While the full economic impact of COVID-19 is unknown, the demand—and need— for jobs and work that can be performed from home certainly will increase. Companies offering opportunities to potentially earn income working from home are likely to see an influx in consumer interest—and, of course, likely to ramp up advertising. The FTC always has actively policed the industry, given the challenges inherent in substantiating earnings claims, and will continue to do so during the pandemic. Below are some common advertising pitfalls and general guidelines for avoiding them.

  1. Earnings Claims Must Be Substantiated and Typical

An earnings claim is a representation of how much money a consumer will make or the level of success a consumer will achieve. Such claims can be either express or implied, and all must be substantiated. This means you must possess information that sufficiently backs up every reasonable takeaway of the ad. In addition, any claim should be typical, which means the average person pursuing the offered opportunity is likely to achieve similar success. It may be tempting to advertise results achieved by the most successful students, but those advertisements are risky. From a regulator’s standpoint, atypical results may mislead consumers into thinking they too will achieve a similar level of success. At a minimum, in order to limit (but not eliminate) the risk, a well-drafted disclaimer should be present.


Continue Reading

Growing concern over the coronavirus (COVID-19) has seeped into the regulatory and legal world. Agencies and plaintiffs’ attorneys are targeting companies that claim their products can treat or prevent COVID-19. As people search for health products to counter the growing threat of coronavirus, companies should keep in mind that any advertising claims made must be substantiated. Health claims trying to trade on the panic caused by the virus will be closely monitored and pursued by law enforcement and the plaintiffs’ bar.

A few days ago, the Federal Trade Commission (FTC) and U.S. Food and Drug Administration (FDA) issued seven joint warning letters to companies making allegedly unapproved and unsupported advertising claims related to their products’ ability to treat or prevent the coronavirus. The letters state that any advertising claims trumpeting a product’s ability to treat COVID-19 “are not supported by competent and reliable scientific evidence” — which is required under the FTC Act.


Continue Reading

Last week, the Federal Trade Commission (“FTC”) announced a settlement with Neurometrix, the makers of the Quell electrical nerve stimulation device. In the complaint, the FTC alleged that the company made false claims about Quell’s ability to treat chronic and severe pain throughout the body, even though the device is only placed below the knee, and allegedly false claims that the device is clinically proven and cleared by the Food and Drug Administration (“FDA”) to treat full body pain. The case provides a good reminder that the FTC remains focused on health claims and the standards that the FTC requires for marketing products making health claims.

The FTC’s complaint also challenged advertising claims about Quell users’ results from using the device, including that 81% of people achieve significant pain relief with Quell, and that Quell relieves chronic or severe pain throughout the body caused by a wide range of conditions, including osteoarthritis, nerve damage, sciatica, shingles, and fibromyalgia.


Continue Reading

Last week, the FTC entered into a settlement with Teami, LLC, a marketer of teas and tea-based skincare products that the FTC alleges promoted its products with deceptive, unsubstantiated health claims and endorsements by social media influencers who did not adequately disclose their material connections to (i.e., monetary payments from) the company. The action highlights the FTC’s continued focus on both health claims and influencer marketing.

According to the FTC’s two-count complaint, Teami and its individual owners claimed, without reliable scientific evidence, that their products would treat cancer, clear arteries, significantly decrease migraines, treat colds, prevent flus, cause “rapid and substantial” weight loss and burn body fat.

The defendants also allegedly misrepresented that social media posts by influencers reflected the views of ordinary users of Teami products, failing to adequately disclose that the influencers were paid for their endorsements. According to the FTC, such disclosures must be clear and conspicuous—and, in this context, because consumers’ Instagram feeds typically display only the first few lines of a longer post followed by an option to read more, that means that endorsers must disclose any material connections above the “more” link.


Continue Reading

On September 18, 2019, the FTC prevailed in its long-waged battle against Hi-Tech Pharmaceuticals. In a per curiam opinion, the Eleventh Circuit affirmed the district court’s decision, holding the defendants in contempt for violating the court’s prior order, which enjoined the defendants from making certain claims about health products without “competent and reliable scientific evidence.” Fed. Trade Comm’n v. Nat’l Urological Grp., Inc., No. 17-15695, 2019 WL 4463503, at *1 (11th Cir. Sept. 18, 2019). The Eleventh Circuit also upheld a $40 million sanction for the defendants’ violation of the order. The case provides a good example of how the FTC views substantiation for dietary supplement claims and the consequences of lacking that substantiation.

In its ruling, the Eleventh Circuit affirmed the district court’s stringent interpretation of “competent and reliable scientific evidence” to mean randomized controlled trials (“RCTs”) because the defendants had fair (and repeated) notice for nearly a decade that the FTC and the district court interpreted “competent and reliable scientific evidence” to mean RCTs.


