Top Legal Challenges for the Consumer Products Industry in 2025

CPSC – Current State Update

In 2024, we discussed an upcoming rule that would require companies to electronically file Certificates of Compliance with US Customs and Border Protection (CBP) for products governed by mandatory safety regulations. The rule was finalized on January 8. Prior to this rule, companies were not required to submit certificates of compliance unless asked. In addition to presenting a logistical hurdle for companies importing large quantities and varieties of products, the new requirement is designed to and likely will facilitate enforcement, potentially leading to an uptick in enforcement actions by the US Consumer Product Safety Commission (CPSC) (though it is difficult predict how the politics of the new administration will affect this). The rule goes into effect on July 8, 2026. For products entered from a foreign trade zone for consumption or warehousing, the rule is effective on January 8, 2027. Because of the logistical challenges presented by this requirement, companies would be wise to start planning for it now if they have not done so already.

PFAS – Year in Review

PFAS Legislation Updates

Last year, we reported on the impact of per- and polyfluoroalkyl substances (PFAS) legislation on the consumer products industry. As of January 2025, at least six states implemented or expanded total bans on the sale of products containing intentionally added PFAS, including textiles and cosmetics, among others. In most cases, this ban encompasses products that were imported and distributed to retailers prior to January 1with no exception for goods sold online. Some manufacturers are scrambling to find solutions for unsold inventory and could find themselves in litigation over retailers’ unsellable stock. It is unlikely that many retailer contracts contemplated risk of loss under these exact conditions, so it remains to be seen who will bear responsibility. Going forward, manufacturers and retailers of products with PFAS that are not currently banned should endeavor to build in protections against the potential of legislation that could affect the sale of their products.

PFAS Litigation Trends

As PFAS litigation has been continuing to develop, certain trends have emerged.

Over the course of the past year, we have seen a multitude of consumer class action lawsuits alleging that manufacturers failed to adequately alert consumers as to the presence of PFAS in their products. These claims have been grounded in states’ consumer fraud laws, unfair trade practices acts and breach of warranty causes of action. The alleged damages are purely economic, i.e., the plaintiffs claim they would not have paid what they paid for the products had they known of the presence of PFAS in them. Notably, though these claims largely hinge on the harmful health effects of PFAS, we have yet to see an attempt at a product liability lawsuit alleging personal injury, rather than economic harm. This is likely because there is no signature disease associated with PFAS and, since PFAS are everywhere (including in our drinking water), it is difficult to link the presence of PFAS in any one product to a single plaintiff’s injury or disease.

Moreover, plaintiffs have struggled to allege facts sufficient to support the presence of harmful levels of PFAS in certain products. Courts have dismissed cases (with leave to replead) not only based on a failure to allege that the products purchased by the named plaintiffs contained PFAS, but also — and more importantly — based on the plaintiffs’ reliance on total organic fluorine (TOF) testing to assert the presence of PFAS in the products. TOF testing is widely considered to produce false positives because, while all PFAS contain fluorine, not all fluorine-containing compounds are PFAS. Some plaintiffs have been able to overcome these obstacles, but courts have also dismissed for failure to allege that harmful PFAS were present in sufficient quantities to cause adverse health effects. Not all PFAS have been demonstrated to be harmful and for those that have causation is dose-dependent. This will be a bigger hurdle for plaintiffs to clear and could ultimately eliminate certain products with trace PFAS from the field of litigation.

Loyalty Programs – Current State

A successful loyalty program can reap benefits for both engaged consumers and the brands that they love. But what happens when a brand’s focus shifts or a loyalty program falls flat? Brands often reinvigorate a loyalty program by retooling it or completely relaunching it but launching, revising, or relaunching a loyalty program runs the risk of alienating existing members and opening a brand up to legal complaints. When drafting the terms for a loyalty program, transparency is key. Some quick tips include:

• Reserve the right to change or eliminate the program but any material changes or termination of a program should be clearly communicated to consumers.
• Carefully think through any changes that eliminate or devalue points or reduce the ability to earn rewards.
• Don’t overpromise rewards. Make sure to set reasonable limits on redeeming rewards and include the ability to add, subtract, or substitute rewards if needed.
• Think through the expiration of any points or rewards to make sure such changes are in compliance with consumer protection laws.
• Loyalty programs are active breeding grounds for internal and external fraud so conduct audits regularly.

Any missteps in this area can produce vulnerability to consumer protection complaints, and even worse, class action lawsuits.

Prop 65 – Update on the Current State

Headed into 2025, consumer product companies selling goods in California will need to consider new requirements to the Proposition 65 “short form” warnings. The new regulation went into effect January 1; however, it does not apply to products manufactured and labeled before January 1, 2028. Accordingly, products labelled with the existing short-form warnings before or during the three-year transition period may continue to be sold in California.

