To borrow a phrase coined by the Supreme Court in a different context, if there is a “star” in the constellation of consumer protection, it is the doctrine of substantiation in advertising.Has been around for decades and was explained in a 1984 report Policy Statementthe basic legal requirements are clear: company must have reasonable basis support their Advertise these claims before spreading them. Several litigation decisions have added detail to the standard, particularly with regard to health and safety claims. However, the FTC’s enforcement actions show that some advertisers continue to flout their long-standing obligation to substantiate their statements with corroborating evidence. The U.S. Federal Trade Commission (FTC) just issued a notice of penalty violations for substantiating product claims, which could increase the costly consequences of violations.
Under Section 5(m)(1)(B) of the FTC Act, if the FTC determines in a proceeding that the conduct was deceptive or unfair, the agency may seek legal action against a company that engages in the conduct in the future. Civil penalties for actual knowledge that it is illegal. To trigger this rule, the FTC can send a company a Notice of Penalty Violation—a document that outlines practices found to be deceptive or unfair. Companies that receive notice but still engage in illegal conduct may face civil penalties of $50,120 per violation.
As FTC watchers know, the agency has release Notices of penalty offenses cover a wide range of offences, including the latest three Non-profit organizations It’s about recognition, money-making opportunities, and education.Notice announced today – and sent to approximately 670 companies involved in the marketing of OTC drugs, homeopathic products, dietary supplements or functional foods to ensure they understand the FTC’s established standards for product substantiation and warn them they will face significant financial consequences if they violate the law. .
You’ll need to read the Notice of Penalty Violations Concerning Substantiation of Product Claims for specific information, but it highlights five practices that violate the FTC Act and cites FTC cases:
- Make objective product claims without relying on strong and reliable evidence to support them;
- Make health or safety claims without relying on competent and reliable scientific evidence that is generally accepted within the industry and is capable of producing accurate and reliable results, conducted and evaluated in an objective manner by a qualified person;
- Express or imply that a product is effective in curing, alleviating, or treating any serious disease without relying on at least one human clinical trial of the product: 1) being randomized, 2) being well controlled, 3) is double-blind (unless marketers can demonstrate that blinding cannot be effectively implemented); 4) is conducted by qualified personnel; 5) measures a disease endpoint or validated surrogate marker, and 6) produces statistically significant results;
- Misrepresenting the degree or type of substantiation of a claim; and
- Indicates that a claim has been scientifically or clinically proven, unlessSS Advertisers rely on evidence sufficient to convince the relevant scientific community that the claim is true.
Receiving a notice does not mean the FTC believes the company violated the law. on the contrary, The goal is Make sure marketers understand their laws obligations and lays the foundation for civil penalties for any future violations.. Furthermore, although the initial recipients are the companies making the health claims, the notice is not limited to that industry.this Case law References in the notice cover all objective Representation of efficacy or performance.
Whether or not your business receives a violation penalty notice, savvy marketers will use this as a cue to conduct a compliance check. A good place to start: The Federal Trade Commission’s Health Product Compliance Guidelines.
