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Yesterday, the FTC’s Bureau of Consumer Protection released its Health Products Compliance Guidance—a sweeping overhaul of the 1998 Guidance, Dietary Supplements: An Advertising Guide for Industry.  Unlike the recently announced effort to review its Green Guides, the FTC did not seek public comment prior to issuing this update. 

According to an FTC blog post that accompanied its release, the new Guidance purports to “correct misunderstandings” and “urban myths” that have circulated about FTC substantiation standards.  In actuality, however, the new Guidance represents a recitation of some of the positions the agency has taken in health-related enforcement matters over the last decade, continuing a stark departure from the prior “flexible” approach to substantiation set forth in the 1998 Guidance.

While FTC guidance does not have the force and effect of law, if a person or company fails to comply with a guide, the Commission might bring an enforcement action alleging an unfair or deceptive practice in violation of the FTC Act.  This makes the new Guidance a must-read for any company operating in the food, supplement, personal care, health equipment or app, or related industries. 

While there is quite a bit of material to digest in this new Guidance, including a new definition of what constitutes a clear and conspicuous disclosure and an entirely new section addressing advertisers’ mischaracterization of FDA approval, here are two main takeaways: 

First, the 2022 Guidance encompasses a far wider industry scope than its predecessor.  While the 1998 Guidance was, by title and content, focused on dietary supplement products, the 2022 Guidance purports to guide advertising practices for “any health-related product,” including dietary supplements, foods, over-the-counter (OTC) drugs, homeopathic products, devices, health equipment, diagnostic tests, and health-related apps.” 

Continue Reading Misguided:  The FTC Attempts to Redefine the Law with its Health Products Compliance Guidance

The FTC sent out new penalty offense notices to 670 companies today, warning them that failure to substantiate product claims could result in civil penalties of more than $50,000. The companies also received copies of the FTC’s previously-issued penalty offense notices regarding endorsements and testimonials. This represents the FTC’s fourth round of penalty offense notices (previous notices involved education practices, money-making opportunities, and endorsements).

We’ve covered the FTC’s use of its long dormant Penalty Offense Authority extensively in prior posts (see here, here, here, here, and here). In those posts, we noted several unanswered questions regarding the FTC’s use of that authority, such as whether the FTC can use dated decisions from decades ago to justify civil penalties for first-time offenses occurring today; whether the facts and legal standards in place today are sufficiently similar to those present in these dated decisions to satisfy statutory requirements; and whether companies are afforded sufficient due process under an expansive use of this authority.

These questions remain outstanding today, as we have yet to see the FTC “put to its proof”’ by defending its interpretation of this authority in court. The only relevant activity we’ve seen so far has been in two recent settlements specifically referencing Penalty Offense Notices (DK Automation and WealthPress).

In today’s warning letters, the FTC outlined another broad array of purportedly deceptive practices that the FTC has determined to be unfair or deceptive in prior administrative cases, including:

  • making an objective product claim without a reasonable basis consisting of competent and reliable evidence;
  • making a health benefits or safety features claim without competent and reliable scientific evidence that has been conducted and evaluated in an objective manner by qualified persons and that is generally accepted in the profession to yield accurate and reliable results, to substantiate that the claim is true;
  • claiming that a product is effective in the cure, mitigation, or treatment of any serious disease without possessing and relying upon at least one human clinical trial of the product that (1) is randomized, (2) is well controlled, (3) is double-blinded (unless the marketer can demonstrate that blinding cannot be effectively implemented given the nature of the intervention), (4) is conducted by persons qualified by training and experience to conduct such studies, (5) measures disease end points or validated surrogate markers, and (6) yields statistically significant results;
  • misrepresenting the level or type of substantiation for a claim; and
  • representing that a product claim has been scientifically or clinically proven without evidence sufficient to satisfy the relevant scientific community of the claim’s truth.