Some key changes to the new regulation include:

• Inclusion of Chemical Name – The amendment requires businesses to add at least one chemical name to short form warnings. The regulation’s current format does not require identification of a specific chemical, only whether the detected chemical is identified in California’s Office of Environmental Health Hazard Assessment’s (OEHHA) list as a carcinogen or reproductive toxin or both.
• Warning Format – Instead of simply the word “WARNING,” the amendment allows business to elect to display “CA WARNING” or “CALIFORNIA WARNING.”
• Label Sizing – The amendment abolishes sizing restrictions to the short form warning, so long as the text is conspicuous remains no smaller than 6-point font in size.
• Inclusion of Food Products – The amendment clarifies that short form warnings apply to food products and requires the display of a separate warning website specific to food products (P65Warnings.ca.gov/food). Business may now elect to use a short form warning on food product labels if it includes the word “WARNING:” or the words “CA WARNING:” or “CALIFORNIA WARNING:”; the identification of at least one chemical; and whether the chemical is a carcinogen or reproductive toxin or both.
• Internet/Catalog Warnings – The amendment clarifies that if products are sold on the internet/in a catalog, businesses must ensure the Prop. 65 warning for sales are accessible both prior to purchase and before product exposure. The amendment also provides Internet retailers with a 60-calendar day grace period upon receiving notice from manufacturers for updates to online warnings.

The amendment will require companies using the new short-form warnings to reassess their product lines to identify at least one listed chemical in their consumer products sold in California to which consumers may be exposed. In some cases, this evaluation will require testing and/or discussion with other entities in the supply chain, and therefore an increased burden on consumer products companies. The final version of the regulation can be viewed here.

California Wiretapping Law Class Actions – An Update on Current Activity and Forecast for 2025

Plaintiff’s attorneys continue to barrage consumer products companies with California Invasion of Privacy Act (CIPA) class action lawsuits and demands for arbitration, showing no signs of letting up in 2025. As we’ve previously detailed, CIPA was enacted to protect California residents from privacy violations that occur when communications are recorded without their knowledge or consent. Over the past couple years, plaintiff’s lawyers have been weaponizing this wiretapping statute (and other state law equivalents) against soft-target retailers, based on the retailers’ use of certain tracking technologies on their websites. Plaintiffs claim the use of these technologies, without consumers’ consent, constitutes unlawful “eavesdropping.” As previously discussed, over the past year we’ve seen a different theory emerge, whereby plaintiffs claim the use of online tracking technologies, such as pixels, cookies, and web beacons, are equivalent to the use of a “pen register” or “trap and trace” device that “capture” a visitor’s IP address, resulting in the “illegal interception” of communications signaling information under Section 638.51 of CIPA. Plaintiffs also continue attempting to bring claims under the Video Privacy Protection Act (VPPA) based on companies alleged sharing of video viewing history captured via pixels without the user’s consent.

ArentFox Schiff continues to defend companies who receive demand letters related to these claims. Last year, AFS successfully defended a French skincare company against a bid by opposing counsel to force mass arbitration with approximately 3,000 class plaintiffs, who alleged the company used third-party tracking software that violated CIPA. But US District Judge for the Central District of California Percy Anderson ruled that the Federal Arbitration Act only provides authority for courts to compel arbitration in circumstances where the agreement to arbitrate evidences a transaction in commerce — and website Terms of Service do not evidence any transaction if a consumer merely visits a website. Independently, the court also found that the consumers did not submit any admissible evidence to support their theory that they had visited the company’s website and thus ruled against compelled arbitration.

AI – Update on Impact to Consumer Products

As artificial intelligence (AI) continues to develop at a rapid pace, even the most sophisticated general counsel and in-house legal teams will be hard pressed to keep up with the evolving legal landscape. While the Trump Administration seems poised to ease regulatory scrutiny on AI, much remains uncertain about their approach. Meanwhile, federal inaction is likely to invite more assertive policymaking at the state and local levels, with a focus on safety, bias, privacy, and sensitive use cases like employment, healthcare, and education, to name a few. Already, state data transparency laws in California and Colorado are poised to impose new levels of scrutiny on AI developers and deployers before the end of the year, which will require AI developers to make certain disclosures about the data that they are using to train their systems. In addition, certain industries will be subject to industry-specific AI-related legislation and regulation, including disclosure obligations for certain interactions between consumers and AI, as well as new obligations to conduct annual bias and impact assessments of their AI tools. Finally, the proliferation of AI agents that are capable of performing complex actions on behalf of consumers will raise new challenges for legal compliance and liability, particularly in areas such as product recommendations, personalized marketing, and automated customer service.

