FTC’s aggressive enforcement of federal law prohibitions against false and deceptive advertising have hit marketers of healthcare products hard, while class action lawsuits are reaching the digital health market. FTC actions regarding health, wellness and beauty (cosmetics) products, showcase FTC’s activity in this arena and suggest key pitfalls that makers of health and wellness products should seek legal review to avoid.
If you’ve received emails like, “Breaking news…,” and “Hi! Oprah says it’s excellent,” followed by hyperlinks, then you may understand why FTC intervenes.
Let’s look at:
- weight-loss products (a perennial favorite of FTC enforcement activity)
- wearable health tech / mobile and digital health products / fitness trackers
- hair care products (consider these a variation on skin care products, also a target of enforcement)
Of Fat and Beauty
On the weight loss end, among other activities, FTC halted marketing of weight loss products by Sale Slash.
According to the press release, the company “allegedly used millions of illegal spam emails, along with false weight-loss claims and fake, unauthorized endorsements from celebrities like Oprah Winfrey, to market its unproven diet pills.”
The activities cited by FTC included, that the company “used affiliate marketers to send illegal spam emails and post banner ads online that led consumers to fake news sites designed to appear as if an independent consumer reporter, rather than a paid advertiser, had reviewed and endorsed the products. The complaint alleges that these fake news sites made false weight-loss claims and used phony celebrity endorsements to promote the defendants’ diet pills.”
The weight-loss supplements involved included: “Premium Green Coffee, Pure Garcinia Cambogia, Premium White Kidney Bean Extract, Pure Forskolin Extract, and Pure Caralluma Fimbriata Extract.”
As to the spam emails, FTC noted:
Because the messages were sent to the “contacts” of hacked accounts, they appeared to be coming from a friend or family member instead of defendants’ affiliates. The spam often contained no information about how consumers could opt out of getting future emails. Sale Slash’s affiliate marketers also placed banner ads making claims like, “1 Tip for a tiny belly,” “Cut down on a bit of your belly every day following this 1 old weird tip,” and “Garcinia Cambogia Exposed – Miracle Diet or Scam?”
Spam emails – obviously a problem. Claiming miracles for a dietary supplement – another. Fake sites, even worse. As to endorsements, these have to comply with FTC rules.
Substantiation, “Clinically Proven,” Testimonials & Endorsements, and Claims about Practices
Manufacturers of health, wellness and beauty products typically make 4 mistakes that will then incur FTC enforcement activity:
- They fail to adequately substantiate their products
- They say the health and wellness product is “clinically proven” but have no or inadequate supporting evidence
- They make claims about their own practices but do not do what they say they do
- They don’t follow FTC rules about testimonials and endorsements
As an example, in another case, FTC went after a company advertising that their dietary supplement causes substantial weight for women over 40, and is “clinically proven.”
Many of our clients have come to us with new products going to market, having flimsy support for their claims … not realizing that failing to adequately substantiate a dietary supplement or cosmetic claim can generate not only FDA enforcement action, but also action by the FTC and litigation by private plaintiffs’ lawyers, who are out looking for these gaps in evidence to launch a class action lawsuit.
Also, many companies slap on a label, “clinically proven,” but lack the clinical evidence; or, there is some evidence, but it does not reasonably prove the claim.
According to the FTC’s complaint, however, a clinical trial conducted in 2001 by the Russian scientists who developed the Amberen formula, used a double dose of Amberen and did not specifically measure weight loss; a subsequent clinical study failed to show a statistically significant difference in weight loss between the test and control groups.
In other words, FTC takes the substantiation requirement seriously, and will review the evidence and draw conclusions as to whether the clinical proof is there or not.
As well, FTC reviews endorsements for compliance with its guidelines on testimonials and endorsements:
The FTC also charges that the defendants falsely claimed a consumer satisfaction and success rate of 93 percent and failed to disclose their relationship with certain endorsers, including one who blogged about the benefits of the supplement.
Another area where dietary supplements and cosmetics companies run afoul of FTC is when they make statements (or claims) about their practices, and then fail to honor those practices. Here, for example:
The complaint further alleges that the defendants falsely claimed that consumers could try Amberen “risk-free” for 30 days, through statements such as, “You can try Amberen absolutely risk FREE and get a one month supply FREE.” In fact, customers were provided a ninety-day supply of Amberen and to qualify for a refund, consumers had to return two unopened product boxes at their own expense, within 30 days of placing the order. Moreover, in many cases consumers were not reimbursed the shipping and handling charges they had paid when they ordered the product.
As the expression goes, “say what you mean and mean what you say.” FTC takes seriously its prohibition against false and deceptive advertising, and this includes advertising about what the company actually will or will not do for its consumers.
Class Action Litigation Risk
As noted, FTC is not the only gorilla in the room; private plaintiff litigation is also rampant.
