The FTC's regulation of advertising

Food and Drug Law Journal

Volumn 65, Issue 3, 2010, Pages 589-622

  Maher, Anne V ^a   Fair, Lesley ^b  

^a Kleinfeld Kaplan and Becker LLP ^*  (United States)

^b FEDERAL TRADE COMMISSION   (United States)

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EID: 84878908815     PISSN: 1064590X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (315)

1. FTC-FDA Liaison Agreement, 4 Trade Reg. Rep. (CCH) ¶ 9851 (1971). Although the Liaison Agreement gives primary authority over labeling to FDA, the FTC has challenged deceptive claims made on product labels when the Commission has also challenged claims in the company's advertising. See, e.g., Nutramax Laboratories, Inc., 138 F.T.C. 380, 383 (2004) (consent order) (challenging as deceptive representations on the product label that Senior Moment enhanced memory); Panda Herbal Int'l, Inc., 132 F.T.C. 125 (2001) (consent order) (challenging as deceptive representations on the label of a product containing St. John's Wort, "No known warnings or contraindications").
2. FTC-FDA Liaison Agreement, 4 Trade Reg. Rep. (CCH) ¶ 9851(III)(b).
3. In addition to advertising in broadcast and print media, the FTC has challenged deceptive representations conveyed through direct mail promotions, telemarketing scripts, infomercials, radio programs, shop-at-home television channels, billboard advertising, point-of-purchase displays, oral statements by sales personnel, pop-up advertisements, banner advertisements, and email. See, e.g., FTC v. Roex, Inc., No. SA-CV-090266 (C.D. Cal. Mar. 6, 2009) (final order) (challenging deceptive claims disseminated primarily through a call-in radio program called "The Truth About Nutrition" for a device sold to treat cancer and supplements advertised to treat or prevent cancer, HIV/AIDS, diabetes, Alzheimer's disease, Parkinson's disease, and other conditions);
4. FTC v. D Squared Solutions, LLC, No. AMD 03CV3108 (D. Md. Aug. 9, 2004) (stipulated final order) (challenging unfair and deceptive use of pop-up advertisements); Home Shopping Network, Inc., 122 F.T.C. 227 (1996) (consent order) (challenging deceptive claims disseminated via a shopping channel); Zygon Int'l, Inc., 122 F.T.C. 195 (1996) (consent order) (first Commission case challenging deceptive health-related claims disseminated via the Internet); Synchronal Corp., 116 F.T.C. 1189 (1993) (consent order) (challenging deceptive claims disseminated via infomercial); North Am. Philips Corp., 111 F.T.C. 139 (1988) (challenging deceptive claims disseminated via advertisements on television and radio, on product packaging and labeling, and through press releases).
5. Advertising Substantiation Policy Statement, appended to Thompson Med. Co., 104 F.T.C. 648, 839 (1984), aff'd, 791 F.2d 189 (D.C. Cir. 1986).
6. Pub. L. No. 63-203, 38 Stat. 717 (codified as amended at 15 U.S.C. §§ 41-58 (2008)).
7. 15 U.S.C. § 41.
8. The FTC's Bureau of Competition has taken an active role in challenging allegedly anticompetitive practices by pharmaceutical companies, hospitals, health professionals, and other sellers of health-related products and services. See, e.g., FTC v. Indiana Fed'n of Dentists, 476 U. S. 447 (1986); Maine Health Alliance, 136 F.T.C. 616 (2003) (consent order); Hoechst Marion Roussel, Inc., 131 F.T.C. 924 (2001) (consent order). The agency's law enforcement in the antitrust arena is beyond the scope of this chapter.
9. The FTC has regional offices in Atlanta, Chicago, Cleveland, Dallas, Los Angeles, San Francisco, and Seattle. The work of the regional offices is identical to the work of staff at FTC headquarters in Washington, D.C.
10. 15 U.S.C. § 45(a)(1).
11. The FTC Act expressly exempts banks, savings and loan institutions, federal credit unions, "common carriers subject to the Acts to regulate commerce," and airlines. 15 U.S.C. § 45(a)(2).
12. 15 U.S.C. § 45(a)(1).
13. See 16 C.F.R. § 2.3 (2010) ("The Commission acts only in the public interest and does not initiate an investigation or take other action when the alleged violation of law is merely a matter of private controversy and does not tend adversely to affect the public").
14. 15 U.S.C. § 52(a).
15. The statute defines "food" to mean "(1) articles used for food or drink for man or other animals, (2) chewing gum, and (3) articles used for components of any such article." 15 U.S.C. § 55(b). The definition of "food" is identical to that in section 201(f) of the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. § 321(f) (2008).
16. The statute defines "drug" to mean "(1) articles recognized in the official United States Pharmacopoeia, official Homoeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of them; and (2) articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; and (3) articles (other than food) intended to affect the structure or any function of the body of man or other animals; and (4) articles intended for use as a component of any article specified in clause (1), (2), or (3); but does not include devices or their components, parts, or accessories." 15 U.S.C. § 55(c). The definition is very similar to that in section 201(g) of the FDCA, 21 U.S.C. § 321(g) (2008).
17. The statute defines "device" to mean "an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is (1) recognized in the official National Formulary, or the United States Pharmacopeia, or any supplement to them, (2) intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or (3) intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of its principal intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its principal intended purposes. 15 U.S.C. § 55(d). The definition is identical to that in section 201(h) of the FDCA, 21 U.S.C. § 321(h) (2008).
18. The statute defines "cosmetic" to mean "(1) articles to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body or any part thereof intended for cleansing, beautifying, promoting attractiveness, or altering the appearance, and (2) articles intended for use as a component of any such article; except that such term shall not include soap. 15 U.S.C. § 55(e). The definition is identical to that in section 201(i) of the FDCA, 21 U.S.C. § 321(i) (2008).
19. 15 U.S.C. § 55(a)(1).
20. 15 U.S.C. § 57a(a)(1)(A).
21. See, e.g., Guides for the Use of Environmental Marketing Claims, 16 C.F.R. § 260.1-8 (2010);
22. Enforcement Policy Statement on Food Advertising, 59 Fed. Reg. 28388 (June 1, 1994).
23. 15 U.S.C. § 57a(a)(1)(B). See, e.g., Ophthalmic Practices Rule (Eyeglass Rule), 16 C.F.R. § 456 (2008);
24. Mail or Telephone Order Merchandise Rule, 16 C.F.R. § 435.1-4 (2010).
25. See, e.g., Truth in Lending Act, 15 U.S.C. §§ 1601-1667f (2008).
26. See, e.g., Comprehensive Smokeless Tobacco Health Education Act of 1986, 15 U.S.C. §§ 4401-4408 (2006),
27. and FTC Regulations to Implement Comprehensive Smokeless Tobacco Health Education Act of 1986, 16 C.F.R. § 307 (2010);
28. CAN-SPAM Act of 2003, 15 U.S.C. §§ 7701-7713 (2008),
29. and FTC Rules Implementing the CAN-SPAM Act of 2003, 16 C.F.R. § 316 (2010);
30. and Fairness to Contact Lens Consumers Act, 15 U.S.C. §§ 7601-7610 (2008),
31. and FTC Contact Lens Rule, 16 C.F.R. § 315 (2010).
32. 16 C.F.R. § 2.7(b) (2010).
33. 16 C.F.R. § 2.7(g) (2010).
34. 16 C.F.R. § 2.7(d)(4) (2010).
35. 16 C.F.R. § 2.7(f) (2010).
36. 16 C.F.R. § 2.13 (2010).
37. 15 U.S.C. § 45(b).
38. 16 C.F.R. § 2.32 (2010).
39. 16 C.F.R. § 2.34 (2010).
40. 16 C.F.R. § 2.34(e) (2010).
41. 16 C.F.R. §§ 3.1-.83 (2010).
42. In their capacity as complaint counsel, Commission attorneys and investigators may not have contact with members of the Commission or their staff. See 16 C.F.R. § 4.7(b).
