FTC’s “Friendly Reminder” on Product Claims
In early April of 2023, a Notice of Penalty was issued to nearly 700 companies by the Federal Trade Commission that focused on the substantiation of product claims. Not to be confused with the FDA, whose jurisdiction is primarily over claims appearing on product labeling, the FTC’s jurisdiction is over claims made in advertising. They state that “claims in advertisements must be truthful, cannot be deceptive or unfair, and must be evidence-based” (FTC Advertising and Marketing). Both organizations, however, have the right to monitor each other’s categories thanks to the 1971 FDA and FTC liaison agreement.
The goal of the Notice was to ensure companies are aware of acts and practices that are unfair and unlawful under the Federal Trade Commission Act. A few of the main takeaways from the notice include,
- Requiring a reasonable basis from the advertiser that the claim can be backed by reliable evidence.
- Requiring reliable scientific evidence to substantiate the claim.
- Cannot falsely claim or imply the ability of a product to cure, mitigate, or treat any serious disease without statistically significant results from human clinical trials.
An important thing to note is that the notice extends to more than just stated claims. Advertisers are responsible for reasonable interpretations from the consumer. If a consumer can reasonably infer a claim from the advertisement, even if it is not explicitly stated, whatever the marketer’s intent was when making the claim is irrelevant (Section 3(a)(1)). An example given in the Health Products Compliance Guidance is as follows:
Example 1: A brochure for a weight-loss product shows images of doctors in white lab coats looking through microscopes, molecular structures, and a stack of medical journals. These images give an impression of scientific legitimacy and likely convey an implied claim that the product has been clinically proven to be effective for weight loss.
Of the 670 companies that received this notice, most were in the dietary supplement, natural products, or essential oils industries. However, recipients were not restricted to those industries. Major retailers like Amazon, Costco, CVS Pharmacy, Pepsi Co., and a handful of pharmaceutical companies such as Pfizer Inc, Johnson & Johnson, Merck & Co., and AbbVie Inc. were included.
Similar notices have been issued by the FTC in the past. In 2021 two notices were issued detailing the guidelines around Endorsements and Testimonials, and Money-Making Opportunities. It is common for companies to receive notices from the FTC, and it is not an indication that those companies have broken the law. It is merely communicating the importance of substantiating advertising claims in accordance with the Health Products Compliance Guidance document.
Commissioner Christine S. Wilson announced that the “Commission cannot obtain civil penalties for first-time violations” in her statement following the issuance of the notice. This is an important detail to note because it demonstrates that companies are unable to be penalized without having first received a notice from the Commission. Receiving a notice of penalty does, however, allow the FTC to seek civil penalties if the advertisement claims are not deemed to be substantiated. Companies can face fines of up to $50,120 per violation.
To avoid civil penalties, and receiving future notices, it’s important to understand the FTC’s most recent Health Products Compliance Guidance. Difficulties can arise when due diligence is not executed before product launch. Especially because the FTC does not require preapproval before a product launch.
Many problems can be avoided by formulating with qualified product development partners who understand how to supply accurate nutritional and supplemental facts. With Sensapure being Your Destination for Product Development, we are equipped to help you meet your product claims and provide the appropriate documentation behind our materials and flavors.
It’s important to work with experts in the field of product development who know the ins and outs of raw materials to avoid future FTC complications. Working with an experienced attorney who specializes in food and supplement label reviews, and marketing claims is also recommended.
Ensuring that your advertising and product claims follow the FTC mandates can be daunting. Contact us today for product development and assistance with substantiating your product’s label claims.