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Last week, the FTC filed its first lawsuit involving COVID-19 disease claims, but the Commission took an approach it had largely abandoned in consumer protection cases, by filing for a temporary restraining order and preliminary injunction in federal court and simultaneously filing an administrative action. Although COVID-19 claims are new, the procedural approach taken by the FTC is one that it has not used in years.

On April 24, the FTC filed a Complaint for a Temporary Restraining Order and Preliminary Injunction in the United States District Court for the Central District of California, in FTC v. Marc Ching. The Complaint alleged that the defendant, Marc Ching doing business as Whole Leaf Organics, disseminated false or unsubstantiated advertisements that its product, Thrive, treated, prevented, or reduced the risk of COVID-19. In addition, the defendant marketed a cannabidiol (CBD) product that it claimed could treat cancer.

The defendant had been the recipient of a warning letter from the federal Food and Drug Administration in November 2019, which warned the defendant that it was making unapproved new drug claims in violation of the Federal Food, Drug, and Cosmetic Act by claiming that its CBD products are intended for use in the mitigation, treatment, or prevention of diseases. According to the complaint, the defendant did not remove the unapproved drug claims from its website.…

Continue Reading FTC Files Lawsuit Against Company Selling CBD Products, Claiming to Prevent or Treat COVID-19 and Cancer

Recently the National Advertising Division (NAD), as part of its routine monitoring program, evaluated whether certain claims made by Petco Animal Supplies, Inc. (Petco) in marketing and advertising materials for its “no artificial ingredients” advertising campaign were adequately substantiated. The NAD determined that Petco presented sufficient evidence to demonstrate that it is “setting a bold new standard for nutrition” and that it “will continue to evaluate and evolve [its] standards and assortment to take pet nutrition to new levels.” However, it recommended that Petco modify certain claims that it was removing “all” artificial ingredients or that there would be “no more artificials” in any of the pet food or treats it carries. The case provides some important guidance on the rules for making claims regarding “no artificial ingredients.”

Petco launched an initiative to remove artificial ingredients from its dog and cat foods and marketed that initiative heavily. Petco had adopted definitions of “Artificial Flavor,” “Artificial Color,” and “Artificial Preservative” that mimicked the FDA’s definitions and language, and expressly disclosed to consumers its definitions of these terms. Specifically, Petco disclosed that its definition of “artificial ingredients” did not include “synthetic vitamins, minerals and amino acids,” “substances that are derivatives or mimics of national compounds,” and “substances that may fall into categories outside the Petco definition of artificial colors.”…

Continue Reading Make No Bones About It: NAD Finds Petco Is “Setting a Bold New Standard for Nutrition” but Recommends “No Artificials” and “Better Nutrition” Claims Should Be Discontinued

Guarantees are a common marketing practice and can have two meanings—the marketers guarantees product performance or, perhaps related, the marketer promises the consumer her money back if not satisfied. A recent decision from the National Advertising Division (“NAD”) regarding claims Ava Science, Inc. (“Ava”) made in marketing its Ava Ovulation Bracelet (“the Bracelet”) provides some guidance on this marketing device. NAD reviewed Ava’s “one-year pregnancy guarantee” appearing in its social media marketing and website and determined whether, given the context, a consumer would believe this to be a performance or money back guarantee. NAD found that Ava’s website claims could be interpreted, by a potentially vulnerable audience, to overstate the Bracelet’s benefits.

NAD’s decision addressed the guarantee claims as made in two separate circumstances—Ava’s social media marketing and Ava’s website marketing. Of greatest concern to NAD was the guarantee claim on Ava’s website offering a “one-year guarantee of pregnancy*.” Though the guarantee contained a hyperlink disclosing its conditions, the hyperlink did not appear unless a consumer scrolled over the text. Relying on the FTC’s Dot Com Disclosures Guidance, NAD determined that the embedded hyperlink with specific conditions was not sufficiently “clear or conspicuous.” Further, NAD found the website’s “one-year guarantee of pregnancy” was too closely related “to the performance result—pregnancy—and not to the fact that the ‘guarantee’ is about the refund[.]” Ultimately, NAD recommended that Ava modify its website guarantee to make it obvious that terms exist in a separate hyperlink, and to clarify that it is a money-back, not pregnancy, guarantee.…

Continue Reading Context is Key: NAD Examines Ava Fertility Bracelet Guarantee Claims

In formulating a health and safety-related claim, advertisers walk a fine line in accurately conveying the results of reliably conducted studies to support their claims. Disclaimers and other qualifying language are limited tools advertisers can use to mitigate the risk of a claims challenge. But as a recent NAD decision shows, just because a study is reliably conducted, does not necessarily mean it is a good fit to support an advertising claim. Thus, basing a claim on a reliably conducted study can still be held to be misleading if the study results do not closely reflect what the average consumer could realistically expect to achieve. What’s more, this recent decision reminds advertisers that a lengthy disclosure may not be sufficient when it fails to disclose a wide variability in observed study results.

On February 25, 2020, the National Advertising Division (NAD) issued a decision and recommendation that Trek Bikes discontinue use of the claim that its WaveCel helmet is “up to 48x more effective than traditional foam helmets in protecting your head from injuries caused by certain cycling accidents.” Although the cited “Bliven Study” demonstrated that the WaveCel helmet in fact outperformed traditional foam helmets for head injury protection in all impact scenarios, the NAD was concerned the claim conveyed the implied message that “People who use the WaveCel Helmet will have little to no risk of experiencing a concussion.”…

Continue Reading Heads Up! NAD Recommends Discontinuing WaveCel Safety Claim

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 Marketing Work-From-Home Opportunities in the Era of WFH

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 FTC, FDA, State AGs, and Class Action Lawsuit Clean Up Claims that Products Can Treat or Prevent Coronavirus

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 FTC Targets Advertising Claims Made for Pain-Relief Device

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 Stirring the Pot: Tea Marketer Settles with FTC Over Unsubstantiated Health Claims, Inadequate Influencer Disclosures

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 $40 Million Reasons to Have RCTs

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 The FTC Gets Real About Fake “Organic” Claims