Nestle, Iovate Settle with FTC

WASHINGTON FTC announced two settlements related to deceptive advertising claims, one for a major food product and the other with a dietary supplement firm. Both companies were charged with making deceptive claims relating to immune health; the supplement company also faced charges of unsupported weight loss claims.

In the first settlement, a subsidiary of Nestle S.A., the worlds largest food company, agreed to drop advertising claims for its childrens drink BOOST Kid Essentials. FTC charged that Nestle HealthCare Nutrition (HCN) made deceptive claims related to the products ability to prevent upper respiratory tract infections in children, and protect against colds and flu by strengthening the immune system. The product touted its probiotic content, delivered in a straw with the drink, and was promoted for its ability to enhance immune function and help in recovery from diarrhea.

Under terms of the settlement, Nestle HCN will stop making the respiratory tract and cold/flu claims unless those claims are approved in advance by FDA; while FDA approval of health claims is not required, FTC determined such approval would help ensure the company complies with terms of the settlement. The company will also cease making claims related to BOOSTs ability to reduce childrens sick-day absences, and from making any claims about the health benefits, performance or efficacy of any probiotic and nutrition drinks unless those claims are well substantiated.

The second settlement is with Iovate Health Sciences USA and its affiliated Canadian companies. FTC is requiring a $5.5 million payment, to be used for consumer refunds, to settle charges the companies deceptively promoted several immune health and weight loss products. The products Cold MD, Germ MD and Allergy MD were promoted for their ability to treat or prevent colds and flu and/or hay fever. In the weight loss area, Iovates products Accelis and nanoSLIM carried claims regarding clinical efficacy and used testimonials from users claiming they lost significant amounts of weight.

Under terms of the settlement, Iovate is barred from making disease-related health claims unless such claims are FDA approved; again, although such approval is not an FDA requirement, FTC determined it would facilitate Iovates compliance. Iovate must also have adequate substantiation for any product claims and is barred from misrepresenting any study results.

Marc Ullman, partner in Ullman, Shapiro & Ullman, said while the claims at issue in both cases were likely out of bounds, he said the settlements themselves appear to suggest there is a double standard in place. If you are Nestle or Kellogg, the FTC will proceed administratively and allow you to settle the case if you promise never to do it againyou dont have to pay a dime, he said. On the other hand, if you are a dietary supplement company you are confronted with federal litigation and FTC will not let up until are pounded into the ground until you agree to disgorge every penny you made selling the product with questionable advertising and have to deal with a Permanent Injunction as long as you remain in business. Its about time that somebody made the Commission get in front of Congress and explain this disparate treatment.