We reported a few weeks ago about a new warning from FDA related to the safety of certain teething-related, non-prescription homeopathic drug products, and in that post we mentioned that both FDA and the Federal Trade Commission (FTC) held public workshops in 2015 to gather information about this uniquely-regulated class of consumer products.  Today, FTC released an Enforcement Policy Statement on Marketing Claims for OTC Homeopathic Drugs  (available here); a Staff Report on the discussions held during the September 2015 workshop (available here); and an FTC blog post summarizing these actions.

For readers who are not familiar with homeopathy, the practice dates back to the 1700s and posits that disease symptoms can be treated by tiny doses of substances that produce similar symptoms if given in larger doses to healthy people (“like cures like”).  Accordingly, modern-day homeopathic remedies that we find ubiquitously in drug stores today are highly diluted formulations, which some people consider to be no more effective than placebo.  The FTC Staff Report provides an excellent overview of how this OTC industry has grown over the past 50 years and the viewpoints presented by both supporters and skeptics of homeopathy.

 The upshot to the new FTC Enforcement Policy is this:
 “No convincing reasons have been advanced either in the comments or the workshop as to why efficacy and safety claims for OTC homeopathic drugs should not be held to the same truth-in-advertising standards as other products claiming health benefits.”

Continue Reading FTC Issues Long-Awaited Enforcement Policy on OTC Homeopathic Drugs

“…Clowns to the right of me, jokers to the left, here I am…”

-Stealers Wheel (1972)


Legal actions regarding “Made in the USA” claims, whether prosecuted by the Federal Trade Commission (FTC) or through various state unfair trade practices acts, often settle early in the proceedings.  For example, in 2014, the FTC issued 16 “closing letters” wherein the target company agreed to revise its “Made in the USA”  claim to clarify that its products, even those assembled in the United States, included imported components. In 2015, the FTC issued 28 such “closing letters”; and in 2016, to date, the FTC has issued 18.

Earlier this month, Chemence, Inc., the Ohio maker of Kwikfix, Hammer-Tite and Flash Glue, entered into a settlement with the FTC.  Chemence was the third glue company that has resolved its claims issues with the FTC since 2015.   Toagosei America, Inc., makers of the Crazy Glue brand, and Gorilla Glue both previously reached agreement with the FTC, with FTC issuing closing letters after both companies agreed to make clear that their products included some imported materials.

Chemence’s path to resolution with the FTC was different.  Continue Reading Stuck in the Middle with the FTC

It seems as though 2016 may become the year that industry receives a plethora of helpful interactive portals from Federal Agencies.  My colleague Matt Cohen recently reported on the existence of a new CPSC tool called The Regulatory Robot that’s helping businesses identify the product safety rules that might apply to a new product.  This week, the Federal Trade Commission (FTC) — in conjunction with the Food and Drug Administration (FDA), the Office of Civil Rights (OCR), and the Office of the National Coordinator for Health Information Technology (ONC), all agencies housed within the Department of Health and Human Services — launched a similar portal for mobile app developers.

FTC Health App toolThe FTC’s interactive tool walks developers of health-related mobile apps through a series of ten questions and then points them to critical Federal laws that may apply to their product.  Mobile apps often collect, create, or share consumer information, thus implicating the FTC Act, which prohibits unfair or deceptive trade practices in or affecting commerce, including practices that relate to data security and consumer privacy.  The FTC Act also prohibits false or misleading claims about the performance of a mobile app product or about its potential safety, if relevant to the app’s function.  FTC also enforces a breach notification rule that requires certain businesses to notify consumers following breaches to their personal health information.  The Commission also released a new guidance, “Mobile Health App Developers: FTC Best Practices,” at the same time as the interactive tool in order to provide additional compliance tips to businesses who are covered by the FTC Act.

Next, the interactive tool asks questions to determine whether the mobile app is intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment or prevention of disease – an affirmative answer will likely render the product a medical device under the Food, Drug, and Cosmetic Act.  FDA has focused its regulatory oversight on what it calls “mobile medical apps” that have the potential to pose risks to consumers, but there may be situations in which lower-risk medical apps are subject to certain medical device requirements as well.

