How We Got Here
History will document that the passage of DSHEA in 1994 spurred a huge wave of growth and expansion that swept through the natural products industry. As marketers began “feeling their oats,” trade and consumer advertising activity escalated to unprecedented levels. With that heightened visibility came increased bravado in making claims about the health benefits offered by natural products. Structure/function claims were discussed and debated and many unfair and unsubstantiated claims consequently slipped through the corporate screening process. By 1996, the Internet was picking up speed, and becoming a more integrated part of consumer life. Small, and some might say, “fly by night” manufacturers with nothing to lose and much to gain found that it was easy and quick to post outrageous ads and make unsubstantiated claims to a quickly expanding and gullible online audience. And so the stage was set for a new era of intensified FTC scrutiny and regulation.

In the years since, millions of new consumers have entered the natural products marketplace, and as manufacturers and retailers have expanded their product offerings, the competition has intensified, fueling the temptation to be more and more aggressive with claims language. Meanwhile, the FTC has become more and more attentive to the marketplace and diligent in searching out and punishing offending companies, and not with just a “slap on the hand.” Redress settlements are now commonly in the millions and multi-millions.

Current FTC battlegrounds include weight loss and sports nutrition, but others are on the horizon including sexual enhancement, cardiovascular disease, and cognitive function.

As a marketer, do you understand how the FTC functions and what types of claims and language might put you at risk? Read on.

How the FTC Works
The FTC is the primary federal agency regulating advertising, and oversees products sold directly to the consumer. The also have broad authority to “prohibit deceptive acts or practices” in advertising that:

• Make deceptive claims
• Fail to reveal material information
• Are unfair
• Make an objective claim for which the advertiser did not possess a reasonable rationale

The FTC defines false advertising as advertising which is misleading in a material respect, “material” meaning in a way that would likely influence a consumer’s decision to purchase or not purchase a product.

FTC Investigations
It’s important to recognize that FTC investigations are private, but FTC enforcement is very public. Press releases are consistently distributed at the issuance of a consent order and once it is approved. FTC investigations are initiated in many ways, but most commonly based upon:

• FTC market surveillance
• Referral from another agency
• Competitive complaints
• Consumer groups
• An offended individual

Consent orders are the most common resolution of an FTC complaint. A consent order outlines the steps required for a company to resolve the complaint, including financial redress. A consent order is not an admission of legal wrongdoing, but is legally binding with civil penalties for non-compliance.

FTC Perspective
The FTC applies three general legal standards to the regulation of all advertising: substantiation, deception and fairness.

Substantiation means that the advertiser is accountable for substantiating all objective claims, before they are disseminated, at the level and type of substantiation represented in the claims advertised.

Deception means that the advertiser makes a representation, omission or practice that is likely to mislead the consumer. And that representation must be a material one. The FTC always looks at the practice from the perspective of a “consumer acting reasonably.”

Unfairness refers to an act or practice that causes or is likely to cause substantial injury to consumers which is not reasonably avoidable.

Understand Your Product, Market and Consumer
It’s important for manufacturers to protect themselves by knowing their product in terms of ingredients, supporting science and intellectual property. Many unsubstantiated claims are made out of ignorance. The better you understand your product offering, the better equipped you will be to create advertising that represents the product responsibly.

It is vital as well to understand the market you are doing business in. Be very careful of emotion-driven categories such as weight loss, breast enlargement, and sexual enhancement because the consumer is often more willing to believe and can be more easily misled or deceived. And obviously, steer clear of FTC lightening rods such as AIDS, SARS or Cancer. In addition, be cautious with serious disease states because the consequences to a misled consumer are much more substantive, particularly if they forgo traditional treatment to pursue a natural course of action. This would include categories such as heart health, brain health, eye health and joint health.

Finally, it helps to understand your consumer. Be careful with “vulnerable” consumer segments such as the elderly, children and the handicapped. Fairness issues quickly come into play since these groups are more easily misled or deceived.

For example, I came across a recent ad on the Internet which read “ A certified Chief of Urology who studied the effects of (Ingredient A) found that most men who ingested (Brand A) were transformed into exploding human volcanoes, filled to the brim with intense, over-flowing sexual energy that continued gushing hour after hour and all night long!” The copy went on to claim that the product would “increase testosterone levels up to 500%,” and promised “amazing sex up to 20 times per day.” If only.

Don’t Make These Common Mistakes
The FTC Bureau of Consumer Protection keeps a careful eye out for common mistakes made by marketers of natural health products. Beware of the following pitfalls as you develop claims language:

• Tested (researched) product is materially different from advertised product in ingredient, dosage, mode of delivery or potency.
• Tested population is materially different from the population targeted by the ad.
• Advertiser uses words like “may improve” or “helps treat” to attempt to make up for shortcomings in the science.
• Advertiser uses consumer testimonials to make claims not supported by science.
• Copy reads “traditionally used for” to cover up a lack of specific and applicable scientific support.
• Copy presents the most dramatic and extreme product benefits as “typical.”
• Copy makes comparative or pre-emptive product claims without supporting data:
• Best
• Most
• Preferred
• Leading
• Most effective
• More potent

Published FTC Guidelines
In 1998, the FTC published guidelines for dietary supplement advertisers. These guidelines address several issues of importance to supplement advertisers.

Substantiation is required for both express claims (stated) and implied claims. Implied claims can be the result of both graphics and copy, including the product name. Advertisers are warned to consider the “net impression” of their ads in evaluating their liability. The FTC holds advertisers responsible for all “reasonable interpretations” of their advertising.

To avoid issues and accusations of deception, advertisers should be certain to include any qualifying information on the product’s health benefits, for example a proven weight loss formula that was only tested on participants already on a diet and exercise program. In other words, avoid misleading by omission. It is also important to disclose in the advertising any significant safety concerns, and that disclosure must be both clear and prominent in terms of language and type size.

Research support must include studies that have been conducted and evaluated by qualified persons using procedures that yield accurate and reliable results. In addition, studies must match the “level of support” promoted in the ad. For example, if copy in an ad claims that “scientists now agree” about the benefits of a product, the advertiser must be able to prove scientific consensus beyond simply a supporting study or two.

Consumer testimonials can be powerful advertising tools, but some caution is in order. Consumers in ads should not make claims that would be deceptive or could not be substantiated if made directly. The advertiser must also provide adequate substantiation that the testimonial experience is representative of what consumers will generally achieve. And keep in mind that anecdotal evidence is generally insufficient support for a claim.

Likewise, expert endorsements can be effective but also dangerous. The qualifications of the expert must be both appropriate and relevant to the nature of the product and the health benefits it provides. In other words, a physical therapist has little credibility talking about cardiovascular health. It is also critical to disclose in the ad any material (read: financial) connection between endorser and advertiser.

Play Smart
The regulatory environment will continue to evolve, but the FTC will no doubt get bolder as the consent orders continue to pile up. They will fish where the fish are, and that leaves functional food and nutraceutical advertisers in a tenuous spot. My advice is to play smart by calculating your risk, keeping a long-term perspective, and seeking out professional guidance to step over the land mines in the marketplace.