43. The Commission may, however, enter into administrative consent orders that require respondents to pay redress to consumers or to disgorge profits. See, e.g., Vital Basics, Inc., 137 F.T.C. 254 (2004) (consent order) ($1 million redress for deceptive memory enhancement and sexual performance claims for dietary supplements); Value Vision Int'l, Inc., 132 F.T.C. 338 (2001) (consent order) (requiring home shopping company to offer refunds to all purchasers of weight-loss, cellulite, and baldness products); Weider Nutrition Int'l, Inc., FTC Dkt. No. C-3983 (Nov. 17, 2000) (consent order) ($400,000 redress for deceptive weight-loss claims for a dietary supplement marketed as a safe alternative to prescription drug combination Phen-Fen); L & S Research Corp., 118 F.T.C. 896 (1994) (consent order) ($1.45 million in disgorgement for deceptive claims for bodybuilding products).
44. 15 U.S.C. § 45(c).
45. 15 U.S.C. § 45(1). See. e.g., United States v. QVC, Inc., No. 04-CV-1276 (E.D. Pa. Mar. 19, 2009) (consent decree) ($1.5 civil penalty for deceptive claims for Lipofactor Cellulite Target Lotion, in violation of 2000 FTC order, and an additional $6 million redress for deceptive claims for For Women Only weight loss pills, Lite Bites weight loss bars and shakes, and Bee-Alive Royal Jelly energy supplements);
46. 15 U.S.C. § 57b.
47. 15 U.S.C. § 57b(a)(2).
48. See FTC v. Figgie Int'l, Inc., 994 F.2d 595 (9th Cir. 1993).
49. 15 U.S.C. § 53(b).
50. See. e.g., FTC v. Branson Partners, LLC, No. 304-CV-1866 (D. Conn. Jan. 11, 2010) (order) (challenging deceptive weight loss claims for Chinese Diet Tea and Bio-Slim Patch);
51. FTC v. Sunny Health Nutrition Technology & Prods., No. 8:06-CV-2193-T-24EAJ (M.D. Fla. Apr. 24, 2007) (stipulated final order) (challenging deceptive claims for HeightMax, a dietary supplement purporting to make teens and young adults taller);
52. FTC v. Seville Mktg., Ltd., No. C04-U81L (W.D. Wash. June 1, 2005) (amended stipulated judgment) (challenging efficacy claims for at-home HIV test kits advertised as 99.4% accurate, but with error rates as high as 59.3%);
53. FTC v. Media Maverick, Inc., No. 04-3395-SVW (CWx) (C.D. Cal. Oct. 25, 2004) (stipulated final order) (challenging deceptive claims for a purported pain relief bracelet);
54. FTC v. Liverite Prods., Inc., No. SA 01-778 AHS (ANx) (S.D. Cal. Aug. 21, 2001) (stipulated final order) (challenging deceptive claims that dietary supplement was effective in the treatment of hepatitis C, cirrhosis, and hangovers, and could prevent liver damage and other side effects from use of HIV drugs, hepatitis C medications, chemotherapy, interferon, and anabolic steroids).
55. See also FTC v. Airborne, Inc., No. CV-08-05300 (C.D. Cal. Aug. 14, 2008) (stipulated judgment);
56. FTC v. Walgreens Co., No.1:10-CV-01813 (N.D. Ill. Mar. 23, 2010) (stipulated final order);
57. FTC v. CVS Pharmacy, Inc., No. CA-09-420 (D.R.I. Sept. 8, 2009) (stipulated final order);
58. and FTC v. Rite Aid Corp., No. 1:09-CV-01333-JEJ (M.D. Pa. July 13, 2009) (stipulated final order) (challenging deceptive cold and flu prevention claims for Airborne and for similar "house brand" products sold in national chain drug stores).
59. See, e.g., FTC v. Rexall Sundown, Inc., No. 00-706-CIV (S.D. Fla. Mar. 11, 2003) (stipulated final order) ($12 million redress for deceptive efficacy representations for Cellasene, a purported anticellulite dietary supplement);
60. FTC v. SlimAmerica, Inc., No. 97-6072-Civ (S.D. Fla. 1999) (permanent injunction) ($8.3 million redress from marketer of purported weight loss product).
61. See. e.g., FTC v. National Urological Group, Inc., No. 1:04-CV-3294 (N.D. Ga. Jan. 15, 2009) (final judgment) ($15.8 million redress judgment after trial in United States District Court on FTC charges alleging deceptive advertising claims for Thermalean and Lipodrene, purported weight-loss products with ephedra, and Spontane-ES, a purported erectile dysfunction product with yohimbine).
62. See. e.g., FTC v. Mary Carter Paint Co., 382 U.S. 46 (1965);
63. Kraft, Inc. v. FTC, 970 F.2d 311, 317 (7th Cir. 1992) ("While it could be posited that it is counter-intuitive to grant more deference to the Commission than to courts, Commission findings are well-suited to deferential review because they may require resolution of exceedingly complex and technical factual issues. In addition, the determination of whether an ad has a tendency to deceive is an impressionistic one more closely akin to a finding of fact than a conclusion of law.") (citations omitted).
64. See Thompson Med. Co. v. FTC, 791 F.2d 189, 197 (D.C. Cir. 1986) ("Although the meaning of the statutory phrase 'deceptive acts or practices' is ultimately a matter for judicial construction, the Commission's conclusion that acts or practices are likely to deceive is due special deference owing to the nature of the inquiry and the Commission's expertise in evaluating deception.").
65. Deception Policy Statement, appended to Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 (1984). Numerous federal courts evaluating claims of deceptive advertising have cited the Deception Policy Statement with approval.
66. See, e.g., Novartis Corp. v. FTC, 223 F.3d 783 (D.C. Cir. 2000);
67. FTC v. Pantron I Corp., 33 F.3d 1088 (9th Cir. 1994).
68. Deception Policy Statement, 103 F.T.C. at 175. Before the Commission issued the Deception Policy Statement, the standard was an advertisement's "tendency or capacity to deceive."
69. See Southwest Sunsites, Inc. v. FTC, 785 F.2d 1431, 1435 (9th Cir. 1986).
70. Deception Policy Statement, 103 F.T.C. at 175.
71. Id. at 179 (citing FTC v. Sterling Drug, 317 F.2d 669, 674 (2d Cir. 1964)).
72. Deception Policy Statement, 103 F.T.C. at 180 n.32
73. (quoting Beneficial Corp. v. FTC, 542 F.2d 611, 617 (3d Cir. 1976)).
74. Deception Policy Statement, 103 F.T.C. at 181
75. (quoting Am. Home Prods. Corp. v. FTC, 695 F.2d 681, 688 (3d Cir. 1982).
76. Deception Policy Statement, J03 F.T.C. at 176.
77. See generally FTC v. Algoma Lumber Co., 291 U.S. 67, 81 (1934).
78. Deception Policy Statement, 103 F.T.C. at 175 n.4.
79. Kraft, Inc. v. FTC, 970 F.2d 311, 318 n.4 (7th Cir. 1992).
80. Deception Policy Statement, 103 F.T.C. at 175.
81. Id. at 175 n.4.
82. See Simeon Mgmt. Corp. v. FTC, 579 F.2d 1137, 1145 (9th Cir. 1978).
83. Deception Policy Statement, 103 F.T.C. at 176 ("[I]n cases of express claims, the representation itself establishes the meaning.").
84. See Kraft, 970 F.2d at 318.
85. Deception Policy Statement, 103 F.T.C. at 176.
86. See Porter & Dietsch, Inc. v. FTC, 605 F.2d 294, 300 (7th Cir. 1979) ("Whether particular advertising has a tendency to deceive or mislead is obviously an impressionistic determination more closely akin to a finding of fact than to a conclusion of law. Giving due regard to the FTC's expertise, we must sustain the FTC's findings if they are supported by substantial evidence on the record viewed as a whole.") (citations omitted).
87. See Kraft, Inc., 970 F.2d at 318.
88. Kraft Inc., 114 F.T.C. 40, 121-22 (1991), aff'd, Kraft, Inc. v. FTC, 970 F.2d 311, (7th Cir. 1992).
89. Stouffer Foods Corp., 118 F.T.C. 746, 807-08 (1994); Thompson Med. Co., 104 F.T.C. at 790.
90. Kraft, Inc., 114 F.T.C. at 53 n.33. See Telebrands Corp., 140 F.T.C. 278, 304 (2005) ("A showing of an intent to make a particular claim is not required to find liability for violating Section 5 of the FTC Act."), aff'd, 457 F.3d 354 (4th Cir. 2006).