Finally, if a wellness or other health-related app is developed by or on behalf of an entity covered by the Health Insurance Portability and Accountability Act (HIPAA), then HIPAA rules on privacy and security will probably apply.  OCR is responsible for enforcing HIPAA and separately released a guidance earlier this year that provided examples of when a mobile app developer may become subject to the law (as discussed recently in a post on our sister blog, Health Law & Policy Matters).

An April 5th FTC press release includes comments from each of the agencies involved in enforcing these various laws and their application to mobile app products.  In our view, the agencies should be applauded for this effort at transparency and facilitating compliance by small businesses who may be overwhelmed with the various legal analyses they need to undertake before releasing a new mobile app product.  The only other comment from us is that having the Mobile Health Apps Interactive Tool running slows down your other computer programs a lot, so be forewarned if you plan to use it!

The potential pitfalls of native advertising were on display this month at the Federal Trade Commission (FTC). The agency reported that national retailer Lord & Taylor settled with it on charges that the company improperly paid for native advertisements. Lord & Taylor allegedly did not disclose that an article in the online publication Nylon, as well as a Nylon Instagram post, were paid promotions for one of the company’s clothing collections. In addition, the company allegedly gave fashion “influencers” dresses and then paid them to post photos wearing them on social media. The company’s contracts with the influencers obligated them to use the “@lordandtaylor” Instagram user designation and hashtag “#DesignLab” in the captions of their photos. The FTC charged that Lord & Taylor did not require the influencers to disclose that they were compensated by the company (none did).

The FTC unanimously voted to issue a complaint and approve a proposed consent agreement. The agreement:

Continue Reading National Retailer Settles FTC Native Advertising Complaint

We blog frequently about new regulatory developments coming from CPSC or FDA and about enforcement actions brought by those federal agencies as well as state counterparts and private plaintiffs.  But we don’t very often discuss actions involving the Federal Trade Commission (FTC) and its enforcement of the FTC Act’s broad prohibition on unfair or deceptive acts or practices, which incorporates false advertising for consumer products such as food, cosmetics, OTC drugs, medical devices, and goods overseen by the CPSC.  We thought it was worth a quick reminder that this area can be fraught with booby traps for the uninitiated advertiser.

The FTC Act is the primary federal law enforcement tool for preventing false advertising that has the capacity to deceive consumers. Continue Reading Reminder – Truthful Advertising Is Not Optional

Made in the USA Labeling RequirementsA courtroom battle concerning a manufacturer’s alleged false marketing of allegedly foreign-produced products as “Made in USA” is potentially nearing a resolution.  On November 30, 2015, the lead plaintiff in Paz v. AG Adriano Goldschmied, Inc. et al. asked the court for preliminary approval of a $4 million settlement between class members and defendants Nordstrom, Inc. and AG Adriano Goldschmied Inc. (“AGAG”).  The lawsuit accuses defendants of falsely marketing jeans—manufactured by AG and sold by Nordstrom—as entirely made in America when they allegedly contained foreign components (such as the jeans’ fabric, thread, buttons, and rivets).  Bringing claims under California’s consumer protection laws, plaintiff’s class action complaint alleges that consumers’ belief that domestically-made products are of higher quality than foreign-made products allows defendants to charge a premium for clothes labeled “Made in USA.” Continue Reading Settlement Looms for “Made in USA” Jeans Suit

POM Juice and PomegranatesWritten by: Timothy Slattery

In part two of this two-part series, we explore two critical takeaways for those facing potential government intervention: (1) the implications of the Court’s deference to the Commission, and (2) whether a substantive disclaimer is a silver bullet to avoid agency scrutiny (or, at least, an agency win).

A Second Quick Glance at POM Wonderful

To briefly recap, the District of Columbia Circuit Court of Appeals handed the Federal Trade Commission a critical win on January 30, 2015 by affirming the Commission’s January 2013 decision holding POM Wonderful LLC in violation of the FTC Act for its deceptive advertisements alleging pomegranate juice and supplements could treat, prevent, or reduce the risk of heart disease, prostate cancer, and erectile dysfunction.  The decision shows the continued reach of the FTC into the scientific bases for health-related advertising, the extensive deference courts give to the agency’s expertise, and that substantive disclaimers may be the only way to avoid liability.

