On April 13, FTC put approximately 670 advertisers (see full list, which includes many prominent industry companies, here) on notice that they should "avoid deceiving consumers with advertisements that make product claims that cannot be backed up or substantiated." Hundreds of companies were sent notifications from the agency, which said it "will not hesitate to use its authority to target violators with large civil penalties." An announcement from FTC noted that the agency is using its penalty offense authority "to remind advertisers of the legal requirement to have a reasonable basis to support objective product claims." And if they don't have that backing, FTC is hoping this action will deter advertisers from making deceptive claims in the future.
“The requirement for advertisers to have adequate support for their advertising claims at the time they’re made is a bedrock principle of FTC law,” said Sam Levine, Director of the FTC’s Bureau of Consumer Protection, in the announcement. “The prospect of steep civil penalties will help ensure that advertisers don’t play fast and loose with the truth.”
"Significant civil penalties" for companies that don't comply
Unlawful acts and practices outlined in the notices include:
- failing to have a reasonable basis consisting of competent and reliable evidence for objective product claims;
- failing to have competent and reliable scientific evidence to support health or safety claims;
- failing to have at least one well-controlled human clinical trial to support claims that a product is effective in curing, mitigating, or treating a serious disease;
- misrepresenting the level or type of substantiation for a claim;
- misrepresenting that a product claim has been scientifically or clinically proven.
In an FTC Business Blog discussing the issue, Lesley Fair explained: "Receiving a Notice isn’t an indication that the FTC thinks the company has violated the law. Rather, the goals are to ensure that marketers understand their legal obligations and to establish a basis for civil penalties for any future violations. Furthermore, although the initial recipients are companies making health claims, the Notice isn’t limited to that sector. The caselaw cited in the Notice covers all objective efficacy or performance representations."
Fair also had a recommendation for the industry at large: "Whether or not your business received the Notice of Penalty Offenses, savvy marketers will take it as a cue to conduct a compliance check. A good place to start: the FTC’s Health Products Compliance Guidance."