scales of justice

New York, Oregon actions highlight state AGs’ power to police dietary supplements

It’s been more than three years since an herbal supplements investigation was launched by former New York Attorney General Eric Schneiderman. His probe, and subsequent actions taken by his office, are a reminder of the power of state attorneys general to police the dietary supplement industry.

State attorneys general (AGs) have the power to enforce state consumer protection laws, often referred to as “little FTC acts.” Patterned off Section 5 of the Federal Trade Commission (FTC) Act, these laws vary in some detail from state to state, but generally adhere to the same prohibitions against deceptive trade practices. Many state statutes mandate courts of that state to consider FTC’s decisions and guidance in its application and analysis of Section 5. 

The phrase, “As goes the FTC, so go the states,” is quite applicable in the world of state enforcement of consumer protection laws regarding dietary supplements. But, while any examination of state enforcement must reference FTC standards, state AGs necessarily have a larger footprint. Add to that the demands of elected AGs to be responsive to consumer complaints, and AGs are no less a focus of the dietary supplement industry than any federal agency. 

Generally speaking, FTC and FDA work together under a liaison agreement that governs their respective responsibilities, including dietary supplements. Under this arrangement, FTC has primary responsibility over advertising claims while FDA takes primary jurisdiction over the accuracy of product labeling

FTC pursues these matters under its authority to enforce Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices.” FTC defines a deceptive practice as one in which (1) a representation or omission is likely to mislead a consumer, (2) the representation or omission is viewed from the perspective of a consumer acting reasonably in the circumstances, and (3) the representation or omission is material. Sometimes, FTC pursues these matters on its own, and sometimes in conjunction with state AGs. And as referenced above, AGs can operate on their own, using their own versions of the FTC Act patterned off these same standards for deception. 

Perhaps the leading example of AG action in the dietary supplement industry is the efforts of former New York Attorney General Eric Schneiderman starting in 2015. In February of that year, Schneiderman sent cease-and-desist letters to four major retailers. According to the New York AG, these retailers sold store-brand herbal supplements that did not contain the ingredients listed on the labels or that contained ingredients not listed on the labels. The AG based its allegations on testing, which demonstrated that, overall, only 21 percent of the supplements tested contained items from the products’ labels, and 35 percent contained items not even listed on the labels. A “large number” of these tests also did not reveal DNA from any botanical substance. 

Shortly thereafter, the New York AG issued subpoenas to these retailers, seeking evidence to support their labeling claims. By late February 2015, the New York AG expanded its investigation to include four major supplement manufacturers: Nature’s Way, NBTY, Nutraceutical Corp. and Pharmavite. The following month, GNC and the AG announced an “agreement” that required GNC to implement new standards to authenticate herbal supplements. But the agreement also affirmed GNC’s products meet cGMPs (current good manufacturing practices) per FDA requirements and, thus, validate their quality. 

The New York AG’s investigation into dietary supplement retailers and manufacturers also resulted in the formation of a bipartisan coalition of four AGs, thereby demonstrating another tool in the AG arsenal. In addition to New York, this coalition included Connecticut, Indiana and Puerto Rico. 

And in April 2015, 14 AGs sent a letter to Congress, urging it “to launch a comprehensive congressional inquiry into the herbal supplements industry, and to weigh a more robust oversight role for the [FDA].” The AGs included on this letter were from Connecticut, District of Columbia, Hawaii, Idaho, Indiana, Iowa, Kentucky, Massachusetts, Mississippi, New Hampshire, New York, Northern Mariana Islands, Pennsylvania and Rhode Island. 

In another example of the bipartisan action that frequently appears in consumer protection matters, the New York and Indiana AGs sent a letter to FDA in June 2015, urging it to overhaul its regulation of the dietary supplement industry and the current cGMP regulations. 

In September 2015, the New York AG again issued cease-and-desist letters, this time to 13 makers of “devil’s claw” supplements marketed to arthritis sufferers.[1] According to the AG, the letters are based on a study by the New York Botanical Garden using DNA barcoding. This study concluded these supplements contained a cheaper, related species that is less desirable than devil’s claw. The AG’s letters requested the companies provide proposals for identifying and recalling “non-complying” supplements, identifying and compensating “defrauded or otherwise harmed” consumers, and reforming their approach to quality control (QC). 

Finally, in September 2016, the New York AG announced a settlement with NBTY Inc. The settlement required the manufacturer to implement new QC measures for all herbal supplements to confirm their authenticity and purity, and to educate consumers about their chemical content. This settlement and its injunctive terms are worth noting. While the financial aspects of settlement can often be large—comprising penalties due the government, restitution, disgorgement and the like—remedial efforts can, in the long term, prove far costlier. Not only does compliance cost more for NBTY, but the additional terms can be tricky to implement, and failure to do so allows the government to come back with another enforcement action. 

Following the New York AG’s initial actions, the Oregon AG, working with FDA, filed suit against GNC in October 2015. According to the Oregon AG, GNC violated the Oregon Unlawful Trade Practices Act by selling dietary supplements wrongfully containing picamilon and BMPEA (beta-methylphenethylamine). As a result, the complaint alleged the supplements were unapproved drugs that may not be lawfully sold in the United States. Attached to the Oregon AG’s complaint was a declaration from an FDA official, Cara Welch, Ph.D., who explained picamilon is not found in nature and does not fit any of the dietary ingredient categories under the Federal Food, Drug and Cosmetic Act (FD&C). FDA then followed up in December 2015, sending warning letters to companies marketing dietary supplements containing picamilon. 

