FTC returning funds to CBD consumers

The Federal Trade Commission on Wednesday announced it is returning nearly $21,000—or an average of $36 each—to 576 consumers nationwide who purchased CBD products from a company that engaged in deceptive marketing.

Arizona-based Kushly Industries LLC made false or unsubstantiated claims that its CBD products could effectively treat or cure various conditions, ranging from common ailments like acne and psoriasis to more serious diseases, including cancer and multiple sclerosis, FTC alleged in a 2021 administrative complaint.

The government also alleged Kushly Industries falsely claimed scientific studies or research had proven CBD products effectively treat, mitigate or cure diseases, including Alzheimer’s disease, hypertension and Parkinson’s disease.

Kushly Industries last year agreed to settle the charges under a consent order.

Consumers who are entitled to refunds will receive either a PayPal payment or a check in the mail, according to an FTC news release. The deadline for consumers to cash their checks is Nov. 22, 2022, and they must claim PayPal payments by Sept. 23, 2022.

According to FTC, the agency’s actions in 2021 resulted in more than $472 million in refunds to consumers across the U.S.

That was the same year the U.S. Supreme Court ruled FTC lacks authority under Section 13(b) of the Federal Trade Commission Act to seek monetary relief in federal court. At the time, FTC’s chairwoman groused the ruling “deprived the FTC of the strongest tool we had to help consumers when they need it most.” The agency has requested Congress restore its 13(b) authority to pursue monetary relief in federal court.

Related:FTC targets CBD marketers in law enforcement sweep

The case against Kushly Industries isn’t the first time FTC targeted marketers of CBD. In a 2020 law enforcement sweep dubbed “Operation CBDeceit,” FTC announced a handful of marketers of CBD products agreed to each pay tens of thousands of dollars in penalties to the agency after they were charged with making deceptive claims.

The companies and individuals named in administrative complaints filed by FTC were charged with making unsupported claims about the ability of CBD-containing products—including balms, coffee, gummies and oils—to treat cancer, heart disease and other serious health conditions.

At the time the crackdown was announced, an FTC official noted her agency had delivered multiple letters to businesses warning them about making questionable disease-related claims for CBD products and moved against others in law enforcement actions.

“The message to marketers has been consistent: The same substantiation principles the FTC has applied to health claims for close to 50 years apply to similar claims for CBD products,” Lesley Fair, a senior attorney with FTC’s Bureau of Consumer Protection, wrote in a Dec. 17, 2020, blog about Operation CBDeceit. “Companies that represent expressly or by implication that what they sell can prevent, treat or cure serious medical conditions will be held to the highest substantiation standards and marketers can expect careful scrutiny of those promises.”

Related:Supreme Court limits 13(b) authority under Federal Trade Commission Act

She concluded, “That’s why believing the myth of the CBD Wild West is likely to lead advertisers in the wrong direction.”