June 14, 2018
FTC is a bipartisan, federal agency with a unique dual mission to protect consumers and promote competition. FTC protects consumers by stopping unfair, deceptive or fraudulent practices in the marketplace. By enforcing antitrust laws, FTC helps ensure U.S. markets are open and free. The agency will challenge anticompetitive mergers and business practices that could harm consumers with higher prices, lower quality, fewer choices or reduced rates of innovation. FTC monitors business practices, reviews potential mergers and challenges them when appropriate to ensure the market works according to consumer preferences, not illegal practices.
For products marketed as dietary supplements in the United States, the government holds companies accountable for making baseless claims. FTC and FDA have enforcement programs to protect consumers from false and misleading claims about safety and benefits of products marketed as dietary supplements. FTC works on advertising claims, while FDA works on product labeling claims, contents, purity and safety. They work together for claims on websites and internet marketing.
Companies must support their advertising claims with solid proof. This is especially true for businesses that market food, over-the-counter (OTC) drugs, dietary supplements, contact lenses and other health-related products.
The role of FTC, which enforces laws banning "unfair or deceptive acts or practices," is to ensure consumers get accurate information about dietary supplements, so they can make informed decisions about these products.
FTC's truth-in-advertising law can be boiled down to two propositions: 1) advertising must be truthful and not misleading; and 2) before disseminating an ad, advertisers must have adequate substantiation for all objective product claims. A deceptive ad is one that contains a misrepresentation or omission likely to mislead consumers acting reasonably under the circumstances to their detriment. FTC's substantiation standard is flexible and depends on many factors. When evaluating claims about the efficacy and safety of foods, dietary supplements and drugs, FTC has typically applied a substantiation standard of competent and reliable scientific evidence.
To determine whether an ad complies with FTC law, it is first necessary to identify all express and implied claims the ad conveys to consumers. Once claims are identified, scientific evidence is assessed to determine whether there is adequate support for those claims.
The Federal Trade Commission Act allows FTC to act in the interest of all consumers to prevent deceptive and unfair acts or practices. In interpreting Section 5 of the Act, FTC determined that a representation, omission or practice is deceptive if it is likely to mislead consumers and affect consumers' behavior or decisions about the product or service.
In addition, an act or practice is unfair if the injury it causes, or is likely to cause, is substantial, not outweighed by other benefits and not reasonably avoidable.
The FTC Act prohibits unfair or deceptive advertising in any medium. That is, advertising must tell the truth and not mislead consumers. A claim can be misleading if relevant information is left out or if the claim implies something that's not true.
In addition, claims must be substantiated, especially when they concern health, safety or performance. The type of evidence required may depend on the product, the claims and what experts believe necessary.
‘Made in USA’ Claims
Because FTC is charged with preventing deception and unfairness in the marketplace, the FTC Act gives the Commission the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin. Traditionally, FTC required that a product advertised as “Made in USA” be "all or virtually all" made in the United States. After a comprehensive review of “Made in USA” and other U.S. origin claims in product advertising and labeling, FTC announced in December 1997 it would retain the "all or virtually all" standard. The Commission also issued an Enforcement Policy Statement on U.S. origin claims to provide guidance to marketers who want to make an unqualified “Made in USA” claim under the "all or virtually all" standard and those who want to make a qualified “Made in USA” claim.
When a manufacturer or marketer makes an unqualified claim that a product is “Made in USA,” it should have—and rely on—a "reasonable basis" to support the claim at the time it is made. This means a manufacturer or marketer needs competent and reliable evidence to back the claim that its product is "all or virtually all" made in the United States, which means the product’s final assembly or processing must take place in the United States. The Commission then considers other factors, including how much of the product’s total manufacturing costs can be assigned to U.S. parts and processing, and how far removed any foreign content is from the finished product. In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a significant amount of the product’s overall processing. The same could be true for some foreign parts. In these cases, the foreign content (processing or parts) is more than negligible, and, as a result, unqualified claims are inappropriate.
Companies must support all their claims with solid proof. FTC ensures consumers get accurate information about products so they can make informed decisions about these products.
Hua Deng, Ph.D., is the president and the founder of Davidia Healthtech LLC, a professional service company for food, dietary supplement and cosmetics. Deng holds a doctorate from Lanzhou University in China with a major in analytical chemistry. She has extensive experience of global regulatory affairs in the food, dietary supplement and cosmetic industries.
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