Advertising Law Blog

The Notice of Penalty Offenses Concerning Substantiation of Product Claims identifies five specific potential offenses:

• Making an objective product claim without having competent and reliable evidence to support it at the time;
• Making a health or safety claim without competent and reliable scientific evidence that has been conducted and evaluated in an objective manner by qualified persons and that is generally accepted in the profession to yield accurate and reliable results;
• Representing expressly or by implication that a product is effective in the cure, mitigation, or treatment of any serious disease without relying on at least one human clinical trial of the product that: 1) is randomized, 2) is well controlled, 3) is double-blinded (unless the marketer can prove blinding can’t be effectively implemented), 4) is conducted by qualified people, 5) measures disease end points or validated surrogate markers, and 6) yields statistically significant results;
• Misrepresenting the level or type of substantiation for a claim; and
• Representing that a claim has been scientifically or clinically proven unless the advertiser relies upon evidence sufficient to satisfy the relevant scientific community of the claim’s truth.

The FTC states that receipt of a Notice does not suggest that the company has violated the law. The goal of the Notice is to ensure that the company understands its legal obligations to substantiate product claims and is aware of possible civil penalties in the case of repeat violations. If a company receives a Notice and continues to violate the FTC’s requirements, it can face civil penalties of up to $50,120 per violation.

The FTC recommended that the companies receiving Notices consult the FTC’s Health Products Compliance Guidance. While the Notices focused on health product marketing, other industries are also subject to the substantiation requirements, which apply to any objective efficacy or performance representations.

By attempting to claim a breach of a prior legal determination without a judicial determination, the Notices are an attempt to circumvent the Supreme Court’s ruling in AMG that the agency does not have the power to obtain monetary relief when proceeding under an equitable relief standard. To what extent a court ultimately agrees with the FTC remains to be seen.

Takeaway: Delivery of the Notices ,which come on the heels of the FTC’s Health Products Compliance Guidance, is a clear indication that the FTC intends to renew its focus on false and unsubstantiated health claims in the near future. Whether or not a court ultimately accepts the FTC’s mass mailing of Notices as constituting a prior legal determination may be a secondary concern once a marketer is facing significant exposure for alleged unsubstantiated health claims.