It is almost football season and the FTC tries to stay seasonal; around this time in 2012, it announced a settlement with football mouthguard manufacturer Brain-Pad regarding unsubstantiated concussion prevention claims. Subsequently, the FTC has sent warning letters to other manufacturers of sporting equipment regarding concussion prevention claims. This year, however, the FTC has called a different play. On August 21, the FTC announced that it had sent warning letters to five major retailers regarding the FTC’s concerns regarding concussion protection claims for athletic mouthguards made on the retailers’ websites. These retailers appear to have been repeating claims that the manufacturers of the products made on their packaging.
In the 1970s during the “Pertschuk Era” at the Commission, the agency pursued retailers for selling unsubstantiated products. Since then, however, the agency generally hasn’t been imposing liability on retailers for claims made on product packaging. The agency now appears to be taking the position in these warning letters that if a retailer repeats on its website statements on product packaging, the retailer is responsible for those claims. That leads to a situation where the retailer might be able to sell the product at a brick and mortar store but not on its website. What if the retailer simply shows an enlarged version of the product packaging, is it responsible then for the claims made on the packaging? These questions and problems highlight the dangerous and confusing approach the FTC seems to be taking.
Law enforcers, including the FTC, have sought to impose liability on “gatekeepers” or “chokepoints” where it is difficult to find or stop the principal alleged malefactor. The DOJ’s oft-criticized Operation Choke Point (which seeks to hold banks and payment processors responsible for the acts of certain merchants and to pressure those institutions not to deal with certain classes of merchants) comes to mind. Here, the manufacturers of the mouthguards are not hard to find. The FTC knows exactly which manufacturers make what claims. Nothing impedes the FTC’s ability to find or stop these manufacturers if the FTC believes their claims are unsubstantiated.
Asking retailers to vet every claim by every merchant for every product the retailer carries on its website would impose a huge cost on retailers. That cost ultimately is borne by consumers through higher prices and diminished selection. That hardly sounds like consumer protection to us.