91. Substantiation Policy Statement, 104 F.T.C. at 840.
92. Deception Policy Statement, 103 F.T.C. at 175.
93. Id., citing Grolier, Inc., 91 F.T.C. 315, 430 (1978), remanded on other grounds, 615 F.2d 1215 (9th Cir. 1980), modified on other grounds, 98 F.T.C. 882 (1981), reissued, 99 F.T.C. 379 (1982) ("In determining the meaning of an advertisement, a piece of promotional material or a sales presentation, the important criterion is the net impression that it is likely to make on the general populace.").
94. See also Kraft Inc., 970 F.2d at 314.
95. Warner-Lambert Co., 86 F.T.C. 1398, 1415 n.4 (1975), aff'd, 562 F.2d 749 (D.C. Cir. 1977).
96. See FTC v. Balme, 23 F.2d 615, 620 (2d Cir. 1928),
97. citing Florence Mfg. Co. v. J.C. Dowd & Co., 178 F. 73, 75 (2d Cir. 1910).
98. Telebrands Corp., 140 F.T.C. at 291. See Thompson Med. Co., 104 F.T.C. at 837-39 (holding advertiser liable for failure to substantiate claim conveyed to 16-18% of consumers). However, "[a]n advertiser cannot be charged with liability in respect of every conceivable misconception, however outlandish, to which his representations might be subject . . . A representation does not become false and deceptive merely because it will be unreasonably misunderstood by an insignificant and unrepresentative segment of the class of persons to whom the representation is addressed." Heinz W. Kirchner, 63 F.T.C. 1282, 1290 (1963).
99. Sears, Roebuck & Co., 95 F.T.C. 406, 511 (1980), aff'd, 676 F.2d 385 (9th Cir. 1982).
100. Grolier, Inc., 91 F.T.C. at 431 (Initial Decision) ("The Commission is not confined to proscribing affirmative misrepresentations. The literal truth employed in a particular context may be used to deceive and deception, moreover, may be accomplished by innuendo, as well as by outright false statements.").
101. FTC v. Cyberspace.com LLC, 453 F.3d 1196, 1200 (9th Cir. 2006),
102. citing Am. Home Prods. Corp. v. FTC, 695 F.2d at 687.
103. Deception Policy Statement, 103 F.T.C. at 179.
104. Ideal Toy Corp., 64 F.T.C. 297, 310 (1964). See also Audio Communications, Inc., 114 F.T.C. 414 (1991) (consent order) (challenging under Section 5 television advertisements that invited children to make 900-number calls to cartoon characters, and resulted in expensive phone bills for their parents).
105. Travel King, Inc., 86 F.T.C. 715 (1975).
106. Deception Policy Statement, 103 F.T.C. at 180. See generally Stouffer Foods Corp., 118 F.T.C. 746 (1994) (holding that sodium-content claims for Lean Cuisine products were false and unsubstantiated, and not cured by fine-print footnote); Häagen-Dazs Co., 119 F.T.C. 762 (1995) (consent order) (challenging effectiveness of fine-print footnote modifying allegedly deceptive claim that frozen yogurt was "98% fat free").
107. Deception Policy Statement, 103 F.T.C. at 180 n.33, citing Crown Central Petroleum Corp., 84 F.T.C. 1493, 1543 nn.14-15 (1974). See also Giant Food, Inc., 61 F.T.C. 326, 348 (1962) ("[V]ery few if any of the persons who would read Giant's advertisements would take the trouble to, or did, read the fine print disclaimer.").
108. See Thompson Med. Co., 104 F.T.C. at 842-43; Removatron Int'l Corp. v. FTC, 884 F.2d 1489, 1497 (1st Cir. 1989).
109. See Palm, Inc., 133 F.T.C. 715 (2002) (consent order) (challenging as ineffective a disclosure in a print advertisement that was in a light color on a white background and oriented perpendicular to the text); Office Depot, Inc., FTC Dkt. No. C-3977 (Sept. 8, 2000) (consent order) (challenging as ineffective a one-sentence disclosure buried in a 15-line block of fine print); Buy.com, Inc., FTC Dkt. No. C-3978 (Sept. 8, 2000) (consent order) (challenging as ineffective a disclosure in a print advertisement that was in four-point type in the upper left corner of a full-page newspaper advertisement). See generally Dot. Com Disclosures: Information About Online Advertising (FTC Staff Report) (May 2000), available at www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index. shtml.
110. See. e.g., Kraft, 114 F.T.C. at 124 (holding that complicated quantitative superscript - "one 3/4 ounce slice has 70% of the calcium of five ounces of milk" - did not cure deceptive calcium-content claim for cheese slices).
111. Id. ("Generally recognized marketing principles suggest that, given the distracting visual and audio elements and the brief appearance of the complex superscript in the middle of the commercial, it is unlikely that the visual disclosure is effective as a corrective measure.").
112. See Thompson Med. Co., 104 F.T.C. at 842-43; United States v. Bayer Corp., No. CV 00-132 (NHP) (D.N.J. Jan. 11, 2000) (consent decree) (requiring that mandated television disclosures "be presented simultaneously in both the audio and video portions of the advertisement").
113. Deception Policy Statement, 103 F.T.C. at 180.
114. Id. at n.37, citing Am. Home Prods. Corp., 98 F.T.C. 136, 370 (1981), aff'd & modified on other grounds, 695 F.2d 681 (3d Cir. 1982), modified, 103 F.T.C. 528 (1984).
115. Kraft, Inc., 114 F.T.C. at 53 n.33. See FTC v. Bay Area Bus. Council, 423 F.3d 627, 635 (7th Cir. 2005);
116. FTC v. Amy Travel Servs., Inc., 875 F.2d 564, 573 (7th Cir.1989);
117. Porter & Dietsch, Inc. v. FTC, 605 F.2d 294, 309 (7th Cir. 1979);
118. Chrysler Corp. v. FTC, 561 F.2d 357, 363 n.5 (D.C. Cir. 1977).
119. See FTC v. Pantron I Corp., 33 F.3d 1088, 1102 (9th Cir. 1994);
120. FTC v. Think Achievement Corp., 312 F.3d 258, 262 (7th Cir. 2002) (money-back guarantee "does not sanitize a fraud").
121. Deception Policy Statement, 103 F.T.C. at 181. Context is critical in this regard. The Commission probably would distinguish between a subjective product claim ("ABC Coffee tastes great") and an objective representation ("In a recent survey, 78% of consumers preferred the taste of ABC Coffee over XYZ Coffee.").
122. Removatron Int'l Corp., 111 F.T.C. 206, 296 (1988) ("An advertisement touting a foreign sports car as 'the sexiest European,' for example, fits into this category."), aff'd, 884 F.2d 1489 (1st Cir. 1989).
123. Deception Policy Statement, 103 F.T.C. at 181.
124. Id. at n.45. See Novartis Corp. v. FTC, 223 F.3d 783, 786 (D.C. Cir. 2000).
125. See Spiegel, Inc. v. FTC, 494 F.2d 59, 62 (7th Cir. 1974); Cliffdale Assocs., 103 F.T.C. 110, 166 n.11 (1982).
126. Id. at 182-83. See Novartis Corp. v. FTC, 223 F.3d at 786;
127. Kraft, Inc. v. FTC, 970 F.2d 311, 322 (7th Cir. 1992); Thompson Med. Co., 104 ETC. 648, 816-17 (1984), aff'd, 791 F.2d 189 (D.C. Cir. 1986); Am. Home Prods. Corp., 98 F.T.C. 136, 368-69 (1981) ("The very fact that AHP sought to distinguish its products from aspirin strongly implies that knowledge of the true ingredients of those products would be material to purchasers."), aff'd, 695 E2d 681 (3d Cir. 1982)
128. See, e.g., Campbell Soup Co., 115 F.T.C. 778 (1992) (consent order) (challenging company's failure to disclose sodium content as a violation of Section 5 in light of representations that product was heart-healthy and low in fat and cholesterol); North Am. Philips Corp., 111 F.T.C. 139 (1988) (challenging company's failure to disclose that a water filter emitted a potentially hazardous chemical into drinking water as a violation of Section 5 in light of representations that the device cleaned water).
129. Policy Statement on Unfairness, appended to Int'l Harvester Co., 104 F.T.C. 949, 1070 (1984). The Unfairness Policy Statement was first issued on December 17, 1980, in the form of a letter from the Commission to Senators Wendell Ford and John Danforth.