Continue Reading

Last week, the Federal Trade Commission (FTC) announced a $1.76 million settlement with Truly Organic, Inc. and its founder and CEO Maxx Harley Appelman regarding false “organic” claims. This is the first time the FTC has obtained monetary relief for deceptive “organic” claims, and the buzz around this settlement signals it may not be the last. The Commissioners’ vote was unanimous, and Commissioner Rohit Chopra released a statement in support of the settlement calling for the FTC to issue a Policy Statement setting forth the Commission’s approach to enforcement in cases involving dishonesty or fraud.

Truly Organic is a bath and beauty retailer that makes and sells a variety of personal care products, including hair care products, body washes, lotions, baby products, and cleaning products. As the brand name suggests, Truly Organic markets its products as wholly organic or certified organic in compliance with the United States Department of Agriculture’s (USDA’s) National Organic Program (NOP), the program that enforces national standards for organically produced agricultural products. Truly Organic conveyed the organic theme through a variety of claims, including “100% organic,” “truly organic,” “certified organic,” and “USDA certified organic.” The company also claimed its products were “vegan.”


Continue Reading

Last week, the Federal Trade Commission issued a press release announcing that it had issued warning letters to three unnamed sellers of cannabidiol (CBD) products who marketed everything from gummies to creams with bold claims that the products could treat a wide variety of the most serious diseases known to man. This follows an earlier wave of letters that it issued jointly with the U.S. Food and Drug Administration (FDA) last March, which warned other CBD marketers of misbranding and introducing an unapproved new drug without prior approval, and of making unsupported claims about their CBD products’ ability to treat and cure serious diseases such as cancer and Alzheimer’s, among other medical conditions.

In the latest press release, the FTC reaffirms its interest in monitoring health-related advertising claims in the budding CBD industry. The FTC did not disclose the recipients of the warning letters, but the Commission quoted several problematic claims made by the undisclosed CBD companies. Examples of claims that the FTC appears focused on include 1) assertions that CBD products have been “clinically proven” to treat cancer, Alzheimer’s disease, or other serious medical diseases; 2) claims that CBD products are effective in relieving various types of pain; and 3) references to the amount of research companies have acquired to support these claims.


Continue Reading

Three things to remember when making claims: always ensure that you have the appropriate substantiation—I forget the other two. Last week, the Second Circuit issued an order vacating the Southern District of New York’s dismissal of an FTC complaint alleging that Quincy Bioscience falsely advertised a memory supplement, known as Prevagen.

A little background: Quincy represented that Prevagen improved memory—and that studies proved as much. Advertising through multiple mediums, Quincy claimed Prevagen “improves memory” and “has been clinically shown to improve memory,” and that “a landmark double-blind and placebo controlled trial demonstrated Prevagen improved short-term memory, learning, and delayed recall over 90 days.” Quincy also represented that apoaequorin, a protein derived from jellyfish and an ingredient in Prevagen, “enters the human brain to supplement endogenous proteins that are lost during the natural process of aging.”

On January 9, 2017, the FTC and the New York Attorney General brought suit alleging that Quincy did not have the proper substantiation to make the claim that apoaequorin improves memory or that it enters the brain. Attached to the complaint was the study on which Quincy relied. Quincy moved to dismiss the complaint, arguing that the complaint failed to allege facts demonstrating that the representations at issue were false or unsubstantiated, and relying on the study to defend against the FTC’s claims.


Continue Reading

There is no denying that, at times, the express claims made on dietary supplement labels may seem to convey a broader implied claim to the consumer regarding the supplement’s performance benefits. While that may be true, last month the Ninth Circuit confirmed that plaintiffs cannot successfully allege that a lawful “structure/function” claim misleadingly implies that a dietary supplement will treat, cure, or prevent a disease under state law. In so deciding, the court found that Section 403(r)(6) of the Federal Food, Drug, and Cosmetic Act (“FDCA”) expressly permits dietary supplements to make claims that describe the role of a nutrient or dietary ingredient intended to affect the structure or function of the body (i.e., structure/function); and that Section 403A(a)(5) of the FDCA expressly preempts any California law that would differ from the FDCA’s allowance for structure/function claims.

While perhaps not surprising that the court reached this conclusion, a recent Ninth Circuit opinion is worth noting because it is the first time that the court has issued an opinion expressly confirming that lawful structure/function claims will have coverage against California’s strong consumer protection laws. We caution, however, that dietary supplement manufacturers may still face liability under state law if they fail to disclose material information about their products, including its safety profile.

The plaintiff alleged that the defendant’s Vitamin E supplement claims to “support cardiovascular health” and “promote[ ] immune function” were false and misleading in violation of California law because the Vitamin E supplements (1) did not prevent “cardiovascular disease” and (2) might increase the risk of all-cause mortality. The Ninth Circuit disagreed and affirmed the district court’s grant of summary judgment in favor of the defendant.


Continue Reading

Earlier this week, the FTC and the FDA announced a joint effort to combat unsubstantiated health claims in the supplement space. In three warning letters—to Gold Crown Natural Products, TEK Naturals, and Pure Nootropics, LLC (collectively, the “Companies”)—the agencies explain that certain efficacy claims may lack competent and reliable scientific evidence for support.