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Hot Claims on FTCs, Plaintiffs Lawyers Radars in Advertising Food, Beverage and Supplement Products

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<p>Whether it is a &#8220;magic pill" that promises weight loss while you sleep or a special belt that will &#8220;melt the pounds away" while you sit at your desk, FTC is likely to view such claims with a big dose of skepticism.</p>

Claims substantiation is critical in this industry, particularly given the increased scrutiny of FTC and plaintiff lawyers. Every product should have a robust dossier to substantiate its claims and dietary supplement marketers must avoid advertisements that could be construed as false and misleading. This is particularly important when offering products in some of the “hot areas" that are already on the radar for regulators and attorneys. Consider the following overview as a general guide to operating within bounds.

Weight Loss Claims

Perhaps no category of products is scrutinized more than products promoted for weight loss. Whether it is a “magic pill" that promises weight loss while you sleep or a special belt that will “melt the pounds away" while you sit at your desk, FTC is likely to view such claims with a big dose of skepticism. In January 2014, the agency launched “Operation Failed Resolution" to stop misleading claims for products promoting easy weight loss and slimmer bodies and, as part of the launch, FTC announced settlements against several companies, including a company selling a skin cream that would allegedly slim users’ bodies as well as a company marketing a product to consumers in well-known and frequently-aired infomercials as something to “sprinkle, eat and lose weight."1

FTC followed up “Operation Failed Resolution" by sending guidance to media entitled “Gut Check: A Reference Guide for Media on Spotting False Weight Loss Claims."2 In that guidance, FTC identified seven “gut check" claims that should cause media to think twice before airing or promoting such advertising. Of course, while companies want to avoid being the subject of a FTC investigation, they must also be mindful that plaintiff lawyers use the FTC guidance as a road map to file class-action lawsuits alleging false and/or misleading advertising over those same claims.

Made in the USA

“Made in the USA" claims are another category of claims that have received attention from FTC. The agency has issued guidance on these claims as well in a document titled “Complying with the Made in USA Standard."3 Essentially, FTC views such claims as meaning that not only must the product’s final assembly or processing occur in the United States, but “all or virtually all" of the parts (or ingredients, if the recent spate of actions filed by plaintiff lawyers is followed) also must be of U.S. origin.4

While FTC has taken action against companies in a variety of industries for alleged misuse of the claim, it has taken relatively little, if any, action against companies in the food, beverage and supplement industries for using such claims. However, in this era of class-action litigation, the relative inaction from FTC against industry companies has not stopped plaintiff lawyers from launching class-action lawsuits over “Made in the USA" claims. In such actions, plaintiff lawyers have asserted one or more ingredients do not originate from the United States and that this makes the product not “Made in the USA" under FTC’s “all or virtually all" standard. While no court of law has ruled on the legitimacy of such claims against food, beverage or supplement companies, defending such actions can cause companies to expend a great deal of time and money.

All Natural / 100% Natural

Countless words have been expended recounting the saga of “All Natural" and “100% Natural" claims. Without a formal definition of “natural" in the Federal Food, Drug, and Cosmetic Act (FDCA) or in the regulations accompanying the law, the courts have been deluged with class-action lawsuits taking issue with “100% Natural," “All Natural" and other “Natural" claims. While FDA recently issued a comment period on several questions it posed regarding the use of “natural," which closed after six months in May 2016, industry companies will still have to wait to see what the agency has in store for use of the term “natural." In the interim, it can only be expected that plaintiff lawyers will continue to target such claims.

FTC has also not shied away from taking action against companies that it believes have misused the word “natural." In April 2016, FTC announced settlements with four companies marketing personal care products as “all natural" or “100% natural."5 In the press release announcing those settlements, Jessica Rich, Director of FTC’s Bureau of Consumer Protection, left no question as to how the FTC views such claims, stating “‘All natural’ or ‘100 percent natural’ means just that—no artificial ingredients or chemicals…Companies should take a lesson from these cases."

These claims are just a sampling of the claims targeted by regulatory agencies, consumer advocacy groups, and plaintiff lawyers. Staying abreast of the changing landscape can keep your company out of trouble.

Looking for guidance on claims substantiation? Join us for the Developing and Substantiating Product Claims workshop on Wednesday, Oct. 6, at SupplySide West 2016.

Justin J. Prochnow is an attorney and shareholder in the Denver office of the international law firm of Greenberg Traurig LLP. His practice concentrates on legal issues affecting the food & beverage, dietary supplement and cosmetic industries.

This article is issued for informational purposes only and is not intended to be construed or used as general legal advice. The opinions expressed are those of the author exclusively.

For a list of references, email [email protected].

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