130. Before issuing the Unfairness Policy Statement, the Commission considered the following factors in determining whether a practice was unfair: (1) whether it injured consumers; (2) whether it violated established public policy; and (3) whether it was unethical or unscrupulous. See Unfairness Policy Statement, 104 F.T.C. at 1070, 1072 nn. 8-9;
131. FTC v. Sperry & Hutchinson Co., 405 U.S. 223, 244-45 n.5 (1972).
132. 15 U.S.C. § 45(n) provides: The Commission shall have no authority under this section or section 57a of this title to declare unlawful an act or practice on the grounds that such act or practice is unfair unless the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition. In determining whether an act or practice is unfair, the Commission may consider established public policies as evidence to be considered with all other evidence. Such public policy considerations may not serve as a primary basis for such determination.
133. Int'l Harvester, 104 F.T.C. at 1063.
134. Id. at 1065.
135. Id. at 1060.
136. See, e.g., Orkin Exterminating Co., 108 F.T.C. 263 (1986), aff'd, 849 F. 2d 1354 (11th Cir. 1988) (upholding ruling that Orkin's action in unilaterally raising fees on certain contracts that had provided for a lifetime fixed annual inspection fee met the FTC's test for unfairness); FTC v. Certified Merchant Services, Ltd., No. 4:02CV44 (E.D. Tex. Jan. 15, 2004) (stipulated final order) (challenging as unfair defendant's unilateral breach of contract by insisting on compliance with additional terms that were not part of the original contract).
137. See, e.g., FTC v. Hold Billing Servs., Ltd., No. SA-98-CA-0629-FB (W.D. Tex. Oct. 6, 1999) (stipulated final judgment);
138. FTC v. Sheinkin, No. 2-00-3638 (D.S.C. Aug. 29, 2001) (stipulated final order) (cramming of unauthorized charges onto phone bills);
139. FTC v. The Crescent Publ'g Group, Inc., 129 F. Supp. 2d 311, 313 (S.D.N.Y. 2001) (judgment and permanent injunction) (unauthorized billing of credit cards).
140. See, e.g., Zango, Inc., C-4186 (Mar. 9, 2007) (consent order) (alleging that it was an unfair practice for a company to install on consumers' computers, without their knowledge or authorization, adware that consumers could not be reasonably identify, locate, or remove); FTC v. Zuccarini, No. 01-CV-4854 (E.D. Pa. May 24, 2002) (stipulated final order) (challenging the unfair practice of "mousetrapping," whereby defendant used consumers' internet connections to take control of their computers, and forced them to view dozens of websites advertising products such as online gambling, psychic services, and adult entertainment).
141. See, e.g., Beck's North America Inc., 127 F.T.C. 379 (1999) (consent order) (alleging an alcohol company's depictions of unsafe behavior in advertising to be an unfair trade practice); Consumer Direct, Inc., 113 F.T.C. 923 (1990) (consent order) (alleging a company's failure to disclose the substantial risk of physical injury posed by its exercise device to be an unfair trade practice).
142. See Rite Aid Corp., File No. 0723121 (proposed consent agreement published for public comment July 27, 2010)) (alleging that company's failure to implement reasonable procedures for securely disposing of personal information was an unfair trade practice, in violation of the FTC Act); CVS Caremark Corp., C-4259 (Feb. 18, 2009) (consent order) (same). See also Health Breach Notification Rule, 16 C.F.R. Part 318 (2010) (requiring vendors of personal health records and related entities not covered by HIPAA to notify consumers and other when the security of individually identifiable health information has been breached).
143. An agency of attorneys and economists, the FTC does not employ an in-house scientific staff. Rather, it relies on the scientific and medical expertise of FDA, the National Institutes of Health, the Centers for Disease Control and Prevention, and other federal and state agencies, as well as experts in academia and the private sector.
144. Working Agreement Between FTC and FDA, 4 Trade Reg. Rep. (CCH) ¶ 9.850.01 (1971) (updating and replacing prior agreements of 1954 and 1958).
145. See 21 U.S.C. § 352(a).
146. See, e.g., In re Request for Comments on Agency Draft Guidance Documents Regarding Consumer-Directed Promotion, FDA Dkt. No. 2004D-0042, Comments of the Staff of the Bureau of Consumer Protection, Bureau of Economics, and Office of Policy Planning of the Federal Trade Commission (May 10, 2004), available at http://www.ftc.gov/opa/2004/05/dtcdrugs.shtm;
147. In re Request for Comments on Consumer-Directed Promotion, FDA Dkt. No. 2003N-0344, Comments of the Staff of the Bureau of Consumer Protection, Bureau of Economics, and Office of Policy Planning of the Federal Trade Commission (Dec. 1, 2003), available at http://www.ftc.gov/opa/2003/12/fdadtc.shtm
148. 21 C.F.R. § 202.1 (2007).
149. See Thompson Med. Co., 104 F.T.C. at 826.
150. See. e.g., Elation Therapy, Inc., C-4204 (Nov. 7, 2007) (consent order) (challenging claims that progesterone product was effective in preventing or reducing the risk of osteoporosis and cancer); Hi-Health Supermarket Corp., 139 F.T.C. 319 (2005) (consent order) (challenging claims that vitamin product could restore vision lost from macular degeneration or eliminate floaters).
151. See, e.g., Interstate Bakeries Corp., 133 F.T.C. 687 (2002) (consent order) (challenging claims that Wonder Bread containing added calcium could improve children's brain function and memory); Conopco, Inc., 123 F.T.C. 135 (1997) (consent order) (challenging claims about the nutritional content and health benefits of margarine and spread).
152. See Chesebrough-Ponds, Inc., 105 F.T.C. 567 (1985) (modifying, on the basis of FDA's 1983 monograph on skin protectants, a 1963 order against the marketer of Vaseline petroleum jelly).
153. Pub. L. No. 101-535, 104 Stat. 2353 (1990) (codified in part at 21 U.S.C. § 343(i), (q), and (r)).
154. 59 Fed. Reg. 28,388 (June 1, 1994).
155. See, e.g., Pizzeria Uno Corp., 123 F.T.C. 1038 (1997) (consent order) (challenging deceptive low-fat representations for Thinzetta pizzas); Mrs. Fields Cookies, Inc., 121 F.T.C. 599 (1996) (consent order) (challenging deceptive low-fat claims for cookies); The Dannon Co., 121 F.T.C. 136 (1996) (consent order) (challenging deceptive low-fat, low-calorie, and "lower in fat than ice cream" claims for Pure Indulgence frozen yogurt); Häagen-Dazs Co., 119 F.T.C. 762 (1995) (consent order) (challenging deceptive low-fat representations for Häagen-Dazs frozen yogurt); The Eskimo Pie Corp., 120 F.T.C. 312 (1995) (consent order) (challenging low-calorie claims for Sugar Freedom products).
156. See FTC, Dietary Supplements: An Advertising Guide for Industry (Dietary Supplement Guide) 6-7 (1998), available at www.ftc.gov/bcp/conline/pubs/buspubs/ dietsupp.pdf. This plain-language guide describes basic principles of FTC advertising law, and provides hypothetical examples from the dietary supplement industry to illustrate how these principles apply in practice.
157. Pub. L. No. 103-417, 108 Stat. 4325 (1994) (codified as amended in scattered sections of 21 U.S.C.).
158. DSHEA also requires that structure/function claims in labeling by substantiated and not misleading. See 21 U.S.C. § 343(r)(6). See also Certain Types of Statements for Dietary Supplement, 21 C.F.R. § 101.93 (2007);
159. Regulations of Statements Made for Dietary Supplements Concerning the Effect of the Product on the Structure or Function of the Body, 65 Fed. Reg. 1000, 1034-35 (Jan. 6, 2000);
160. Food Labeling: Nutrient Content Claims, Health Claims, and Statements of Nutritional Support for Dietary Supplements, 62 Fed. Reg. 49,859, 49,860, 49,861, 49,864 (Sept. 23, 1997).
161. Dietary Supplement Guide, supra n. 124.
162. See infra 607.
163. Policy Statement Regarding Advertising Substantiation, appended to Thompson Med. Co., 104 F.T.C. at 839.
164. Id. ("[W]e reaffirm our commitment to the underlying legal requirement of advertising substantiation - that advertisers and ad agencies have a reasonable basis for advertising claims before they are disseminated.").
