May 28, 2013
An interesting performance claims advertising claims case caught my eye today in my daily media sweep. According to the CBC, HuffPost and others, Kellogg has agreed to pay $4 million to settle a class action lawsuit relating to some of its former marketing claims for Frosted Mini-Wheats.
How could cereal claims lead to a class action suit you might ask? According to Kellogg (see: Mini-Wheats Class Action Settlement), the lawsuit claimed that Kellogg “falsely advertised that its Frosted Mini-Wheats cereal improved kids’ attentiveness, memory and other cognitive functions to a degree not supported by competent clinical evidence.”
While denying any liability, Kellogg agreed to make changes to its Frosted Mini-Wheats marketing and labelling and make cash payments to class members. Some of Kellogg’s former claims have been changed to describe the fact that Mini-Wheats are full of fiber and “fill you up first thing and help keep you focused all morning.” Still sounds great! (I myself used to love Mini-Wheats.)
In Canada, in addition to general misleading advertising provisions and sections that regulate or prohibit specific types of advertising claims, the Competition Act also contains a standalone provision that prohibits performance claims that are not based on an “adequate and proper test”. In this regard, the Competition Act prohibits representations made to the public, in the form of a statement, warranty or guarantee, of the performance, efficacy or length of life of a product that is not based on an adequate and proper test. Any testing or verification must be conducted before a performance claim is made and the onus, if challenged, is on the person making the claim to show that it is adequately supported.
Some of the types of performance claims that may fall under this provision include claims relating to the performance of a product (e.g., speed, reliability, sales performance, etc.), comparative advertising (e.g., where one firm’s product’s performance is being compared to another company’s products or services) and claims relating to preferences or perceptions.
While Canada’s Competition Tribunal has set out a non-exhaustive list of factors relevant to determining whether testing is “adequate and proper”, testing does not need to be 100% reliable or be the best scientific testing that could have been performed (i.e., it has been held that testing does not need to meet a test of certainty).
For anyone following the ongoing Rogers performance claims case (see e.g., here and here), however, there can be significant debate over whether testing is adequate and proper and the appropriate industry standard of testing to apply.
Given that the Competition Bureau has challenged performance claims in a wide variety of industries over the years, including in relation to weight loss products (diet patches, skin care cream, sauna belts, weight loss devices and natural products, etc.), clothing (alleged therapeutic benefits of some types of clothing), fuel saving devices, chimney cleaning products, UV ray protection, anticorrosion devices, disease cures (e.g., cancer, AIDS, etc.), therapeutic benefits of tanning and wireless, among others, it is incumbent on companies and their advisors to ensure that adequate testing is conducted before performance claims are made.
For more about Canadian misleading advertising laws and performance claims see: here and here.
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I am a Toronto competition and advertising lawyer offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. I also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
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