|Footnotes for this article are available at the end of this page.
In 1978, Bruce Springsteen sang “Prove It All Night.” Forty-five years later (on April 13, 2023), the Federal Trade Commission (“FTC”), a different Boss, reminded approximately 670 over-the-counter drug, homeopathic product, dietary supplement, and functional food companies of its obligations relating to product claim substantiation when it sent out Notices of Pending Offenses.1
- In its 1984 Policy Statement, FTC articulated the Commission’s policy with respect to advertising substantiation, namely, that companies should have a reasonable basis to support advertising claims before those claims are made.2
- According to Section 5(m)(1)(B) of the FTC Act, if the Commission concludes in a litigated proceeding that conduct is deceptive or unfair, it may seek civil penalties against a company that engages in those practices with actual knowledge that it was unlawful.
- To start this process, FTC can send a company a Notice of Penalty Offenses, which lists the conduct found to be deceptive or unfair. A company that receives a Notice and then continues to promote unlawfully can face civil penalties of $50,120 per violation.
- The Notice issued recently was sent to approximately 670 companies involved in various food and drug industries to remind them of FTC’s standards regarding product substantiation and the cost of non-compliance.
- The Notice focuses on five practices that violate the FTC Act:
- making a 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 provide accurate and reliable results;
- representing expressly or by implication that the 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: (1) is randomized; (2) is well controlled; (3) is double blinded (unless the marketer can prove blinding cannot be effectively implemented; (4) is conducted by qualified people; (5) measures disease end points or validated surrogate markers; and (6) yields 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 on evidence sufficient to satisfy the relevant scientific community of the claim’s truth.
- It is important to understand that receiving a Notice is not an indication that the FTC believes there is a violation of law.
- Companies should take note that FTC has ramped up enforcement efforts in the consumer packaged goods space in recent years. Well-established companies as well as young, growing companies are recipients of the FTC Notices — no one category or market segment is targeted.3
- Companies should have a system in place to holistically review all public-facing creative assets, such as packaging, labeling, web copy, product inserts, social ads, commercials, etc., before they are published to ensure potential red flags are addressed and risks are minimized in terms of advertising law compliance, and to verify compliance in ancillary legal areas, such as trademarks, copyright, patent, FDA, EPA, and the like.
- Companies new to the aforementioned creative review process should conduct a compliance audit of claims made (or implied) on or in their creative assets.
- Substantiation must be in place before the claim is made. And substantiation must be reliable, i.e., objective and repeatable.
- Companies must review all product claims before dissemination; a Promotional Review Committee (or similar function) can do this.
- Life science companies know that FDA can regulate product labels and promotional claims, but they should not forget that others are watching, such as FTC (and competitors, consumers, state agencies, plaintiff lawyers, and the Department of Justice, to name some others).
- We have prepared Bulletins, webinars, and podcasts on these types of issues:
- To come full circle, if you don’t prove it all night, you’ll be up all night (and day) paying the price for non-compliance.
 The FTC Notice can be accessed at https://www.ftc.gov/enforcement/notices-penalty-offenses/penalty-offenses-concerning-substantiation.