165. Removatron Int'l Corp., 884 F.2d at 1492 n.3.
166. Dietary Supplement Guide, supra n. 124, Example 1.
167. See also Am. Home Prods. Corp., 98 F.T.C. at 377.
168. Removatron Int'l Corp., 884 F.2d at 1492 n.3 ("'Establishment' claims are statements to the effect that scientific tests establish that a product works.").
169. Id. See Removatron Int'l Corp., 111 F.T.C. at 297; Thompson Med. Co., 104 F.T.C. at 814.
170. See Am. Home Prods. Corp., 98 F.T.C. at 375 n.28; Bristol-Myers Co., 102 F.T.C. 21, 321 (1983), aff'd, 738 F.2d 554 (2d Cir. 1984).
171. The factors are derived from Pfizer, Inc., 81 F.T.C. 23 (1972).
172. Substantiation Policy Statement, 104 F.T.C. at 840.
173. Id. See also Porter & Dietsch, Inc. v. FTC, 605 F.2d 294, 302 n.5 (7th Cir. 1979) ("[T]here may be some types of claims for some types of products for which the only reasonable basis, in fairness and in the expectations of consumers, would be a valid scientific or medical basis. The case at bar, in which the representations concern the efficacy of a drug, is such a case.") (citations omitted).
174. Thompson Med. Co., 104 F.T.C. at 822; Sterling Drug, Inc. v. FTC, 741 F.2d 1146, 1155 (9th Cir. 1984) (observing that "it is difficult for consumers to compare analgesic products effectively, so they are more likely to give credence to advertising claims"); Am. Home Prods. Corp., 695 F.2d at 698 ("Another consideration in favor of holding comparative effectiveness and safety claims for analgesics to high standards of substantiation is the difficulty for the average consumer to evaluate such claims through personal experience, and the consequent tenacity of advertising-induced beliefs about superiority.").
175. 140 See, e.g., Goen Tech. Corp., Inc., C-4185 (F.T.C. Jan. 4, 2007) (consent order) (challenging claims that TrimSpa diet product would cause rapid and substantial weight loss); Telebrands Corp., 140 F.T.C. 278 (2005), aff'd, 457 F.3d 354 (4th Cir. 2006) (finding that company's claims that Ab Force electronic belt would cause weight loss and give users well-defined abdominal muscles were deceptive).
176. See, e.g., FTC v. Vital Living Prods., Inc., No. 3.02CV74-MU (W.D.N.C. Feb. 27, 2002) (stipulated final order) (challenging deceptive efficacy claims for a purported do-it-yourself test kit represented to detect anthrax bacteria and spores);
177. FTC v. Medimax, Inc., No. 99-1485-CIV (M.D. Fla. Mar. 22, 2000) (stipulated final order) (challenging false representation that home HIV test kits could accurately detect HIV virus);
178. FTC v. Cyberlinx Mktg., Inc., No. CV-S-99-1564-PMP-LRL (D. Nev. Nov. 8, 1999) (stipulated final order) (same).
179. See, e.g., FTC v. Western Botanicals, Inc., No. CIV.S-01-1332 DFL GGH (E.D. Cal. July 1, 2001) (stipulated final order) (challenging the health risks of product containing comfrey); Panda Herbal Int'l, Inc., 132 F.T.C. 125 (2001) (consent order) (challenging the health risks of a product containing St. John's Wort when advertised to consumers taking prescription drugs for HIV/AIDS).
180. See, e.g., FTC v. QT, Inc., 512 F.3d 858, 863 (7th Cir. 2008) ("Deceit such as the tall tales that defendants told about the Q-Ray Ionized Bracelet will lead some consumers to avoid treatments that cost less and do more; the lies will lead others to pay too much for pain relief or otherwise interfere with the matching of remedies to medical conditions.").
181. See Consumer Direct, Inc, 113 F.T.C. 923 (1990) (challenging as an unfair practice a company's failure to disclose the risk that the spring on the Gut Buster exercise device could break, thereby injuring consumer).
182. Removatron, 111 F.T.C. at 306 n.20.
183. See, e.g., id. at 307 n.20; Thompson Med., 104 F.T.C. at 825.
184. Dietary Supplement Guide 9.
185. Compare CompUSA Inc., 139 F.T.C. 357 (2005) (consent order) (requiring computer company to possess "competent and reliable evidence" to support representations about when consumers will receive requested rebates) with Conopco, Inc., 121 F.T.C. 131 (1997) (consent order) (requiring food company to possess "competent and reliable scientific evidence" to support representations that margarine or any other spread will help to reduce the risk of heart disease").
186. C-4262 (2009) (consent order).
187. See, e.g., Telebrands, 140 F.T.C. at 459;
188. United States v. Bayer Corp., No. 07-01 (HAA) (D.N.J. Jan. 4, 2007) (consent decree); KFC Corp., 138 F.T.C. 422 (2004) (consent order); Interstate Bakeries Corp., 133 F.T.C. 687.
189. See supra n. 124.
190. Id. at 10-18.
191. Id. at 10.
192. See, e.g., Novartis, 127 F.T.C. at 726 (requiring two well-controlled clinical studies to substantiate certain analgesic claims);
193. Viral Response Sys., Inc., 115 F.T.C. 676, 693 (1992) (consent order) (requiring two well-controlled clinical studies to substantiate cold-prevention or -cure claims); Thompson Med., 104 F.T.C. at 850.
194. See, e.g., Thompson Med., 104 F.T.C. at 720-21 (initial decision) ("Replication is necessary because there is a potential for systematic bias and random error in any clinical trial: the methodology may be insensitive, or the wrong conclusion may be reached by sheer chance. Moreover, even an experienced investigator may use an aberrant methodology, or some unexpected flaw or anomaly in the randomized population may bias the test results. Other possible sources of systematic bias include the geographic location of the trial and idiosyncrasies in the way the data are collected.") (citations omitted).
195. Removatron, 111 F.T.C. at 318.
196. Id. at 306-07 n.20.
197. See, e.g., Unither Pharma, Inc., 136 F.T.C. 145 (2003) (consent order) (requiring marketer of nutrition bars to substantiate with competent and reliable scientific evidence claims that the product could treat, cure, or prevent cardiovascular disease or improve cardiovascular or vascular function); FTC v. Blue Stuff, Inc., No. Civ-02-1631W (W.D. Okla. Nov. 18, 2002) (stipulated final order) (requiring marketer of a topical cream to substantiate pain-relief claims with competent and reliable scientific evidence).
198. 125 F.T.C. 698 (1997) (consent order).
199. See, e.g., Nestlé HealthCare Nutrition, Inc., File No. 092-3087 (proposed consent agreement published for public comment July 14, 2010); FTC v. Iovate Health Sciences USA, Inc., No. 10-CV-587 (W.D.N.Y. July 29, 2010) (stipulated final order).
200. See FTC v. Iovate Health Sciences USA, Inc.
201. See Nestlé Healthcare Nutrition, Inc.
202. For example, the Director of the FTC's Bureau of Consumer Protection stated: We are also concerned about health benefit claims for various kinds of so-called 'functional foods' - claims that such foods will boost the immune system, assist with memory and brain function, boost metabolism, protect the heart, or afford other physical or mental health benefits. Advertisers need to be very careful when they venture into this realm that they have good scientific research, that they are not overstating what the research shows, and that they are not making disease prevention or treatment claims not approved by the FDA. David VladeckDirector, Bureau of Consumer Protection, Federal Trade Commission, remarks before the National Advertising Division Annual Conference (Oct. 5, 2009)(emphasis added), available at www.ftc.gov/speeches/vladeck/ 091005vladecknationaladvertising.pdf.
203. See e.g., Nestlé Subsidiary to Settle FTC False Advertising Charges; Will Drop Deceptive Health Claims for BOOST Kid Essentials (July 14, 2010) available at www.ftc.gov/opa/2010/07/nestle.shtm;
204. and Dietary Supplement Maker to Pay $5.5 Million to Settle FTC False Advertising Charges (July 14, 2010), available at www.ftc.gov/opa/2010/07/ iovate.shtm.
