Parties Settle Subway v. Quiznos Litigation
In 2006, Subway Restaurants filed a false advertising action
against Quiznos Restaurants relating to two television commercials
and a contest that invited consumers to submit videos comparing
Quiznos and Subway sandwiches. The domain name for the contest
website was www.meatnomeat.com. As part of the contest, Quiznos
posted four sample videos that it created or approved, provided
contest rules and "thought starters" with suggestions for
entrants, and posted some of the contestant videos.
The advertising industry was closely following this case because
one of the issues was whether Quiznos would be able to qualify for
immunity from liability for the false advertising claim relating to
the videos submitted by contestants under Section 230 of the
Communications Decency Act. Section 230 provides in part: "No
provider or user of an interactive computer service shall be
treated as the publisher or speaker of any information provided by
another information content provider." Subway did not dispute
that Quiznos was a provider and a user of an interactive computer
service, so the issue was whether Quiznos merely published
information provided by third parties or instead was, as the court
said, "actively responsible for the creation and development
of disparaging representations about Subway contained in the
contestant videos."
The court declined to answer this question, stating that it was for
a jury to decide if Quiznos was a traditional publisher or if it
went "further and actively participated in creating or
developing the third-party content submitted to the contest
website." But the court did identify certain features of the
contest that could sway a jury towards finding that Quiznos was not
merely a publisher.
The decision is Doctor's Associates, Inc. v. QIP Holder LLC, et al ., No. 3:06-cv-1710 (D. Conn. Feb. 19, 2010).
FTC Settles with LifeLock over False Allegations of Data Security
The Federal Trade Commission announced that LifeLock, Inc. has
agreed to pay $11 million to the FTC and $1 million to a group of
35 state attorneys general to settle charges that the company used
false claims to promote its identity theft protection services,
which it widely advertised by displaying the CEO's Social
Security number on the side of a truck. According to the FTC, this
is one of the largest FTC-state coordinated settlements on
record.
The FTC charged that statements in LifeLock's ads about its
identity theft services and in ads about its own data security were
false. According to the FTC's complaint, LifeLock claimed that
its identity theft services, available for a monthly fee, offered
absolute protection from identity theft, but the fraud alerts that
LifeLock placed on customers' credit files protected only
against certain forms of identity theft and gave them no protection
against the misuse of existing accounts, the most common type of
identity theft. The FTC's complaint further alleged that
LifeLock claimed that it would prevent unauthorized changes to
customers' address information, that it constantly monitored
activity on customer credit reports, and that it would ensure that
a customer always would receive a telephone call from a potential
creditor before a new account was opened. The FTC charged that
those claims were false. Regarding LifeLock's own data
security, the FTC charged that LifeLock routinely collected
sensitive information from its customers, including their social
security numbers and credit card numbers, claiming that such data
was encrypted, when in fact the data was not encrypted.
The FTC and state settlements with LifeLock bar deceptive claims,
and prohibit the company from misrepresenting the "means,
methods, procedures, effects, effectiveness, coverage, or scope of
any identity theft protection service." They also bar
misrepresentations about the risk of identity theft, and the manner
and extent to which LifeLock protects consumers' personal
information. In addition, the settlements require LifeLock to
establish a comprehensive data security program and obtain biennial
independent third-party assessments of that program for twenty
years.
The FTC will use the $11 million it receives from the settlement to
provide refunds to consumers. It will be sending letters to the
current and former customers of LifeLock who may be eligible for
refunds under the settlement, along with instructions for applying.
Information about the redress program can be found at www.ftc.gov/lifelock .
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