Agency Deference Increases the Commission’s Home-Field Advantage

Continue Reading FTC Tastes “Sweet” Victory: The Implications of POM Wonderful for Government Practice

POM Wonderful vs. FTC in DC Court of AppealsIn this first post of a two-part series, we take a closer look at last Friday’s decision in POM Wonderful v. FTC by the U.S. Court of Appeals for the District of Columbia, which has meaningful implications for how companies advertise their products’ health benefits to consumers. The decision bolsters the Federal Trade Commission’s position that, when a company makes specific claims that its products’ health benefits are scientifically “established,” it must have “competent and reliable scientific evidence” to substantiate these claims–specifically, at least one randomized controlled trial (RCT), the “gold standard” in the medical and scientific fields. A company relying on studies that do not meet this gold standard, like POM Wonderful, risks being charged with false or misleading advertising by the Commission.

For consumer-product companies making health claims–especially in litigation-heavy states like California–the logical next question is whether POM Wonderful somehow exposes them to liability from consumer plaintiffs if they fail to meet the standard articulated in the decision. The short answer is that it does not; POM Wonderful is not likely to “change the game” in the world of private class actions for consumer fraud and false advertising. The reason: what courts and counsel have come to call the “prior substantiation” doctrine. And it has important ramifications for how companies should view and respond to class actions brought in the decision’s wake.

POM Wonderful at a Glance
Continue Reading No Representation Without Substantiation? What POM Wonderful v. FTC Means for Consumer Class Actions

FTC Full Disclosure AdvertisementsIn this blog we often discuss products being subjected to a lawsuit based on allegations that a label is false or misleading under California’s consumer protection laws.  The Federal Trade Commission is similarly concerned with the prevention of false and misleading claims, but its focus is also on the product’s advertising, not just its labeling.

Recently, FTC sent warning letters to more than 60 companies – including 20 of the 100 largest advertisers in the country – saying that the companies failed to make adequate disclosures.  The initiative, called Operation Full Disclosure, was brought after the agency reviewed national television and print advertisements.

The inadequate disclosures fell into different categories – from not adequately disclosing the conditions for obtaining a stated price (such as an automatic billing feature or the need to buy an additional product or service), to claiming that a product was unique or superior but not disclosing the narrow definition applied or the basis of the comparison.  Other ads made absolute statements but did not adequately disclose exceptions or limitations, did not adequately disclose issues related to the safety or legality of a product or service, or did not disclose material alterations to a product demonstration.

If you received such a letter, or if you want to review your advertising to make sure it is in compliance with FTC’s standards, you can follow its performance standard of “Clear and Conspicuous” disclosures.  That is, a disclosure is clear and conspicuous if consumers notice it, read it, and understand it.  Instead of dictating the specifics of font size, etc., FTC advises companies to focus on “The 4 Ps”:

Continue Reading Operation Full Disclosure! FTC’s Frontal Assault on Ads

A recent federal decision has made clear that court-ordered recalls can have real teeth, not just for manufacturers but also their officers—especially when the court has reason to suspect a company’s execs are deliberately dragging their feet.

On Tuesday, September 2, the Northern District of Georgia held the CEO and a senior vice president of Hi-Tech Pharmaceuticals in contempt for their repeated delays in carrying out a court-ordered recall.  The court had issued the original recall order in May 2014, finding that Hi-Tech had run afoul of a long-standing injunction by continuing to make unsubstantiated weight loss claims about its dietary supplement products in violation of Sections 5 and 12 of the Federal Trade Commission Act.  Months later—and with the recall far from complete—the court ordered the executives jailed as a sanction.

Expressing concern that the execs were not implementing the recall in good faith, the court emphasized several facts justifying the harsh penalty:

Continue Reading Do Not Pass Go: Federal Judge Orders Execs Jailed for Contempt of Recall Order