Privacy Laws – Update on Current State Privacy Laws

The year 2025 is shaping up to be another significant one for US state privacy laws, with five new laws taking effect in January and three more scheduled for implementation by October. Delaware, Iowa, Nebraska, and New Hampshire saw their laws go into effect on January 1, while New Jersey’s law took effect on January 15. Below, we outline the laws that effective in January. Be sure to visit us again in 2025 for updates on the laws coming into effect in July and October. A fuller analysis of the laws that have already taken effect this year and those that will be coming can be found here.

Store Gift Cards – Request for Cash on the Remaining Balance in Some States

To redeem or not redeem. That is the question. State laws mandating that consumers be allowed to redeem a gift card for cash when the gift card balance falls below a certain dollar amount continue to expose companies to consumer complaints and class action litigation. Fourteen states and Puerto Rico have rules that allow a consumer to redeem a gift card for cash when the gift card balance falls below a certain dollar amount, typically below $1, $5, or $10. Massachusetts has a unique regime where the gift card holder can request the remaining value of a gift card in cash after at least 90% of the face value of the gift card has been redeemed. This means the threshold for cash redemption in Massachusetts varies based on the original face value of the gift card. Massachusetts also has different rules depending upon whether a gift card is reloadable or not.

Most gift card terms contain the catchall language that gift cards are “not redeemable for cash, unless required by law” but companies typically do not have the ability to track and parse out gift card purchasers by state, making it difficult if not impossible to comply with the rules on an individual state level. Companies also rarely provide training to in-store staff and customer service agents on how to handle or escalate cases when cash redemption is requested. Any company that sells gift cards or certificates to consumers should review their current gift card terms and internal policies and training on cash redemption requests.

Terms of Use

Website and mobile app terms of use are a crucial way for companies to manage their legal risk. They can and should include provisions that, among other things, protect the company’s intellectual property, establish rules of conduct, disclaim warranties, limit liability, and mandate how disputes will be adjudicated. But without careful drafting and routine reviews, businesses can face substantial legal exposure.

Increasingly, online businesses face the threat of mass arbitration. Requiring users to resolve disputes through binding, individual arbitration has long been regarded as an advantageous way to avoid class actions and limit litigation costs. Recently, however, plaintiffs’ lawyers, in response to such provisions, have begun filing hundreds or thousands of individual arbitrations, resulting in overwhelming upfront arbitration fees for the business. Businesses have tried a number of tactics to counteract this threat — for example, by requiring batched or bellwether arbitration and/or including fee shifting provisions — but, in several cases, courts have declined to enforce such provisions, finding that they unfairly favor the business in the dispute resolution process. This is an evolving area of the law with some inherent uncertainty. Still, companies should review and tailor their terms of use to address the risk of mass arbitration while steering clear of higher-risk provisions.

Beyond the substance of the agreement, a critical threshold question is whether a business’s terms of use represent a valid agreement in the first place. Online contracting is held to the same requirement of mutual assent as traditional contracting. It is now well-established that simply placing a hyperlink to the terms of use in the website footer is unlikely to result in an enforceable contract. Instead, users must take some action to affirmatively manifest their assent to the terms of use. While simple in theory, courts closely scrutinize user interfaces — considering factors like font size and the placement and color of hyperlinks — to determine whether there is sufficient evidence of user acceptance. Similar challenges are faced when businesses seek to amend their terms of use. It is essential for companies to carefully design their user interfaces and notifications to ensure that they result in an enforceable agreement. After all, even the most ironclad terms of use are useless without an enforceable contract.

Promised Shipping and Delivery Times

Time is money, and consumers continue to seek out companies that promise they can deliver items ordered online quicker the competitors. But those claims of quick delivery can be a minefield if the promised delivery time slips. The Federal Trade Commission (FTC) Mail, Internet, or Telephone Order Merchandise Rule prohibits sellers from soliciting mail, internet, or telephone order sales unless they have a reasonable basis to expect that they can ship the ordered merchandise within the time stated on the solicitation or, if no time is stated, within 30 days. If shipments are going to be delayed, the rule also requires sellers to seek the consumer’s consent to the delayed shipment. If the buyer does not consent to the delay, the seller must offer a prompt refund. It is especially important to note that there are no exemptions for supply chain disturbances or problems resulting from delayed mail or package processing.

While the rule was adopted in 1975, it remains relevant. In late 2024, the FTC announced the filing of a court order requiring online marketplace GOAT to pay more than $2 million for violating FTC rules and the company’s own policies related to shipping and refunds. The FTC alleged the company failed to keep these promises, shipping 37% of all “Instant” orders later than promised and shipping more than 16% of all “Next Day” orders on the second day or later after the order, despite the buyers paying the shipping upgrade charges. The FTC rule includes strict instructions on how to deal with delays and when consumers must be offered a refund; however, many companies are not prepared to deal with delays until it is too late. Conducting an internal audit of shipping procedures and building a compliance program into that system may be the best practice to deal with delays as they occur.