March 28, 2016 Practice Points

FTC Targets Deceptive Conduct by Dietary Supplement Manufacturers

By Julie A. Davis

The Federal Trade Commission Act, 15 U.S.C. § 45-58, (FTC Act) and the Controlling the Assault of Non-Solicited Pornography and Marketing Act, 15 U.S.C. §§ 7701-7713, (CAN-SPAM Act) protect consumers against false and misleading product claims and materially false and misleading emails. The FTC has administrative or enforcement responsibilities for various laws, including statutes that relate to the consumer protection and competition mission. The FTC Act is the Commission's primary statute and prevents deceptive or unfair acts or methods of competition affecting commerce; seeks monetary redress and alternative relief for consumers who are injured by deceptive or unfair conduct; defines trade regulation rules, specifying practices or acts that are deceptive or unfair; and creates requirements to stop such practices or acts. The CAN-SPAM Act regulates commercial messages, gives email recipients the right to halt unwanted emails, and spells out stringent penalties for violations.

In Federal Trade Commission v. Sale Slash, LLC, Case No. 15-CV-03107-PA-AJW(x) (C.D. Cal.), the FTC alleged that the advertising schemes, including unsolicited spam emails, fake celebrity endorsements, phony news sites, and banner ads, violated both the FTC Act (15 U.S.C. §§ 53(b) and 57b) and CAN-SPAM Act (15 U.S.C. § 7706(a)) in the promotion of its weight loss products. The FTC claimed that the description of its weight loss products (Pure Garcinia Cambogia and Pure Caralluma Fibriata Extract) as providing quick and substantial weight loss was a misrepresentation and that emails used to promote the products were misleading and materially false.

The FTC's initial complaint was filed in May 2015, and amended in October 2015 to add five additional defendants. Under a settlement entered on February 3, 2016, Sale Slash and associated defendants will be prohibited from making unsubstantiated health-related product claims, misrepresenting any test, study or research, generating misrepresentations like those found on "fake news websites," and myriad CAN-SPAM Act violations. The settlement is anticipated to secure at least $10 million for defrauded customers.

Additional Civil Actions by the FTC
A year-long investigation by the FDA and the U.S. Postal Inspection Service led to a nationwide sweep of dietary supplement cases at the end of 2015. On November 15, 2015, The Department of Justice announced that the FTC (along with other federal agencies) filed several civil cases against individuals and businesses for allegations regarding the promotion of supplements with unsubstantiated claims.

In an FTC complaint filed in the U.S. District Court of Nevada, Health Nutrition Products, Case. No. 2:14-cv-00683, (D. Nev.), defendants—five companies and six individuals—were charged with utilizing direct mail ads and website content to make false and misleading efficacy and health claims for products "W8-B-Gone" and/or "Quick & Easy." At issue were bogus scientific studies and fake weight loss experts used in ads for weight loss pills.

In Federal Trade Commission v. Sunrise Nutraceuticals, LLC, Case No. 9:15-cv-81567 (S.D. Fla.), the FTC's complaint arose from the manufacture and distribution of an herbal product called Elimidrol that claimed to treat opiate addiction and withdrawal symptoms. The ads for this product were deemed false and unsubstantiated and, therefore, deceptive.

In both complaints, the FTC cited "Section 13(b) of the…FTC Act, 15 U.S.C. § 53(b), to obtain permanent injunctive relief, rescission of contracts, restitution, the refund of monies paid, disgorgement of ill-gotten monies, and other equitable relief for Defendants' acts or practices in violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52, in connection with the advertising, marketing, and sale of" the products at issue.

As the above cases illustrate, the FTC has taken a powerful stance against deceptive conduct in the promotion of dietary supplements. Becoming familiar with the intricacies of the FTC Act and CAN-SPAM Acts will facilitate critical legal review of clients' websites, advertising, use of third-party literature, and marketing content.

Practice Pointers:

  • Any direct email marketing should conform to the CAN-SPAM Act. Check out their compliance guide for businesses.
  • Review clients' advertisement and website content for accuracy. Encourage use of peer reviewed research. Claims should be backed by sufficient scientific evidence and comply with the FTC and FDA guidelines.
  • Ensure marketing materials and website content included required FTC and FDA legal notices or disclaimers.

Keywords: products liability, litigation, dietary supplements, marketing, false advertising, CAN-SPAM Act, FTC Act

Julie A. Davis is with The Medical Resource Network, Inc. in Lake Oswego, Oregon.


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