Are Your Ad/Marketing Claims FTC Compliant?

As the natural products industry continues its growth curve and advertising activity escalates, FTC is becoming more attentive to the marketplace and diligent in searching out and punishing companies that advertise using illegal health claims. And not with just a “slap on the hand.” Redress settlements are now commonly in the millions and multi-millions.

As a marketer, you need to understand how FTC functions and what types of claims and language might put you at risk. Just as you would schedule an annual physical to assess your health status, you should also have a regular review of your advertising and marketing claims to make sure you are “in shape” from a regulatory standpoint.

First, it is critical to understand how FTC works. FTC is the primary federal agency regulating advertising and oversees products sold directly to the consumer. It also has broad authority to “prohibit deceptive acts or practices” in advertising that: 

FTC defines false advertising as advertising that is misleading in a material respect, meaning in a way that could influence a consumer’s decision to purchase or not purchase a product.

The agency applies three general legal standards to the regulation of all advertising: substantiation, deception and fairness. Substantiation means the advertiser is accountable for substantiating all objective claims, before they are disseminated, at the level and type of substantiation represented in the claims advertised. Deception means the advertiser makes a material representation, omission or practice that is likely to mislead the consumer. FTC always looks at the practice from the perspective of a “consumer acting reasonably.” Fairness refers to an act or practice that causes or is likely to cause substantial injury to consumers that is not reasonably avoidable.

Applying the Knowledge

Manufacturers must protect themselves by thoroughly knowing their products in terms of ingredients, supporting science and intellectual property. Many unsubstantiated claims are made out of ignorance. The more you understand your product offerings, the better equipped you will be in creating responsible product advertising.

It is vital to understand the market you are doing business in. Take extra precaution in emotion-driven categories such as weight loss, breast enlargement and sexual enhancement, since consumers are often more willing to believe and can be easily misled or deceived. Steer clear of FTC lightening rods such as AIDS, SARS or cancer. In addition, be cautious with serious disease statements. The consequences for a misled consumer are much more substantive, particularly if they forgo traditional treatment to pursue a natural course of action. This would include categories such as heart health, brain health, eye health and joint health.

It also helps to understand the target consumer. Be careful with “vulnerable” consumer segments such as the elderly, children and the disabled. Fairness issues quickly come into play since these groups are more vulnerable.

Common Mistakes

FTC’s Bureau of Consumer Protection keeps a careful eye out for common mistakes made by marketers of natural health products. There are several possible pitfalls to avoid when developing claims language:

Following FTC’s Guidelines

In 1998, FTC published guidelines specifically for dietary supplement advertisers. These guidelines address several issues of importance to supplement advertisers.

First is the issue of substantiation, which is required for both express claims (stated) and implied claims. Implied claims can be the result of both graphics and copy, including the product name. Advertisers are warned to consider the “net impression” of ads in evaluating possible liability. FTC holds advertisers responsible for all reasonable interpretations of advertising.

To avoid issues and accusations of deception, advertisers should be certain to include any qualifying information on the product’s health benefits. In other words, avoid misleading by omission. It is also important to disclose any significant safety concerns. This disclosure must be clear and prominent in terms of language and type size.

Research support must include studies that have been conducted and evaluated by qualified persons using procedures that yield accurate and reliable results. In addition, studies must match the level of support promoted in the ad.

Consumer testimonials can be powerful advertising tools, but some caution is in order. Consumers in ads should not make claims that would be deceptive or could not be substantiated if made directly. The advertiser must also provide adequate substantiation that the testimonial experience is representative of what consumers will generally achieve.

Likewise, expert endorsements can be effective, but also dangerous. The qualifications of the expert must be both appropriate and relevant to the nature of the product and the health benefits it provides. It is also critical to disclose in the ad any material (e.g., financial) connection between endorser and advertiser.

The regulatory environment will continue to evolve, and FTC will, no doubt, get bolder as infractions continue to mount. They will fish where the fish are, and that leaves functional food, beverage and nutraceutical advertisers in a virtual fishbowl. The best defense is to play it smart by calculating the risk, keeping a long-term perspective, and seeking out professional guidance to avoid potholes in the road. 

Jeff Hilton is the president and co-founder of Integrated Marketing Group (IMGbranding.com), a full-service public relations and advertising firm based in Salt Lake City.