The FTC issued warnings to nearly 700 companies about allegedly unsubstantiated health-related advertising claims. It’s a reminder that whenever companies make claims about their products—health-related or otherwise—those claims must be substantiated, or the companies risk regulatory penalties and lawsuits.
New Notice Targets Health Related Products
In March, the Federal Trade Commission issued a warning to about 670 companies that they may face civil penalties for failing to substantiate health-related claims about their products. The list of recipients included big names as well as small companies. All of the recipients, however, were warned that the FTC does not believe that specific claims the companies are making can be substantiated. The notice warned the recipients that they could face regulatory action and steep fines if they continue to make those unsubstantiated claims.
Basis for the Federal Trade Commission’s Policy on Advertising Claim Substantiation
Since 1984, the FTC has required advertisers to have a reasonable basis for any advertising claims they make. As a matter of law, firms lacking a reasonable basis for claims are subject to prosecution under Section 5 of the FTC Act. Periodically, the FTC issues notices of penalty to businesses that do not appear to be substantiating their advertising claims.
The FTC notices issued in March targeted 670 companies marketing over-the-counter drugs, homeopathic remedies, dietary supplements, and “functional” foods. Claims made by these businesses must use scientifically accepted methods to substantiate their claims or risk penalties. Within the notice, the FTC identified five types of claims that can lead to penalties if they are not properly substantiated:
- Making an objective product claim without relying on competent and reliable evidence to support it;
- Making a health or safety claim without relying on competent and reliable scientific evidence 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 is: 1) randomized, 2) well controlled, 3) double-blinded (unless the marketer can prove blinding can’t be effectively implemented); and 4) conducted by qualified people. The clinical trial also must 5) measure disease end points or validated surrogate markers, and 6) yield 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 provides a deeper explanation of health product compliance here.
Companies making unsubstantiated claims relating to health and safety face hefty fines under the new notice, of up to $50,120 per violation. These notices are intended to ensure that marketers understand the legal implications of misrepresenting product claims. Where public health and safety are at risk, the FTC is sending a clear message to marketers to substantiate their claims or face steep fines.
The Importance of Advertising Claim Substantiation
Although this notice focused on health-related claims, which can be substantiated in a laboratory, the FTC requirement to substantiate claims applies equally to claims about consumer perceptions or preferences, which are most often substantiated with survey research.
MMR Strategy Group offers this kind of survey research for advertising claim substantiation, marketing research, and for use as evidence in advertising litigation. We provide litigation-ready reports, and our staff includes expert witnesses who can testify about our research in the event of litigation or regulatory actions. To discuss how MMR can help your company substantiate its advertising claims, contact us today.