FTC Threatens Almost 700 Health Product Companies With Civil Penalties for Misleading Advertising

FTC Threatens Almost 700 Health Product Companies With Civil Penalties for Misleading Advertising

April 25, 2023 By

The Federal Trade Commission (FTC) announced On April 13, 2023, that it has sent notices to approximately 670 companies involved in the marketing of dietary supplements, functional foods, over-the-counter (OTC) drugs, and homeopathic products concerning substantiation of product claims.

These notices carry penalties of up to $50,120 USD per violation. The notices outlined 5 areas of non-compliance to FTC law, including:

  1. A reasonable basis consisting of competent and reliable evidence for product claims
  2. Competent and reliable scientific evidence to support safety claims
  3. At least one randomized, controlled human clinical trial to support claims that a product is effective in curing, mitigating, or treating serious disease
  4. Misrepresenting the level or type of substantiation for a claim
  5. Misrepresenting that a product claim has been scientifically or clinically proven

This statement from the FTC shows that it is prepared to enforce claims compliance as set out within the December 20, 2022 publishing of the new guidance document “Health Products Compliance Guidance” for advertising and marketing health claims. For your convenience, we have written a review of that guidance document here.

The Commission voted 3-1 in favour of issuing the penalty notice on March 31, 2023, with former Commissioner Christine S. Wilson being the single vote against the issuance of the penalty notice. Wilson issued a separate statement providing a rationale behind her dissenting vote, stating it would be inappropriate to seek civil penalties in substantiation cases and further that deceptive claims would be difficult to prove by the commission and not be an “efficient use of [the commission’s] scarce and finite resources”.

What does this mean for industry?

These notices act as a warning to industry that the FTC is prepared to act in the form of civil penalties against any advertisers using unsubstantiated product claims. However, outside of the monetary penalty, it remains to be seen how, and when, these remedial actions will take place.

It is recommended that any advertiser making product claims review their substantiating evidence and ensure that they meet the FTC’s definition of “competent and reliable scientific evidence”. dicentra can assist with advertising and promotional materials review to help ensure your product claims are compliant with the FTC. Also, companies seeking “competent and reliable scientific evidence” should consider our clinical trial services as evidence from randomized, controlled human clinical trials is considered the gold standard for claims substantiation by the FTC.

This article provides a supplemental review of “FTC Warns Almost 700 Marketing Companies That They Could Face Civil Penalties if They Can’t Back Up Their Product Claims” and is not a substitute for reading the press release. Please access the full press release here.