FTC warns 700 marketing companies of potential civil penalties if they fail to substantiate their product claims

Berita, Bisnis165 Dilihat

The Federal Trade Commission (FTC) is cautioning numerous advertisers to refrain from misleading consumers with unsubstantiated product claims in their advertisements. In warning notices sent to these companies, the FTC explicitly states its willingness to enforce its authority by imposing significant civil penalties on violators.

The FTC has issued warnings to hundreds of advertisers, urging them to refrain from making unsubstantiated product claims in their advertisements. Violators may face significant civil penalties, as the FTC is committed to enforcing its authority in such cases.

According to FTC regulations, companies are required to substantiate their product claims with reliable evidence. When it comes to claims regarding health or safety benefits, scientific evidence must support those claims.

If a company asserts that its product can cure, mitigate, or treat a serious disease like cancer or heart disease, it must provide evidence that meets the accepted standards of scientific testing.

“The fundamental principle of FTC law is that advertisers must have sufficient evidence to support their claims when they make them,” stated Sam Levine, Director of the FTC’s Bureau of Consumer Protection. Levine further emphasized that the potential for significant civil penalties will serve as a deterrent, ensuring that advertisers do not manipulate the truth.

Despite the FTC’s extensive history of offering guidance on advertising substantiation, including through litigation cases and policy statements, numerous sellers persist in making unsupported claims about their products and providing false evidence.

To address this issue, the FTC is utilizing its penalty offense authority to remind advertisers of the legal obligation to have a reasonable basis for objective product claims and to discourage deceptive claims in the future.

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The FTC has issued penalty offense notices to around 670 companies engaged in marketing OTC drugs, homeopathic products, dietary supplements, or functional foods. These notices serve as a warning to these companies that they may face substantial civil penalties if they fail to sufficiently substantiate their product claims, particularly in ways that contradict previous litigated decisions in FTC administrative cases.

Through penalty offense notices, the agency has the authority to pursue civil penalties, reaching up to $50,120 per violation, against companies that engage in conduct they know has been deemed illegal in prior FTC administrative orders, excluding consent orders.

The notices provide a detailed list of prohibited acts and practices, which include the failure to: 1) establish objective product claims with a reasonable basis supported by competent and reliable evidence, 2) provide competent and reliable scientific evidence for health or safety claims, and 3) present at least one well-controlled human clinical trial to substantiate claims of effectiveness in curing, mitigating, or treating a serious disease.

Additionally, the prohibited acts or practices encompass misrepresenting the level or type of substantiation for a claim and falsely claiming that a product claim has been scientifically or clinically proven.

The FTC has published a comprehensive list of businesses that have received the notice on its official website. It’s important to note that inclusion on the list does not imply any presumption of deceptive or unfair conduct.

While the initial distribution of the notice focuses on entities involved in or likely to make health claims, it is not limited to such claims and applies to any marketer making assertions regarding the effectiveness or performance of their products.

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In addition to the letter, the recipients are furnished with a previously approved notice of penalty offenses concerning the utilization of endorsements and testimonials.

This notice covers various deceptive practices, such as falsely attributing endorsements to third parties, misrepresenting the status of an endorser as a current or recent user, using endorsements to make misleading performance claims, failing to disclose relevant connections with endorsers, and misrepresenting the typical or ordinary consumer experience based on the experiences of endorsers.

The letters advised the recipients to refer to the recently issued “Health Products Compliance Guidance” by the FTC staff for further guidance and information.

On March 31, 2023, the Commission voted 3-1 in favor of approving the substantiation notice and authorizing the distribution of both notices. Commissioner Christine S. Wilson dissented and issued a separate statement on her last day as a Commissioner.

Commissioner Rebecca Kelly Slaughter, along with Chair Lina M. Khan and Commissioner Alvaro Bedoya, issued a joint statement.

The Federal Trade Commission (FTC) is dedicated to fostering competition, safeguarding consumers, and providing consumer education. For more information on consumer-related topics, visit consumer.ftc.gov. To report fraud, scams, or unethical business practices, visit ReportFraud.ftc.gov.

Stay updated with the FTC by following them on social media, reading consumer alerts and the business blog, and subscribing to receive the latest news and alerts from the FTC.

Source : ftc.gov