Stay ADvised: 2025, Issue 16

NAD Weighs in on Reference Pricing for Scales

The National Advertising Division (NAD) recently issued a decision addressing alleged false reference pricing claims related to body weight scales. The case arose from a challenge by Etekcity against competitor Renpho, focusing on Renpho's use of "strikethrough" prices and "limited time" offers in online advertisements.

Etekcity challenged Renpho's reference pricing marketing tactic of featuring sale prices beside "strikethrough" prices on various merchant pages and on its own site. Etekcity argued that Renpho's marketing for its Elis 1 Smart Scale misled consumers by implying that the sale price reflected a genuine discount from a bona fide "original" price. According to the challenger, data collected over the course of a year showed that Renpho's reference prices did not represent actual, sustained prices at which the product was sold. Instead, Etekcity contended that the strikethrough prices were artificially inflated and that the "limited time" offers were not truly time limited.

In response, Renpho maintained that its pricing practices were not deceptive. The company asserted that its listed prices complied with merchant platform protocols and were comparable to, or lower than, prices charged by competitors for similar products. Renpho also claimed that its reference prices were validated against recent sales data provided by online merchants.

NAD reaffirmed that advertisers have discretion to determine the basis for comparison in their reference pricing—but only if the nature of that comparison is clearly disclosed in the ad. However, NAD emphasized that the comparison price cannot be an "outlier." To be valid, a reference price must reflect a bona fide price—either one at which an appreciable number of sales were made or one that was offered for a significant period of time.

After reviewing the evidence, NAD found no indication that Renpho had made substantial sales at the strikethrough price or had offered the product at that price for any meaningful duration. Similarly, NAD concluded that the "limited time" deal was not, in fact, limited in duration. Etekcity's data demonstrated that the purported sale price was effectively the product's regular selling price.

Key Takeaways

False reference pricing has become an increasingly common issue in false advertising litigation, though it remains relatively uncommon in NAD proceedings. This decision underscores NAD's consistent position: merchant pricing policies do not override NAD's standards for truthful reference pricing.

Advertisers must ensure that any "original" or "list" price used in comparison is grounded in reality—reflecting either the actual price at which a meaningful number of sales occurred or a genuine offer price maintained for a significant time. Simply relying on merchant or platform pricing conventions will not satisfy NAD scrutiny.

Skechers Faces Lawsuit Over Allegedly Deceptive Email Subject Lines

Plaintiffs are increasingly targeting advertisers for allegedly misleading consumers about "limited time" sales—and now, email marketing practices are under scrutiny.

A recent class action lawsuit accuses Skechers USA Inc. of violating Washington's Commercial Electronic Mail Act (CEMA) by sending promotional emails with false or misleading subject lines. CEMA prohibits sending commercial emails that contain "false or misleading information in the subject line" and allows for a private right of action, including statutory damages of $500 per unlawful message.

Plaintiffs allege that Skechers repeatedly sent consumers emails touting limited-time promotions that were false "in an attempt to drive sales by creating a false sense of urgency." According to the complaint, Skechers allegedly used subject lines such as "3 DAYS ONLY" and "Long Weekend Savings Ends Tonight" to create a false sense of urgency and drive sales. Plaintiffs claim that these offers were not actually time-limited, citing examples in which the same promotions were extended beyond their purported expiration dates—such as follow-up emails stating, "Surprise! Long Weekend Savings Extended for Today."

The lawsuit further alleges that Skechers routinely planned these "extensions" in advance, meaning the sales were never truly limited-time offers. Plaintiffs contend that such practices mislead consumers and violate both CEMA and Washington's Consumer Protection Act, which prohibits unfair or deceptive acts in commerce.

As many may know, the Washington Supreme Court held earlier this year that an email may violate CEMA even if the subject line does not mislead consumers about the email's overall purpose—so long as it contains any false or misleading information.

Notably, Skechers has faced similar scrutiny before: earlier this year, the company faced a separate lawsuit filed in California in which it was accused of using false reference prices in online advertising, though that case was voluntarily dismissed in March.

Key Takeaways

Advertisers conducting email marketing campaigns in Washington should take special care to ensure that subject lines accurately reflect the content and timing of promotional offers. CEMA's broad reach means that even minor inaccuracies in a subject line may trigger statutory liability.

That said, marketers can still create urgency in email campaigns. The key is truthful urgency: if an offer says it ends tonight, it should actually end tonight. Extending a sale is permissible, but only if the extension is genuine and not part of a preplanned strategy to mislead consumers.