205. Id. (emphasis added).
206. Compare FTC v. Enforma Natural Prods., Inc., 362 F.3d 1204, 1217 (9th Cir. 2004),
207. with FTC v. SlimAmerica, Inc., 77 F. Supp. 2d 1263, 1274 (S.D. Fla. 1999).
208. Dietary Supplement Guide 10.
209. See, e.g., In the Matter of Assessing Consumer Perceptions of Health Claims, Comments of the Staff of the Bureau of Economics, Bureau of Consumer Protection, and Office of Policy Planning of the Federal Trade Commission (FDA Dkt. No. 2005N-0413 Jan. 17, 2006);
210. FTC, Generic Copy Test of Food Health Claims in Advertising: A Joint Staff Report of the Bureaus of Economics and Consumer Protection (Nov. 1998).
211. Food Policy Statement, 59 Fed Reg. at 28,394.
212. Dietary Supplement Guide 7.
213. Dietary Supplement Guide 6, Example 7. See, eg., Indoor Tanning Association, C-4290 (May 19, 2010) (consent order) (challenging trade association's deceptive health and safety claims about indoor tanning); Panda Herbal Int'l, Inc., 132 F.T.C.125 (challenging the health risks of a product containing St. John's Wort when advertised to consumers taking prescription drugs for HIV/AIDS).
214. Dietary Supplement Guide 6, Example 8.
215. See, eg., FTC v. Western Botanicals, Inc. (challenging the health risks of product containing comfrey).
216. Id. See also Warner-Lambert, 86 F.T.C. at 496 ("Since there may be a divergence between what the user thinks the product will do for him and what the product actually does (or does not do), evidence of consumer beliefs has little probative value for determining whether" a product works as advertised); Removatron, 111 F.T.C. at 302 (testimonials from satisfied customers are not scientific substantiation necessary to demonstrate a product's effectiveness).
217. Simeon Mgt. Corp., 579 F.2d at 1143.
218. FTC v. Pantron I Corp, 33 F.3d at 1097.
219. 16 C.F.R. § 255.0-255.5 (2010). After requesting public comment on "the overall costs, benefits, and regulatory and economic impact" of the Guides, the Commission revised them in 2009. See infra at 619. A violation of the Guides does not create an independent cause of action; rather "the Guides address the application of Section 5 of the FTC Act (15 U.S.C. 45) to the use of endorsements and testimonials in advertising." 16 C.F.R. § 255.0(a).
220. See 16 C.F.R. § 255.1(a) ("[Endorsements] may not contain any representations which would be deceptive, and could not be substantiated if made directly by the advertiser."); Dietary Supplement Guide 18.
221. QT, Inc., 512 F.3d at 862. See infra at 186.
222. Id. at 12. See FTC v. QT, Inc., 448 F. Supp. 2d 908, 932-48 (N.D. Ill. 2006), aff'd, 512 F.3d 858, 863 (7th Cir. 2008);
223. FTC. v. California Pacific Research, Inc., No. CV-N-88-602 BRT (D. Nev. Aug. 27, 1991) (order granting permanent injunction);
224. Sterling Drug, 102 F.T.C. 395, 429 (1983) ("In a well-controlled clinical test, drugs are tested on real patients having actual symptoms. It is not disputed in this case that the elements of a well-controlled clinical test are the use of an appropriate pain model, replication of results, experienced unbiased investigator and adequately trained personnel, a written protocol, double-blinding, use of a placebo control, use of appropriate predetermined analytical techniques, and statistical and clinical significance of the results.").
225. Dietary Supplement Guide 12. See Schering Corp., 118 F.T.C. at 1030 (initial decision) ("Double blinding minimizes bias by withholding knowledge of placebo or treatment group assignments from the subject and the investigator. Double blinding is especially important when subjective measurements are made, for if the investigator knows to which group the subject is assigned, his perception of the treatment's effects may be altered by that knowledge.").
226. Id. See also Am. Home Prods., 98 F.T.C. at 155 (initial decision) ("The dose-response curve is generally accepted by clinical pharmacologists as a useful statistical tool in guessing the efficacy of a drug dosage in terms of its anticipated potency based on clinical data obtained from actual tests of graded dosages.").
227. See Telebrands, 144) F.T.C. at 321 n.40.
228. Novartis, 127 F.T.C. at 685 n.20.
229. See, e.g., QT, Inc., 512 F.3d at 862-63; Pantron, 33 F.3d at 1100.
230. QT, Inc., 467 F. Supp. 2d at 964.
231. QT, Inc., 512 F.3d at 862.
232. Dietary Supplement Guide 14.
233. In its Food Policy Statement, for example, the FTC observed that, when a claim is based on science that is inconsistent with the larger body of evidence, it is likely to be misleading, even despite an advertiser's efforts to qualify the claim. 59 Fed. Reg. at 28,393-94.
234. Dietary Supplement Guide 14.
235. See, e.g., Removatron, 111 F.T.C. at 302; Original Mktg., Inc., 102 F.T.C. 278 (1995) (consent order).(challenging the use of consumer testimonials that did not represent the typical experience of consumers who used weight loss product).
236. For example, in Quigley Corp., C-3926 (Feb. 10, 2000) (consent order), and QVC, Inc., C-3955 (June 16, 2000) (consent order), the claim on the product packaging was that use of Cold-Eeze zinc lozenges would "reduce the severity and duration" of colds. The advertised claims, however, went far beyond that qualified representation by promising consumers that "if you take these on a preventative basis, you might not ever get a cold at all."
237. See, e.g., Valuevision Int'l, Inc, 132 F.T.C. 338(2001) (consent order) (alleging that company's purported substantiation was based on studies using a formulation different from that of the advertised weight-loss product).
238. Dietary Supplement Guide 16.
239. See United States v. Bayer Corp., No. CV 00-132 (NHP) (D.N.J. Jan. 11, 2000) (consent decree) (challenging unqualified heart-health claim for aspirin regimen when studies allegedly supported benefits only for patients who had already had one heart attack); Schering Corp., 118 F.T.C. 1030 (1994) (initial decision) (challenging unqualified weight-loss claims when subjects in studies were also on diet and exercise programs).
240. See Honeywell Inc., 126 F.T.C. 202 (1998) (consent order) (challenging as deceptive the representation that an air filter will remove 99.97% of impurities from the air because testing was not conducted in conditions approximating household use).
241. Dietary Supplement Guide 16.
242. See, e.g., FTC v. H.N. Singer, Inc., 668 F.2d 1107, 1113 (9th Cir. 1982);
243. FTC v. Security Rare Coin & Bullion Corp., 931 F.2d 1312, 1316(8th Cir. 1991).
244. Each dissemination of a deceptive claim is considered a separate violation. Therefore, civil penalties can often total in the millions of dollars. See, e.g., United States v. Bayer Corp., No. 07-01 (HAA) (D.N.J. Jan. 4, 2007) (consent decree) ($3.2 million civil penalty for violating the terms of a 1991 FTC order by making allegedly deceptive weight-loss claims for One-A-Day WeightSmart);
245. United States v. NBTY, Inc., No. CV-05-4793 (E.D.N.Y. Oct. 12, 2005) ($2 million civil penalty for violating terms of 1995 FTC order by making allegedly deceptive claims for products advertised to cause weight loss and treat diabetes, cancer, Alzheimer's disease, and other serious conditions);
246. United States v. Nu Skin Int'l, Inc., No. 97-CV-0626G (D. Utah Aug. 6, 1997) (stipulated permanent injunction) ($1.5 million civil penalty against seller of weight-loss products for violating 1994 FFC order barring deceptive claims);
247. United States v. General Nutrition Corp., No. 94-686 (W.D. Pa. Apr. 28, 1994) (stipulated permanent injunction) ($2.4 million civil penalty for violating FTC order requiring substantiation for disease, weight-loss, and muscle-building claims).
248. Sears, Roebuck & Co., 95 F.T.C. at 520, citing Fedders Corp. v. FTC, 529 E2d 1398, 1403 (2d Cir. 1976).
249. FTC v. Nat'l Lead Co., 352 U.S. 419, 431 (1957) ("[R]espondents must remember that those caught violating the Act must expect some fencing in.").
250. See FTC v. Colgate-Palmolive Co., 380 U.S. 374 (1965).
251. 343 U.S. 470, 473 (1952).
