Consumer Protection eBrief – 01/02/2013

1 February 2013|In Consumer Protection Act Briefs

In this issue:

  • South Africa: Consumer protection authority gets new commissioner
  • South Africa consumer protection: Phedra-Cut’s claims misleading
  • United States consumer protection: Cord Blood Bank Settles Charges with FTC

South Africa: Consumer protection authority gets new commissioner

In September 2012, the National Consumer Commission appointed a new Commissioner, Ebrahim Mohamed. This followed after the previous Commissioner’s, Mamodupi Mohlala-Mulaudzi, was not extended by Trade and Industry Minister Rob Davies.

Ebrahim Mohamed was a former chief director in the office of consumer protection at the Department of Trade and Industry and was closely involvement in the promulgation of the Consumer Protection Act.


South Africa consumer protection: Phedra-Cut’s claims misleading

The Advertising Standards Authority (“ASA”) has ruled that USN withdraw certain packaging of its Phedra-Cut Hardcore product as it contains unsubstantiated and therefore misleading claims relating to the efficacy of the product.

The ASA found that USN’s claim that Phedra-Cut Hardcore was “scientifically formulated to help burn fat, and crush appetite and constant cravings” was unsubstantiated by any robust medical study regarding its efficacy and therefore misleading to consumers.

The ASA added that it would not accept USN’s undertaking that it would amend its claims, as in the past nine years at least 24 rulings had been issued relating to the efficacy of USN’s products. As a result, the ASA stated that “given the respondent’s apparent pattern of providing undertakings – as opposed to evidence – for its efficacy claims, the directorate will consider whether or not additional sanctions should be imposed.

It is interesting to note that claims of this nature may also be deemed to constitute fraud and may result in follow up actions by consumers.


United States consumer protection: Cord Blood Bank Settles Charges with FTC

Cbr Systems Inc (“Cbr”), a leading umbilical cord blood and tissue bank, has settled with the Federal Trade Commission (“FTC”) for failing to protect the security of customers’ personal information.

Cbr Systems is a leading provider of umbilical cord blood and umbilical cord tissue banking services where consumers pay to preserve and store a newborn’s cord blood and cord tissue as it contains stem cells, which may be used to treat some diseases and conditions.

In its privacy policy, Cbr claimed that “[w]henever CBR handles personal information, regardless of where this occurs, CBR takes steps to ensure that your information is treated securely and in accordance with the relevant Terms of Service and this Privacy Policy.” However, according to the FTC, Cbr failed to use reasonable and appropriate procedures for handling customers’ personal information which lead to the theft of Social Security numbers as well as credit and debit card numbers of approximately 300,000 consumers. Pursuant to this theft the FTC concluded that Cbr’s above privacy policy was misleading and contrary to the FTC Act.

An exact description of the agreed upon settlement has not yet been released.

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