Unsubstantiated Claims May Lead to Civil Penalties

May 3, 2023 by Laura Brett, Vice President, National Advertising Division, BBB National Programs

The Federal Trade Commission (FTC) recently put almost 700 marketing companies on notice: if you can’t back up or substantiate your product claims, you could face civil penalties to the tune of $50,000 per violation.   

Specifically, the FTC calls out that claims “about the health or safety benefits of a product” must be backed by competent and reliable scientific evidence. This comes on the heels of the FTC’s new guidance on Health Products Compliance, which updated the Commission’s 1998 Dietary Supplements guidance. 

The FTC’s concern is not new. When an industry experiences a surge in growth, harmful and misleading claims can proliferate and ignite consumer distrust, spurring the FTC to take a closer look. And, in recent years, as consumers have prioritized wellness, the health and wellness industry has exploded. This seems to have attracted serious scrutiny from the FTC. Questionable health claims abound for products ranging from dietary supplements, essential oils, and flower essences to healthcare apps, wearable devices, or customized IV “wellness” hydration packages.   

Such concerns are not new to BBB National Programs’ National Advertising Division (NAD) either. Distrust in advertising claims in the era of cigarette advertising is what led to the creation, more than 50 years ago, of the U.S. system of advertising industry self-regulation, NAD and its appellate arm, the National Advertising Review Board. The “bedrock principle of FTC law” is the principle of prior substantiation: advertisers are required to have adequate support for both express and reasonably implied claims at the time the claims are made. 

NAD follows that principle when reviewing hundreds of advertising claims each year across all media. NAD’s decisions apply consistent standards for advertising truth and accuracy, delivering meaningful protection to consumers and leveling the playing field for business. 

Here are some tips to avoid the civil penalties the FTC may seek after issuing its latest round of letters, this time advising companies that the law requires competent and reliable scientific evidence to support health or safety claims.  

Advertisers must: 

  • Be laser-focused about the quality of your evidence. The updated FTC Guidance on health-related claims explains the elements of a reliable randomized, controlled trial and what to avoid. Make sure your team and any third parties with which you work are aware of this guidance to ensure your studies are reliable.  
  • Carefully study all of the FTC’s examples in the updated Guidance. They provide a wealth of information as to the applicability of the new guides and provide even more claim substantiation-specific guidance (e.g., what makes for a reliable ingredient study).
  • Don’t overpromise your evidence and underdeliver with disclosures. Avoid qualifying language that conveys a more positive message about the state of the scientific support for a claim than actually exists, and for disclosures, avoid hyperlinks and include visual and audio disclosures if the claims are visual and audible.
  • Scrutinize third-party sources referenced anywhere in your advertising. As noted in one of the examples, an advertiser who indirectly links to a book touting a cancer cure, even if it is “two clicks” away from the advertiser’s website, is responsible for any implied claims that arise from reference to the book in the advertising. 

 

The U.S. economy is built on a fair and transparent product marketplace. It is the responsibility of companies to have adequate substantiation for health and safety claims and to hold their competitors to the same standard.   

Companies can use NAD’s self-regulatory process to increase compliance with truth-in-advertising standards across their industry. Indeed, more than 90% of companies that have the truth and accuracy of their advertising challenged in an NAD case elect to make voluntary changes to their advertising based on our guidance. The wellness industry should make use of this tried-and-true system of self-regulation to rid the marketplace of misleading advertising, build consumer trust, and stay out of the crosshairs of the FTC as it indicates its intent to seek civil penalties for unsupported health and safety claims

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