252. See, e.g., Synchronal Corp., 116 F.T.C. 1189(1993) (consent order) (ordering sellers of purported baldness remedy and anti-cellulite cream to cease and desist from "making any representation, directly or by implication, regarding the performance, benefits, efficacy or safety of any product or service . . . unless, at the time of making such representation, respondents possess and rely upon competent and reliable evidence that substantiates the representation"); Zygon Int'l, Inc., 122 F.T.C. 195 (1996) (consent order) (ordering sellers of dietary supplements and "brain tuner" device to cease and desist from "making any representation, in any matter, directly or by implication . . . regarding the performance, benefits, efficacy or safety of any product or service . . . unless, at the time of making such representation, respondents possess and rely upon competent and reliable evidence, which when appropriate must be competent and reliable scientific evidence, that substantiates such representation").
253. See, e.g., Tropicana Prods., Inc., 140 F.T.C. 176, 185-86(2005) (consent order) (scope of order includes any future claims that a food will affect cholesterol, folate levels, or homocysteine levels; blood pressure; or the risk of developing heart disease, stroke, or cancer); KFC Corp., 138 F.T.C. 422 (2004) (consent order) (scope of order includes any future claims about the nutrients or health benefits of any product containing chicken).
254. Telebrands Corp. v. FTC, 457 F.3d 354, 358 (4th Cir. 2006),
255. citing Atlantic Ref. Co. v. FTC, 381 U.S. 357, 377 (1965).
256. See Southwest Sunsites, 785 F.T.C. 1431, 1439 (9th Cir. 1985) ("The Commission has broad remedial power and a remedial order should be upheld if reasonably related to the unlawful practices found to exist.").
257. Telebrands Corp., 457 F.3d at 358. See also Sears, Roebuck & Co., 676 F.2d at 392; Kraft, Inc., 970 F.2d at 326; Bristol-Myers, 738 F.2d at 561. The Fourth Circuit in Telebrands noted that some courts have applied an additional factor: the extent to which the claim was health-related or the product posed a health risk. See, e.g., Removatron Int'l Corp., 884 F.2d at 1499. See also Am. Home Prods., 695 F.2d at 706.
258. See, e.g., Pfizer, Inc., 126 F.T.C. 847, 861-62 (1998) (consent order) (imposing requirement that "[t]his order will terminate . . . twenty (20) years from the most recent date that the United States or the [FTC] files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later. . ."); London Int'l Group, Inc.,125 F.T.C. 726, 734 (1998) (consent order) (same); Johnson & Johnson Consumer Prods., Inc. 121 F.T.C. 22, 31-32 (1996) (consent order) (same).
259. See, e.g., Laser Vision Institute, 136 F.T.C. 1, 35 (2003) (consent order) (imposing requirement that respondents "shall deliver a copy of this order to all current and future principals, officers, and directors, and to all current and future employees, agents, and representatives having responsibilities with respect to the subject matter of this order, and shall secure from each such person a signed and dated statement acknowledging receipt of the order. Respondents shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities.").
260. Whenever the Commission can identity consumers who purchased the product that was deceptively advertised, it uses redress judgments to pay refunds to consumers. If that is not feasible, any financial restitution won by the agency escheats to the U.S. Treasury. No portion of judgments goes to the FTC's operating budget. See, e.g., FTC v. Great Am. Prods., Inc., No. 3:05-CV-00170-RV-MD (N.D. Fla. May 20, 2005) (stipulated final order) (up to $20 million redress for unsubstantiated anti-aging claims for purported human growth hormone product, deceptive format for radio and television infomercials, and violations of the Telemarketing Sales Rule);
261. FTC v. Blue Stuff, Inc., No. Civ-02-1631W (W.D. Okla. Nov. 18, 2002) (stipulated final order) ($3 million in consumer redress for allegedly deceptive claims for Blue Stuff pain reliever and two dietary supplements advertised to reduce cholesterol and reverse bone loss);
262. FTC v. Enforma Natural Prods., Inc., No. 04376JSL(CWx) (C.D. Cal. Apr. 26, 2000) (stipulated final order) ($10 million in consumer redress from marketer of purported weight-loss product);
263. FTC v. American Urological Corp., No. 98-CVC-2199-JOD (N.D. Ga. Apr. 29, 1999) (permanent injunction) ($18.5 million judgment against marketers of dietary supplement purporting to treat impotence).
264. See, e.g., FTC v. 7 Day Marketing, Inc., No. CV08-01094-ER-FFM (C.D. Cal. Feb. 27, 2008) (permanent injunction) (banning individuals who sold "7 Day Miracle Cleanse Program" from marketing any health-related product in any medium);
265. FTC v. Sagee U.S.A. Group, Inc., No. CV04 10560 GPS (CWx) (C.D. Cal. Aug. 10, 2006) (modified stipulated final judgment & order) (imposing lifetime ban from selling health-related products);
266. FTC v. Am. Urological Corp., No. 98-CVC-2199-JOD (N.D. Ga. Apr. 29, 1999) (permanent injunction) (imposing $6 million bond on marketer of "Vaegra," a dietary supplement purporting to treat impotence); Synchronal Corp., 116 F.T.C. 1189 (1993) (consent order) (requiring corporate officer who sold baldness, anti-cellulite, and skin care products to establish $500,000 escrow account before future marketing of certain products).
267. Warner-Lambert Co. v. FTC, 562 F.2d 749 (D.C. Cir. 1977), aff'g, 86 F.T.C. 1398 (1975).
268. Warner-Lambert Co. v. FTC, 562 F.2d at 762.
269. Novartis Corp. v. FTC, 223 F.3d 783 (D.C. Cir. 2000), aff'g, 127 F.T.C. 580 (1996).
270. Novartis Corp. v. FTC, 223 F.3d at 788.
271. See, e.g., PhaseOut of America, Inc., 123 F.T.C. 395 (1997) (consent order) (requiring marketer of device advertised to reduce health risks of smoking to notify purchasers that the product had not been proven to reduce the risk of smoking-related diseases); Consumer Direct, Inc., 113 F.T.C. 923 (1990) (consent order) (requiring marketer of Gut Buster exercise device to mail to purchasers a warning regarding a serious safety hazard posed by the product).
272. See, e.g., FTC v. Met-Rx USA, Inc., No. 99-WI-2197 (C.D. Cal. Nov. 15, 1999) (stipulated final order) (requiring labeling and advertising for purported body-building supplements containing androgen and other steroid hormones to disclose, "WARNING: This product contains steroid hormones that may cause breast enlargement, testicle shrinkage, and infertility in males, and increased facial and body hair, voice deepening, and clitoral enlargement in females. Higher doses may increase these risks. If you are at risk for prostate or breast cancer, you should not use this product.");
273. FTC v. AST Nutritional Concepts & Research, Inc., No. SAC V-99-1407 (D. Cob. Nov. 15, 1999) (stipulated fmal order) (same); R.J. Reynolds Tobacco Co., 128 F.T.C. 262 (1999) (consent order) (requiring marketer of Winston "no additives" cigarettes to state in future advertisements: "No additives in our tobacco does NOT mean a safer cigarette.").
274. Chrysler Corp. v. FTC, 561 F.2d 357, 363 & n.5 (D.C. Cir. 1977).
275. See Regina Corp. v. FTC, 322 F.2d 765, 768 (3d Cir. 1963);
276. Orkin Exterminating Co. v. FTC, 849 F.2d 1354 (11th Cir. 1988) (holding that company's purported good-faith reliance on advice of counsel is not a defense under Section 5).
277. See, e.g., FTC v. Standard Educ. Soc'y, 302 U.S. 112, 119-20(1937);
278. Pati-Port, Inc. v. FTC, 313 F.2d 103 (4th Cir. 1963).
279. Rentacolor, Inc., 103 F.T.C. 400, 438 (1984).
280. Thiret v. FTC, 512 F.2d 176, 181-82 (10th Cir. 1975).
281. FTC v. Affordable Media, 179 F.3d 1228, 1234 (9th Cir. 1999),
282. quoting FTC v. Publ'g Clearing House, Inc., 104 F.3d 1168, 1171 (9th Cir. 1996). The knowledge requirement can be satisfied by showing that the individuals had actual knowledge of a material misrepresentation, were recklessly indifferent to the falsity of a misrepresentation, or were aware of the probability of fraud and intentionally avoided knowledge of the truth.
