The Federal Trade Commission (FTC) has put hundreds of advertisers on notice that they should avoid misleading consumers with ads that make product claims that cannot be substantiated. In notices sent to approximately 670 companies, the FTC warned that it will not hesitate to use its authority to target violators with large civil penalties.
Under well-established FTC law, companies that make product claims must back them up with reliable evidence. If a company claims that its product can cure, mitigate or treat a serious disease such as cancer or heart disease, it must support that claim with accepted standards of scientific testing.
The FTC sent the notices to companies involved in the marketing of over-the-counter (OTC) drugs, homeopathic products, dietary supplements and functional foods. The notices state that the companies could incur significant civil penalties if they fail to adequately substantiate their product claims in compliance with the litigated decisions of prior FTC administrative cases.
The letters state, in bold type, “Receipt of a notice of penalty offenses puts your company on notice that engaging in conduct described therein could subject the company to civil penalties of up to $50,120 per violation. See 15 U.S.C. § 45(m)(1)(B).”
The notices identify specific unlawful acts and practices, including failing to have 1) a reasonable basis consisting of competent and reliable evidence for objective product claims; 2) competent and reliable scientific evidence to support health or safety claims; and 3) at least one well-controlled human clinical trial to support claims that a product is effective in curing, mitigating or treating a serious disease. Unlawful acts or practices also include 1) misrepresenting the level or type of substantiation for a claim, and 2) misrepresenting that a product claim has been scientifically or clinically proven.
The FTC stated that a recipient’s inclusion on the list does not in any way suggest that it has engaged in deceptive or unfair conduct. The FTC also stated that although the initial distribution of the notice is limited to companies making or likely to make health claims, the notice is not limited to health claims and applies to any marketer making claims about the efficacy or performance of its products.
The notice to the recipients also provides them with a copy of a previously approved notice of penalty offenses regarding the use of endorsement and testimonials. That notice addresses falsely claiming an endorsement by a third party; misrepresenting whether an endorser is an actual, current or recent user; using an endorsement to make deceptive performance claims; failing to disclose an unexpected material connection with an endorser; and misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.
The notices suggested that the recipients consult the FTC staff’s recently issued “Health Products Compliance Guidance.”
On March 31, 2023, the FTC voted, 3-1, to approve the notices, with then-Commissioner Christine Wilson voting no and issuing a separate statement on her final day as a commissioner. Commissioner Rebecca Kelly Slaughter issued a statement, joined by Chair Lina M. Khan and Commissioner Alvaro Bedoya.
If you would like assistance with the FTC notice, please contact Bez Stern, Jeffrey Edelstein or Christine Reilly.