These cited administrative orders focus on a wide variety of product claims, including the biodegradability of certain plastics (ECM Biofilms), efficacy of add-on braking systems, auto fuel-savings devices, and gasoline additives (Auto. Breakthrough Scis., Brake Guard Products, Cliffdale Assocs.), efficacy of hair epilators (Removatron), superiority of microwave ovens (Litton Industries), efficacy of weight loss treatments (Porter & Dietsch), and health claims related to treatment of cancer, erectile dysfunction, heart disease, and other ailments (POM Wonderful, Daniel Chapter One, Thompson Medical, Bristol-Myers Comp., American Home Products).

The notices further encourage companies to reference the FTC’s recently released “Health Products Compliance Guidance,” which – as we noted here – constitutes a sweeping overhaul of the 1998 dietary supplement guidance and a departure from the agency’s prior, flexible interpretation of the “competent and reliable scientific evidence” standard.

We will be watching closely to see how the FTC uses these Penalty Offense Notices in future matters and settlements. In the meantime, we encourage all companies (not only the ones who received notices directly) to review claim substantiation and endorsement practices with an understanding that the FTC staff is continuing its efforts to impose a less-flexible substantiation standard and more stringent disclosure requirements.

For the 26+ years I served at the FTC, the agency always described itself as a “law enforcement agency,” not a “regulator.” That’s because the FTC spent most of its resources on enforcing the FTC Act and other laws passed by Congress, not creating new regulations on its own. While it would be an exaggeration to say that the FTC has become a regulator in the mold of the federal banking agencies or CFPB, Chair Khan is certainly pushing the FTC in that direction. Indeed, the agency’s rulemaking activity has dramatically increased under her tenure.    

From “Whack-a-Mole” to “Rule-a-Palooza”

What explains the change? For one thing, the FTC majority believes that the FTC’s former way of operating (which it often describes as “case-by-case enforcement” or even “whack-a-mole”) hasn’t adequately protected consumers and competition, warranting the creation of stricter, broader rules for the entire marketplace. For another, in the wake of the Supreme Court’s decision in AMG (holding that the FTC can’t obtain monetary relief under Section 13(b)), the FTC is increasingly relying on other legal tools to get money – notably, alleging rule violations wherever possible, which enables the FTC to seek civil penalties and/or consumer redress. Hence the desire for more rulemaking, or what Commissioner Wilson has described (in strongly worded dissents) as a “Rule-a-Palooza.”   

Continue Reading Is the FTC a “Regulator”?  It Sure Seems to be Moving in that Direction  

Welcome to the 2023 inaugural issue of our newsletter, where we explore litigation and regulatory trends and developments from around the food, dietary supplement, and personal care industries.  Like most everybody else, we’ve given up on our new year’s resolutions, so let’s go to the food court.

The Food Court – Vanilla Cases Melt Away But Other Ingredient Theories Rise

With courts expressing continued skepticism about vanilla bean false advertising theories, plaintiffs are targeting a slew of other ingredient-based false advertising angles.  For example, in Patoni et al. v. Spindrift Beverage Co., the plaintiff claims that Spindrift’s “clean” branding and messaging trumpeting that the drinks contain only water and fruit are false and misleading because the products also contain citric acid, which is plainly disclosed on the ingredient declaration.  Because many courts do not expect consumers to look beyond a product’s front panel to read ingredient declarations, those three words – yup, that’s it – which are pervasive in Spindrift’s branding, are likely to be highly significant because they expressly tell the consumer that there is nothing else in the products.

Where consumers are basing their lawsuits on assumptions rather than express claims, courts are more likely to view them as… half-baked.  An Illinois court dismissed a claim that Bimbo Bakery’s brown bread was falsely advertised because the bread’s dark color, visible flecks of grain and “brown bread” name caused consumers to believe it has a higher grain content, when it is actually made with enriched flour and has only 4% of the daily fiber value.  The court found that the plaintiff’s assumptions about the bread content were unreasonable.  Even if the bread’s color and obvious presence of grain suggested that the product had whole grains, it was no guarantee of the product’s precise grain content.  The court stated: No reasonable consumer could conclude what percentage of whole wheat the bread contains merely by these toppings.

Continue Reading Food + Personal Care Industry Insights – January 2023