FTC Denies Request for Rulemaking on Health Claims in Ads

FTC Denies Request for Rulemaking on Health Claims in Ads

WASHINGTONAfter a year-longconsideration, the Federal Trade Commission (FTC) found its practices forinvestigating healthrelated claims are consistent with federal regulations andthe First Amendment. FTC denied a petition filed in April 2003 by Emord &Associates (www.emord.com) on behalf of the First Amendment Health FreedomAssociation (FAHFA) requesting the agency consider rulemaking to amend itspractices concerning advertising claims in the health arena.

The petition requested FTC make four changes to its practicesin investigating health-related claims in advertising for foods, drugs anddietary supplements. It asked FTC staff be required to evaluate the scientificevidence prior to commencing an investigation; identify the specific ad contentconsidered to be misleading; note specific grounds for FTCs belief thatsubstantiation for the claim is inadequate; and issue warning letters as aprimary enforcement mechanism versus conducting formal investigations. Thepetitioners alleged FTCs current investigative practices have an impermissiblechilling effect on health-related advertising claims, which is in violationof the First Amendment; FAHFA also alleged FTC staff members have too muchdiscretion in commencing investigations of health-related claims, which is inviolation of the Administrative Procedure Act.

The Commissions practices and procedures forinvestigating deceptive claims are the same whether an advertiser is making ahealth-related claim or some other type of claim, FTC said in a letter toEmord explaining the decision. FTC responded to each of the four requests inturn. For example, FTC noted companies making health claims are often the mostreliable source of scientific evidence on a product, and that commencinginvestigations is legally supported even if to determine whether a violationoccurred. The agency added it does initial assessments of the merits of a case,including consultation with scientific experts, and continues the discussionwith outside experts and the company throughout the investigation.

Finally, FTC supported its existing investigation structure,noting the agency has issued guidance on evaluating health-related claims andsubstantiation requirements. Given the governments substantial interest inpreventing harm to consumers from deception, the Commission puts the obligationon the advertiser in the first instance to make truthful and substantiatedclaims, FTC wrote. Formal enforcement is typically necessary to deter harmfulactivities in the future and, in appropriate cases, to redress damages caused bythe original deception. FTCs decision and letter are online (www.ftc.gov/opa/2004/04/fyi0426.htm).

Jonathan Emord said FAHFA is reviewing FTCs decision anddetermining its next move. For years, FTC has engaged in an extensivecampaign of enforcement against dietary supplement companiesnot only largefirms and individuals who have engaged in intentional acts of deception but alsosmall firms and individuals who have unknowingly failed to meet anall-too-uncertain FTC competent and reliable scientific evidence standard,falling short of the mark despite the best of intentions, Emord told INSIDER.By refusing to limit enforcement actions to instances involving inherentlymisleading claims and to institute a warning letter system in all otherinstances, FTCs decision makes clear that it intends to maintain its heavyhanded enforcement regime, ignoring the chilling effects on speech and thedevastating consequences to Americas entrepreneurs.