As exemplified above, AGs often work together. Another way that AGs communicate is through the National Association of Attorneys General (NAAG). NAAG provides the AGs with training, research and analysis on a variety of subjects. It also affords the AGs a forum for pooling their knowledge and resources and discussing commonly observed issues. These efforts sometimes result in collective AG action. 

The AGs also sometimes work with FTC. For example, in January 2017, FTC and the New York AG together sued dietary supplement manufacturers and sellers in the Southern District of New York. According to the complaint, the marketers allegedly made false and unsubstantiated claims that their product improves memory, provides cognitive benefits and is clinically shown to work. In September 2017, the court granted the defendants’ motion to dismiss, and the appeal to the Second Circuit is currently pending. (See FTC v. Quincy Bioscience Holding Co., Inc., 272 F. Supp. 3d 547, 549 (S.D.N.Y. 2017), appeal docketed, No. 17-3791 (2d Cir. Nov. 21, 2017). 

Similarly, in February 2017, FTC and the Maine AG sued nine defendants, alleging they deceptively marketed two dietary supplements, CogniPrin and FlexiPrin.[2] The defendants include both entities and individuals, who were named both in their individual capacity and in their official capacity. According to the agencies, the defendants used radio infomercials deceptively formatted as talk shows, featuring purported experts who made unsubstantiated claims that the supplements improve memory and reduce back and joint pain. The agencies also alleged defendants published print ads featuring fictitious endorsers to make similarly false and misleading claims. Along with the complaint, the agencies simultaneously filed three settlements with six defendants, barring them from making similar claims and prohibiting them from engaging in a range of marketing practices. In August 2017, FTC settled with the remaining three defendants. These settlements bar the defendants from engaging in the conduct alleged in the complaint and require them to pay FTC so that it can refund consumers. 

The genesis of AG actions in dietary supplement cases can often result from something entirely unrelated to the product’s health claims. AGs must be responsive to consumer complaints—consumers are, after all, capable of firing AGs who they think aren’t doing a good job. Accordingly, AGs place great emphasis on responding to consumers complaining about out-of-pocket losses. Ineffective products that have continuity plans and recurring charges are likely to generate consumer complaints, and AGs take these seriously. 

The consequences of AG actions can be quite significant for the targets of an investigation. Apart from the costs of the investigation with fees and document production, and then any settlement costs and ongoing costs of compliance, the negative press associated with AG actions is often followed by private class actions. (See, e.g., In re Herbal Supplements Mktg. & Sales Practices Litig., No. 15-CV-5070, 2017 WL 2215025 (N.D. Ill. May 19, 2017) (refusing to dismiss most of plaintiffs’ claims). 

The industry response has been impressive, seeking to engage in outreach to the AGs. For example, in early 2016, the Council for Responsible Nutrition (CRN) invited the Alabama AG to tour a dietary supplement manufacturing and packaging facility. Events like these can educate the AGs on how the industry follows cGMPs and is regulated, and how “responsible parties” conduct business. 

While the policy decisions and guidance of FTC and FDA must be the primary focus of attention for the dietary supplement industry, the above litany of actions demonstrates AGs are often the foot soldiers for costly enforcement actions. With an AG’s mandate to respond to consumer complaints—and the threat of an AG being fired for failing to do so—a company that generates unhappy consumers can easily find itself being the center of an AG’s attention. 

Outreach to AGs will not only build up an understanding of the industry and the best practices of its participants. It will also go a long way toward establishing effective lines of communication between the industry and state enforcers. That said, the best defense for members of the industry will be to have solid marketing disclosures, solid substantiation for health claims and solid customer service. These measures will ensure consumers aren’t complaining about a company’s supplements, but rather getting out of them all the results that were promised. 

Richard Lawson is a partner in the consumer protection practice of the law firm Manatt, Phelps & Phillips LLP (, where he concentrates his practice on FTC and state attorney general investigations and litigation. Before joining Manatt, Richard served as the director of the Consumer Protection Division for the Florida Attorney General’s Office. 

Shoshana Speiser is a litigation associate in Manatt’s New York office. 

Learn more from Richard Lawson about state attorneys general investigations, lawsuits and priorities during a “Responding to State Legislators & Attorneys General” Workshop on 9 a.m. to 11 a.m. on Friday, Nov. 9, at SupplySide West 2018.

[1] These supplement manufacturers were Nutraceutical International Corporation (Soloray); Alternative Remedies Health & Herbs; The Kroger Co., as parent of Vitacost.com; FoodScience Corporation (Food Science of Vermont & DaVinci Labs); Biopower Nutrition; Thorne Research Inc.; NBTY, Inc. (Puritan’s Pride); Olympian Labs, Inc. (Prescribed Choice); Now Foods; Nature’s Sunshine Products, Inc.; RHG & Company Inc. (Vital Nutrients); The Natural Healing Room & End Time Essentials; and Shine Supplements.

[2] The defendants were XXL Impressions LLC, Jeffrey R. Powlowsky, J2 Response LLP, Justin Bumann, Justin Steinle, Synergixx, LLC, Charlie Fusco, Ronald Jahner and Brazos Minshew.

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