FTC and DOJ Sue Sendit App, Alleging Deceptive Practices and COPPA Violations

The Federal Trade Commission (FTC) and Department of Justice (DOJ) have jointly filed a complaint against the social media messaging app Sendit, alleging that the company deceived users into purchasing premium subscriptions and unlawfully collected personal data from children. Sendit, operated by Iconic Heart Holdings, is a social platform popular among children and teenagers. The app allows users to interact with friends or meet new people by posting question prompts such as "ask me anything?" and receive anonymous responses from peers.

According to the complaint, Sendit and its parent company engaged in deceptive practices in violation of the FTC Act, the Children's Online Privacy Protection Rule (COPPA), and the Restore Online Shoppers' Confidence Act (ROSCA).

The government alleges that Sendit knowingly collected personal information from children under 13 without obtaining verifiable parental consent. COPPA requires online services directed to children—or those that know they are collecting data from children under 13—to secure parental permission before collecting, using, or sharing personal information. The FTC and DOJ claim that Sendit gathered usernames, phone numbers, birthdates, photos, and other identifying details from children who self-reported being under 13, without providing parental notice or obtaining consent.

The complaint further alleges that Sendit leveraged dark patterns and falsely marketed its premium "Diamond Membership" subscription service as a way for users to "reveal who sent" romantic or sexual anonymous messages. In reality, the FTC alleged that these were often "fake messages" generated by the app and sent in order to lure users to sign up for the subscriptions, costing about $9.99 a week. Even after subscribing, users still could not identify the senders and the app did not distinguish between real and fake messages.

Finally, the FTC and DOJ claim that Iconic Heart failed to clearly disclose the auto-renewal terms of its subscription program, violating ROSCA, which requires clear notice and express informed consent before charging consumers on a recurring basis. Many users allegedly did not realize their subscriptions would renew automatically until after multiple charges appeared.

Key Takeaways

The Sendit case underscores the FTC's ongoing focus on children's privacy and deceptive subscription practices. App developers and advertisers should ensure compliance with COPPA's parental notice and consent rules, provide clear disclosures of auto-renewal terms, and make sure marketing claims for paid features are truthful and substantiated—especially when directed at young or vulnerable audiences.

CARU Snubs MrBeast's Advertising to Young Kids

The Children's Advertising Review Unit (CARU) of the Better Business Bureau has found that marketing on the popular MrBeast YouTube channel—including video ads and sweepstakes—violated its advertising standards and the Children's Online Privacy Protection Act (COPPA). CARU monitors online advertising for compliance with its Self-Regulatory Guidelines for Children's Advertising, Privacy Protection Guidelines, and COPPA, focusing on content by MrBeast (Jimmy Donaldson), his production company MrBeastYouTube LLC, and his snack brand Feastables.

CARU based its jurisdiction over the matter, which extends to advertising directed at children under the age of 13, on the evidence that MrBeast targets children under 13 through toys, kid-friendly content, collaborations with child influencers, and Donaldson's own acknowledgment that a significant portion of his audience is under 13.

First, CARU asked whether MrBeast's YouTube channel ads are clearly and conspicuously identifiable as advertising to children. It found that several videos included promotional text and purchase links without clear disclosure, blurring the line between content and marketing. CARU concluded that children could easily mistake these promotions for regular videos and engage with them without realizing they were ads.

CARU also reviewed a Feastables "blind taste test" video in which participants sampled various chocolate bars and unanimously declared Feastables the best. The group found the video misleading because one of the samples was dark chocolate, not comparable to the other milk chocolates tested. From a child's perspective, CARU said, the message was that Feastables outperformed other premium brands. Although MrBeast claimed the video was humorous, CARU noted that children are likely to take it at face value.

CARU further identified multiple issues with MrBeast's sweepstakes promotions, warning that sweepstakes can easily exploit children's immaturity and impulse to win. The "Blue Wave 10K Sweepstakes" failed to clearly disclose free entry options, odds of winning, or age restrictions—violating CARU's Guidelines—and encouraged excessive purchases with slogans like "More bars = More entries." A reasonable child, CARU said, could believe they needed to buy bars to enter or even purchase as many as ten chocolate bars a day to win.

Similarly, the "Halloween $10K Sweepstakes" buried key disclosures in small print and click-through rules, making it unclear that no purchase was necessary and that children under 13 could not participate. Countdown timers added pressure to buy quickly, creating a false sense of urgency. CARU also found that both sweepstakes violated COPPA because they lacked effective age screening to prevent the collection of children's personal data without parental consent.

Key Takeaways

CARU's findings highlight the special care required when marketing to children. Advertising must be clearly identifiable, truthful, and appropriate for a child audience. Sweepstakes must disclose free entry options, odds of winning, and age limits in a clear and conspicuous way, and companies must implement effective age-screening tools to comply with COPPA. The case serves as a reminder that strategies acceptable in adult advertising can be deceptive when directed at children—and that brands popular with young audiences must take extra care to meet child advertising standards.