FTC Warns 670 Marketing Companies of Potential Civil Penalties Over Advertised Product Claims
The Federal Trade Commission (FTC) recently sent stern penalty notices to 670 marketing companies, warning them to be prepared to produce appropriate evidence that backs up their advertised product claims, and to review their product endorsements and testimonials to ensure they comply with FTC laws.
The FTC is responsible for enforcing federal laws that prohibit businesses from engaging in deceptive, fraudulent, or misleading advertising about their products or services. The term “advertising” includes TV, radio, print, the internet, and statements or depictions:
Made on product packages and labels.
Contained in promotional materials, such as brochures, pamphlets, or booklets.
Displayed on websites.
Displayed in digital content.
Made in social media and influencer marketing.
Made in press releases, press interviews, or other media appearances.
Made at trade shows, conferences, or seminars.
Indirectly made through healthcare professionals or other intermediaries.
A primary goal of the FTC is to protect consumers from being duped into buying a product based on a company’s fraudulent, deceptive, or misleading claim that may result in harm to consumers’ health, safety, or finances. To do this, the FTC investigates complaints it receives from both consumers and businesses, monitors advertising and marketing claims, and pursues enforcement and other legal action against those who violate this law.
FTC Warning Notice
The FTC penalty notice sent to the 670 marketing companies presents a strong warning message to all companies advertising non-FDA approved products to be prepared for two things: (1) to provide the FTC with appropriate evidence substantiating their advertised product claims, and (2) to prove that the product endorsements and testimonials comply with the legal requirements of the FTC truth-in-advertising law.
Products and Product Claims at Issue
The type of products addressed in the FTC penalty notice involve OTC drugs, homeopathic products, dietary supplements, and functional foods. Essentially, non-FDA approved wellness products. The product claims at issue involve one or more of the following: a claim concerning a product’s health benefits or safety features, its ability to cure, mitigate, or treat any serious disease, or its effectiveness or performance.
The FTC strongly encouraged the recipients to review the agency’s notices of penalty offenses that outline what type of evidence is required for Substantiation of Product Claims and the legal requirements for product Endorsements and Testimonials to determine if they are complying with the law.
FTC on Substantiation of Product Claims
Generally, the Substantiation of Product Claims provides that an advertiser’s act or practice is unfair or deceptive where the advertiser makes a claim about a product and has “no competent and reliable scientific evidence” to support it. Claims made about a product's health benefits, safety features, its ability to cure, mitigate, or treat any serious disease, or its effectiveness or performance fall under this category.
For certain products, the term "competent and reliable scientific evidence" includes product testing in at least one human clinical trial that is randomized, well controlled, double-blinded, conducted by qualified persons, measures disease end points or validated surrogate markers, and yields statistically significant results.
FTC on Endorsements and Testimonials
The product Endorsements and Testimonials notice provides that an advertiser’s act or practice is unfair or deceptive where the advertiser engages in any of the following:
Claims a product or a product’s performance is endorsed by a third party when it is not.
Claims an endorsement represents the experience, views, or opinions of a user or purported user.
Claims an endorser is an actual user, current user, or recent user when he/she/they is/are not.
Continues to advertise a user endorsement that the user no longer supports.
Publishes testimonials containing unsubstantiated product claims even if the testimonials are genuine.
Fails to disclose a connection between the seller of an advertised product and the endorser if this connection might materially impact the credibility or weight of the endorsement and if consumers would not, under reasonable circumstances, expect such a connection.
Claims expressly or by implication that product testimonials represent the typical or ordinary experience of the product users.
The FTC truth-in-advertising law requires companies engaged in advertising and marketing wellness products to ensure their advertised product claims, endorsements, and testimonials are truthful, not misleading, do not contain any health-based related claims, contain any required disclosures, and are substantiated by appropriate competent and reliable scientific evidence. A failure to comply with this law exposes a company to the risk of legal action for engaging in unfair or deceptive acts or practices and the imposition of hefty civil financial penalties. While the FTC penalty notice sent to the 670 marketing companies is a warning message, it serves as a strong reminder to all companies engaged in advertising wellness products that it continues to censor product claims, including product endorsements and testimonials, and may pursue enforcement and other legal action against violators of FTC law.
The information provided in this article is for general informational purposes only. Nothing stated in this article should be taken as legal advice or legal opinion for any individual matter. As legal developments occur, the information contained in this article may not be the most up-to-date legal or other information.