009) alleged that the bank marketed a cash back reward feature on its business credit card accounts (the press release can be found here). Due to the tiered structure of the cash back payments, however, the FDIC alleged that the advertised percentage cash back was not available for all purchases, and indeed, the agency alleged that it was effectively impossible to earn the stated percentage of cash back reward payments. The FDIC thus concluded that the Bank's solicitations were likely to mislead a reasonable customer and that the representations were material and that therefore, the Bank engaged in a pattern of deceptive acts or practices in violation of Section 5 of the FTC Act.

FTC Prepares to Crackdown on Conflicts of Interest in the Blogosphere

Controversy is brewing over whether the FTC will exercise its enforcement discretion and go after bloggers for violations of the current testimonial guides or the revised testimonial guides once they are approved (likely later this summer). The issue is whether a blogger who is compensated by a manufacturer should disclose the connection when recommending the product. The compensation can be in the form of cash, advertising dollars or products, such as a free computer or a free vacation. Does compensation in any form affect the bias of the blogger such that a failure to disclose violates Section 5? Should the concern be limited to cases of cash payment but not free product? Does it depend on the total value of the compensation, whatever the form?

The FTC’s position in its proposed revisions to the testimonial guides is that consumers should be notified if bloggers receive compensation or free products to post reviews and that failure to disclose can result in Section 5 liability for marketers and bloggers alike. The examples the FTC’s gives of conduct requiring disclosure include a college student reviewing video games on her blog who gets free copies of games to review from manufacturers and an employee of an MP3 player device company who posts favorable comments about his company’s products on a music discussion chat board (apparently whether or not encouraged to make such comments by his employer). Some suggest this is simply a logical extension of the rules that apply to testimonials in print and tv ads to the online marketing community and will provide ground rules to facilitate making blogging endorsement deals more common. Others suggest more clarification should be given as to the FTC’s positions on when a marketer can be liable for a blogger’s lack of disclosure, that the FTC has not fully considered the First Amendment issues with its position and that workshops should be held or comments solicited as to whether there is a meaningful distinction between significant compensation and small amounts of free product with limited value.

In the meantime, if you blog about products or services, and receive any sort of compensation for your words of wisdom or if you market a product or service and provide any sort of compensation to bloggers, the dot.com disclosure guidance is recommended reading.

CPSC Takes Key Step Toward Registration Requirement for Durable Infant and Toddler Products

On Monday, June 29, CPSC published a Notice of Proposed Rulemaking (“NPR”) in the Federal Register, proposing and requesting comments on a rule requiring “manufacturers” (defined in the proposed rule to include “importers”) of “durable infant or toddler products” to (a) provide consumers with registration forms with each such product, (b) keep records of consumers’ contact information, and (c) permanently mark their products with identifying information. The NPR can be found here.

In addition to setting forth the statutory requirements of section 104(d) of the CPSIA, the proposed rule:

• specifies the required text and format for registration forms;
• specifies the required text for registration websites;
• specifies the content of the product and manufacturer’s contact information that must be permanently marked on the product, and requires the permanent marking to be “in a location that is conspicuous to the consumer;” and
• sets an effective date of 180 days after publication of a final rule and specifies that the requirements shall apply to durable infant or toddler products manufactured on or after that date.

The sample registration card included in the proposed rule is identical to the sample that the CPSC staff provided in its briefing package to the Commission on May 20.

The Commission requests comments by September 14 on all aspects of the proposed rule, and specifically on the following issues:

• what products are included in the definition of durable infant or toddler product;
• whether the Commission should prescribe the format of the registration cards or allow flexibility;
• the interplay between the permanent identification marking required to be placed on the product and the tracking label requirement;
• the party best situated to conduct the registrations (as among the manufacturer, importer, private labeler and retailer);
• the practical and economic impact of requiring an additional section on the registration form—one section for consumers to mail to the manufacturers and the other section for consumers to keep;
• allowing the consumer to e-mail registration information as an option;
• whether requirements on the ease of use and navigation of Web sites are necessary; and
• appropriateness of the proposed effective date.

- Eric Rubel