Soft-drink producers have fallen under investigation in recent years for their marketing tactics. Many beverage producers, including Monster Beverage Company and 5-Hour Energy, have been accused of unfairly marketing their allegedly dangerous energy drinks to children. For over two years the Food and Drug Administration (FDA) has been cracking down on the distribution of highly caffeinated beverages, claiming that the mixtures of sugar, caffeine and other compounds used in the products pose public health hazards. Monster continues to claim no wrong doing and full compliance with FDA policies, including the warning labels printed onto their cans cautioning pregnant women, children and consumers to use the products responsibly at their own digression. The beverage manufacturer has not been charged with violations of any specific legislation yet, however the increase scrutiny about their “Monster Army” marketing campaign and other advertising tactics may lead to future challenges.
The Federal Trade Commission (FTC) lists monitoring and reporting on commercial marketing practices specifically aimed at children as a one of their top priorities. Currently, few laws exist specifically detailing what are and are not appropriate practices, and industries rely heavily on self-regulation to protect children from deceptive and unfair marketing tactics. There are three standards regularly enforced by the FTC when challenging a businesses’ marketing or advertising practices.
- The Theory of Unfairness standard is designed to protect consumers from marketing and advertising practices that cause or potentially cause substantial injury or adverse effects such as economic “injury.” Marketing tactics that entice children to act in a manner that could be dangerous or costly are generally considered punishable offenses by the FTC.
- The deceptive performance standard is designed to protect consumers from claims that misrepresent the abilities or capacities of any product. For example depictions of a toy animal standing or walking on its own when in fact the product cannot do so, could leave the company exposed to a lawsuit for misrepresentation of a product’s capabilities. Under this standard, advertisements and other marketing tactics must account for the target audience’s capacity to understand the limitations of the product.
- Nutritional claims must be accurate and scientifically tested to be utilized as a selling point or promotional claim. Misrepresentations of nutritional information and health benefits of a product pose a “public safety risk” according to the FDA, especially when manipulated to entice children and parents to purchase products that could be nutritionally lacking. Claiming that a particular cereal will help increase a child’s strength or performance capabilities, for example, could be considered a misrepresentation if not factual evidence is attainable.
It is increasingly likely that your business will face claims of misconduct, negligence or irresponsibility. Whether the claims are justified or complete fabrications, the financial impact of legal complications can be costly to any business. Obtaining a comprehensive Wallingford Business Insurance plan will help your venture weather any operational impediments that may arise.
At Sinclair Risk and Financial Management our specialists work hard to ensure that you are completely protected for the best prices. We proudly offer an array of Connecticut Commercial Insurance programs, including Wallingford Errors and Omissions Liability coverage to protect your business from allegations of misconduct. Give us a call today at (877) 602-2305 for more information about all our Wallingford Business Insurance offerings.