FTC Makes Fooling Consumers Harder

court jurisdiction The Federal Trade Commission took a stand against deceptive marketing practices, through a consent agreement with GeneLink Bioscience Inc., and a former subsidiary Foru International Corp., who agreed to stop making unsubstantiated claims about their supplements and skin care products. These products were advertised to enhance genetic disadvantages, by using DNA samples from customers to make unique nutritional treatments for conditions like diabetes, insomnia, and heart disease. In addition to the promises they were making to new customers, they were making up testimonials from “allegedly” old customers who were delighted with the results.

The consent agreement requires that all advertising claims be substantiated by two randomized controlled trials. This requirement is the standard that has been applied to most companies that make disease-related claims, even though there are complaints about the time, difficulty, and expense of research for non-pharmaceutical products. The FTC is trying to remove the flexibility that many companies use when advertising and making claims about their products.

In a 3-1 vote, Commissioner Maureen Ohlhausen dissented, stating that the agreement set an “unduly high standard.” Many agree with Ohlhausen in wishing the FTC would adopt the Pfizer balancing test.

“The Commission has traditionally applied the Pfizer factors to determine the appropriate
level of substantiation required for a specific advertising claim. These factors examine the nature of the claim and the type of product it covers, the consequences of a false claim, the benefits of a truthful claim, the cost of developing the required substantiation for the claim, and the amount of substantiation experts in the field believe is reasonable for such a claim. One of the goals of the Pfizer analysis is to balance the value of greater certainty of information about a product’s claimed attributes with the risks of both the product itself and the suppression of potentially useful information about it. Under such an analysis, the burden for substantiation for health- or disease-related claims about a safe product, such as a food, for example, should be lower than the burdens imposed on drugs and biologics because consumers face lower risks
when consuming the safe product.”
Statement of Commissioner Maureen K. Ohlhausen, January 7, 2014.

One of Ohlhausen’s arguments is that by setting the bar too high, companies and consumers are actually harmed when hurdles are too difficult to allow new business and new ideas into the marketplace. While it is true that the requirement of two randomized trials will make it impossible for many companies to bring their products to the marketplace, it is just as true that consumers trust and believe the claims made about the products they buy. Already, there is much higher standard on claims regarding pharmaceutical and non-pharmaceutical products than the requirements for food. If a consumer buys bottled-iced tea, they might care less about the ingredients or claims that the tea will quench thirst. However, when those same consumers are looking for a product to heal a rash or remove age spots, the product had better provide the treatment it promised. Any product that does not perform as advertised is subject to false advertising claims, misbranding, and misrepresentation. Consumers are drained by quick fixes and gimmicks that promise everything and only guarantee to take their money.

The Importance Of Being An Informed Consumer

An informed consumer can certainly make decisions on what is good for them and what may not be beneficial to them. To be informed the consumer, must be presented with the correct information. When companies make claims regarding their products, consumers have no other alternative except to believe that the claims are valid and tested. The only other option is to question the validity of the claims and let the product sit on the shelf. Now that the FTC has taken a stand against another false advertising company, the message should be clear that claims need to be accurately supported by independent scientific data.

Texas Business and Commerce Code:
Sec. 17.46. DECEPTIVE TRADE PRACTICES UNLAWFUL.(a) False, misleading, or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful and are subject to action by the consumer protection division under Sections 17.47, 17.58, 17.60, and 17.61 of this code.

Relief for Consumers:
Actual damages (Texas Bus. and Com Code § 17.50(b)(1))
Three times the amount of actual damages if the advertiser acted intentionally (Texas Bus. & Com Code § 17.50(b)(1));
Injunction (Texas Bus. & Com. Code § 17.50(b)(2));
The return of money or property acquired by the unlawful advertising (Texas Bus. & Com. Code § 17.50(b)(3));
The cost of reasonable attorney’s fees and costs of the person suing, if that The person wins the lawsuit (Texas Bus. & Com. Code § 17.50(d))

The Chairwoman Edith Ramirez and Commissioner Julie Brill, wrote in there majority opinion the following:

“We also disagree that the proposed remedy will deny consumers access to useful information about new areas of science. The value of information naturally depends on its accuracy.10 As the D.C. Circuit has emphasized, “misleading advertising does not serve, and, in fact, disserves, th[e] interest” of “consumers and society . . . in the free flow of commercial information.” FTC v. Brown & Williamson Tobacco Corp., 778 F.2d 35, 43 (D.C. Cir. 1985) (citation and internal quotation marks omitted). If respondents wish to rely on emerging science, they can qualify their claims accordingly. Properly qualified claims are lawful and permissible under our proposed orders.”
Statement of Chairwoman Edith Ramirez and Commissioner Julie Brill, In the Matter of GeneLink, Inc. and Foru International Corporation,January 7, 2014.

Consumers depend on the accuracy of labeling and the honesty of companies that manufacture products. Deceptive advertising is no different than stealing the hard-earned money of consumers who buy products in good faith. There are Texas and Federal laws that give consumers relief for the false and misrepresented claims companies make about their products. The rights of consumers need to be valued and respected.

If you have been misled by a company, you need an attorney to help you enforce the laws designed to stop that behavior. Call The Loewy Law Firm today to set up a free consultation.