Just yesterday, an FDA attorney colleague shared with me his favorite example of litigation run amuck: a class action notice involving “a class of patrons who were exposed to Defendants’ menus, and who purchased, from Jimmy John’s restaurant in the United States, a sandwich identified on a Jimmy John’s menu as containing alfalfa sprouts but which in fact did not contain alfalfa sprouts (the “Subject Food Products”).”
Plaintiff alleged claims including violation of California’s false advertising and consumer legal remedies statutes.
Is this both bad financial news and a PR debacle for the company? Of course.
Don’t say you include sprouts when you don’t include sprouts!
Class Actions against Mobile Health (digital health) Companies
Speaking of class actions involving health and wellness products, consider the class action brought against Fitbit, “maker of wearable, wireless-enabled devices that purportedly track exercise and other fitness and physical activity to measure data such as the number of steps walked, calories burned, and other personal metrics” (according to the complaint).
The gist of the complaint is that Fitbit made claims about its “sleep-tracking function” to track “how long you sleep,” “the number of times you woke up,” and “the quality of your sleep.” The complaint alleges that the Fitbit sleep-tracking function “does not and cannot do these things. It cannot perform as advertised. Consumers who pay for this function do not receive the value of the function for which they paid.”
The lawsuit is to “stop this unlawful practice” – read, Fitbit would have to remove the sleep-tracking function from its products, or stop advertising as it does; “force the Defendant to return and disgorge its inequitable profits, and recover for customers the overcharges which they paid.” Read – a lot of $$$$ for the plaintiffs as a class, if successful. The complaint alleges that damages exceed $50 million.
What mobile or wearable device manufacturer wants to “disgorge profits” or have them tagged as “inequitable?”
Going deeper into the complaint, there is discussion of various sleep-tracking technologies and allegations that Fitbit’s marketing and advertising suggests a level of accuracy in measuring sleep that the device cannot attain. Through various graphical images, “Fitbit, Inc. goes beyond even those exact, mathematical representations, though, and represents to consumers that the sleep-tracking function can actually take those numbers … to determine, to an exact percentage, the quality and efficiency of the consumer’s sleep. This, plainly, is false…. Fitbit, Inc. has egregiously overstated the ability of the Fitbit sleep-tracking function to perform as advertised.”
The complaint goes on to allege public health concerns from “thinking you are sleeping up to 67 minutes more than you actually are.”
- Violation of California’s Consumers Legal Remedies Act, Civil Code sections 17200, et seq.
- violation of California’s False Advertising Act, California Business & Professions Code sections 17500, et seq.
- Violation of California’s Consumers Legal Remedies Act, Civil Code sections 1750, et seq.
- Violation of the Magnuson-Moss Warranty Act, 15 USC 2301, et seq.
- Breach of express warranties
- negligent misrepresentation
- unjust enrichment, restitution, quasi-contract
The lessons for manufacturers of wearables and fitness tracking devices are clear:
- Have all marketing claims reviewed in depth by legal counsel to ensure the claims are adequately substantiated and defensible in case of enforcement action by FDA or FTC, or a class action lawsuit.
- Have the legal review drill down into the detail of the evidentiary basis for claims, even if they are claims (such as “sleep-tracking”) that are commonly made by other wearable and fitness tracking device manufacturers.
- Legal review should include the graphics and images and the representations they make or imply to the consumer, and ensure that these are defensible – or better, as impregnable as possible so as not to give ground to a possible claim.
When a company is in defense mode, as in here, its choices are either to defend or negotiate. An ounce of legal prevention is worth a pound of cure.
FTC Challenges Marketers’ Claims that Dietary Supplements Prevent Gray Hair
On the other side of the wellness coin, makers of “Get Away Grey” and “Go Away Gray” can no longer make “gray hair elimination claims unless they have reliable scientific evidence to support them.”
Even FTC has a sense of humor, apparently:
“These companies claimed their supplements could treat gray hair at its roots,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “In fact, their root problem was a lack of evidence for their claims.”
Included in FTC’s complaint against the companies are consumer testimonials as well as company statements about the purportedly grey-reversing products. FTC will “also require the defendants to retain certain records of human clinical testing that they rely on as competent and reliable scientific evidence.”
Legal Strategy Matters
The bottom line is that when marketing a health, wellness or beauty product, whether a medical device, cosmetic, dietary supplement, or drug, look not only to compliance risk vis-à-vis the FDA, but also to risks coming from FTC enforcement. This means that a company’s website and all marketing materials should be reviewed for possible risk of FTC enforcement action. As well, there are other FTC rules that need to be complied with, including rules about how a company handles testimonials and endorsements, whether by ordinary consumers or by celebrities.
Often, the more aggressive the marketing claims, the more important it is to have an FDA and FTC lawyer review marketing decisions and recommendations. Find a law firm that understands the need to provide practical legal advice, weighing legal risk exposure against marketing gains and taking a realistic view of the options. Ask us to review your dietary supplement, cosmetic, medical device, homeopathic remedy, or drug product to assess your liability risk and recommend mitigation.