283. Affordable Media, 179 F.3d at 1234.
284. See Campbell Mithun, L.L.C., 133 F.T.C. 702 (2002) (consent order) (challenging agency's role in advertisements claiming that Wonder Bread with added calcium could improve children's brain function and memory); Bozell Worldwide, Inc., 127 F.T.C. 1 (1999) (consent order) (challenging agency's role in advertisements containing deceptive representations of car leasing terms); Jordan McGrath Case & Taylor, 122 F.T.C. 152 (1996) (consent order) (challenging agency's role in advertisements making deceptive claims for pain-relief superiority of Doan's pills); NW Ayer & Son, Inc.,121 F.T.C. 656 (1996) (consent order) (challenging agency's role in advertisements containing deceptive claims regarding the effect of Eggland's Best eggs on blood cholesterol); BBDO Worldwide, Inc., 121 F.T.C. 33 (1996) (consent order) (challenging agency's role in advertisements containing deceptive claims for nutritional content of Hãagen-Dazs frozen yogurt).
285. Bristol-Myers Co., 102 F.T.C. at 364, citing Doherty, Clifford, Steers & Shenfield, Inc. v. FTC, 392 F.2d 921, 927 (6th Cir. 1968).
286. Bristol-Myers Co., 102 F.T.C. at 364.
287. Id. at 225, citing Merck & Co., 69 F.T.C. 526, 559 (1966), aff'd, 392 F.2d 921 (6th Cir. 1968).
288. See, e.g., World Media TV, Inc., C-3717 (Feb. 28, 1997) (consent order) (challenging infomercial producer for role in disseminating claims for a pain-relief device).
289. See, e.g., Home Shopping Network, Inc., 122 F.T.C. 227 (1995) (consent order) (holding home shopping company liable for deceptive claims for vitamin and stop-smoking sprays); United States v. Home Shopping Network, Inc., No. 99-897-CIV-T-25C (M.D. Fla. Apr. 15, 1999) (consent decree) ($1.1 million civil penalty for violating previous FTC order barring false and unsubstantiated claims for skin-care, weight-loss, and MS/menopause products); Value Vision Int'l, Inc., 132 F.T.C. 338(2001) (holding home shopping company liable for deceptive claims for weight-loss, cellulite, and baldness products); QVC, Inc., C-3955 (June 16, 2000) (consent order) (holding home shopping company liable for deceptive cold-prevention claims for zinc supplement).
290. See, e.g., Sharper Image Corp., 116 F.T.C. 606(1993) (consent order) (holding cataloguer liable for unsubstantiated claims for exercise device and dietary supplement); Lifestyle Fascination, Inc., 118 F.T.C. 171 (1994) (consent order) (holding cataloguer liable for deceptive claims for pain-relief device and a "Brain Tuner" advertised to treat addiction and depression).
291. See, e.g., FTC v. First Am. Payment Processing, Inc., No. CV 04-0074 PHX SRB (D. Az. Nov. 3, 2004) (stipulated permanent injunction) ($1.5 million redress for electronic payment processor's role in assisting fraudulent telemarketers by electronically debiting consumers' bank accounts in violation of the Telemarketing Sales Rule and the FTC Act);
292. FTC v. No. 1025798 Ontario, Inc. (W.D.N.Y. Oct. 12, 2004) (stipulated final order) (holding fulfillment company liable for its role in marketing of deceptively advertised weight-loss products);
293. FTC v. Lane Labs-USA, Inc., No. 00CV3174 (D.N.J. June 28, 2000) (stipulated final order) (applying common enterprise theory to hold both the product manufacturer and a company that distributed information about the use of the product liable for deceptive cancer-treatment claims for shark cartilage product); Walgreen Co., 109 F.T.C. 156 (1987) (consent order) (holding retail drugstore chain liable for deceptive advertising of OTC pain reliever).
294. 16 C.F.R. §§ 255.0-.5 (2010)
295. 16 C.F.R. § 255.1(a).
296. See FTC v. QT, Inc., 512 F.3d 858, 862 (7th Cir. 2008).
297. 16 C.F.R. § 255.2(b).
298. 16 C.F.R. § 255.2.
299. Id. at n.1. While not ruling out the possibility that "a strong disclaimer of typicality could be effective in the context of a particular advertisement," the agency observed that "an advertiser possessing reliable empirical testing demonstrating that the net impression of its advertisement with such a disclaimer is non-deceptive will avoid the risk of the initiation of such an action in the first instance." Id.
300. 16 C.F.R § 255.3 (2008).
301. See FTC v. Kendall, No. 00-09358-AHM (AIJx) (C.D. Cal. Aug. 31, 2000) (stipulated final order) (challenging false representation that person who appeared on an infomercial touting a weight-loss product was a nutritionist).
302. See Black & Decker (U.S.) Inc., 113 F.T.C. 63 (1990) (consent order).
303. See, e.g., Synchronal Corp., 116 F.T.C. 1189 (1993); Steven Victor, M.D., 116 F.TC. 1189 (1993) (consent orders) (holding company and physician responsible for allegedly deceptive endorsements given by the physician for products advertised as treatments for baldness); Patricia Wexler, M.D., 115 F.T.C. 849 (1992) (consent order) (holding company and physician responsible for allegedly deceptive endorsements given by the physician for products advertised as treatments for cellulite).
304. See, e.g., FTC v. Terrill Mark Wright, M.D., No. 1:04-CV-3294 (N.D. Ga. Jan. 15, 2009) (final judgment and permanent injunction) ($15,454 redress for doctor's deceptive endorsement of Thermalean weight-loss product);
305. FTC v. Mark J. Buchfuhrer, M.D., No. 03CV5002-RNBX (C.D. Cal 2003) (stipulated final order) (challenging deceptive representations made by physician for a purported anti-snoring treatment); Robert M. Currier, D.O., 132 F.T.C. 672 (2002) (consent order) (challenging deceptive representations made by eye doctor for a purported anti-snoring treatment); William S. Gandee, 123 F.T.C. 698 (1997) (consent order) (challenging chiropractor's role in the marketing of a purported pain-relief device); William E. Shell, M.D., 123 F.T.C. 1519 (1997) (consent order) (challenging physician's role in the marketing of a purported weight-loss pill). Endorsements by groups perceived by reasonable consumers to be expert organizations must meet the same standards as endorsements by expert individuals, and must be reached by a process sufficient to ensure that the endorsement reflects the collective judgment of the organization. See 16 C.F.R. § 255.1, Example 3 ("An ad for an acne treatment features a dermatologist who claims that the product is 'clinically proven' to work. Before giving the endorsement, she received a write-up of the clinical study in question, which indicates flaws in the design and conduct of the study that are so serious that they preclude any conclusions about the efficacy of the product. The dermatologist is subject to liability for the false statements she made in the advertisement. The advertiser is also liable for misrepresentations made through the endorsement.")
306. 16 C.F.R. § 255.5, Example 1.
307. 137 F.TC. 350 (2004) (consent order).
308. 116 F.T.C. 1078 (1993) (consent order).
309. See also James L. McElhaney, M.D., 116 F.T.C. 1137 (1993) (consent order). See also 15 C.F.R. § 255.5, Example 4 ("An ad for an anti-snoring product features a physician who says that he has seen dozens of products come on the market over the years and, in his opinion, this is the best ever. Consumers would expect the physician to be reasonably compensated for his appearance in the ad. Consumers are unlikely, however, to expect that the physician receives a percentage of gross product sales or that he owns part of the company, and either of these facts would likely materially affect the credibility that consumers attach to the endorsement. Accordingly, the advertisement should clearly and conspicuously disclose such a connection between the company and the physician.")
310. 126 F.T.C. 375 (1998) (consent order).
311. 16 C.F.R. § 255.0, Example 8.
312. 16 C.F.R. § 255.1(a).
313. See FTC v. Garvey, 383 F.3d 891,905(9th Cir. 2004) (holding that baseball player was not liable under Section 5 for claims about a weight-loss product because his statements reflected his "actual beliefs and experiences").
314. 16 C.F.R. § 255.1 (2008).
315. Cooga Mooga, Inc., 98 F.T.C. 814, 815 (1981), modifying 92 F.T.C. 310 (1978) (consent order).