FTC Warns Almost 700 Marketing Companies That They Could Face Civil Penalties if They Can’t Back Up Their Product Claims

The Federal Trade Commission is putting hundreds of advertisers on notice that they should avoid deceiving consumers with advertisements that make product claims that cannot be backed up or substantiated. In notices sent to the companies, the FTC warned that it will not hesitate to use its authority to target violators with large civil penalties.

Under FTC law, companies must back up claims about what their product can do with reliable evidence. If a company makes a claim about the health or safety benefits of a product, that claim must be based on scientific evidence. If a company claims that its product can cure, mitigate, or treat a serious disease such as cancer or heart disease, it must back up that claim through the accepted standards of scientific testing.

“The requirement for advertisers to have adequate support for their advertising claims at the time they’re made is a bedrock principle of FTC law,” said Sam Levine, Director of the FTC’s Bureau of Consumer Protection. “The prospect of steep civil penalties will help ensure that advertisers don’t play fast and loose with the truth.”

While the FTC has long history of providing guidance on advertising substantiation, through both litigated cases and policy statements, many sellers continue to make unsubstantiated claims about their products and false claims about the proof they have. Consequently, the FTC is now using its penalty offense authority to remind advertisers of the legal requirement to have a reasonable basis to support objective product claims and to deter them from making deceptive claims in the future.

By sending notices of penalty offenses to approximately 670 companies involved in the marketing of OTC drugs, homeopathic products, dietary supplements, or functional foods, the agency is placing them on notice they could incur significant civil penalties if they fail to adequately substantiate their product claims in ways that run counter to the litigated decisions of prior FTC administrative cases.

Notices of penalty offenses allow the agency to seek civil penalties — up to $50,120 per violation — against a company that engages in conduct that it knows has been found unlawful in a previous FTC administrative order, other than a consent order.

The notices outline specific unlawful acts and practices, including failing to have: 1) a reasonable basis consisting of competent and reliable evidence for objective product claims; 2) competent and reliable scientific evidence to support health or safety claims; and 3) at least one well-controlled human clinical trial to support claims that a product is effective in curing, mitigating, or treating a serious disease. The unlawful acts or practices also include: 1) misrepresenting the level or type of substantiation for a claim, and 2) misrepresenting that a product claim has been scientifically or clinically proven.

A full list of the businesses receiving the notice from the FTC is available on the Commission’s website. A recipient’s inclusion on the list does not in any way suggest that it has engaged in deceptive or unfair conduct. Although the initial distribution of the notice is limited to those making or likely to make health claims, the notice is not limited to health claims and applies to any marketer making claims about the efficacy or performance of its products.

The letter to the recipients also provides them with a copy of a previously approved notice of penalty offenses regarding the use of endorsement and testimonials. That notice addresses falsely claiming an endorsement by a third party; misrepresenting whether an endorser is an actual, current, or recent user; using an endorsement to make deceptive performance claims; failing to disclose an unexpected material connection with an endorser; and misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.

Finally, the letters suggested that the recipients consult FTC staff’s recently issued “Health Products Compliance Guidance.”

The March 31, 2023, Commission vote to approve the substantiation notice and authorize the distribution of both notices was 3-1, with then-Commissioner Christine S. Wilson voting no and issuing a separate statement on her final day as a Commissioner. Commissioner Rebecca Kelly Slaughter issued a statement, joined by Chair Lina M. Khan and Commissioner Alvaro Bedoya. The primary staffers in this matter were Michael Ostheimer and Christine DeLorme in the FTC’s Bureau of Consumer Protection.