By Jeff Hilton
As the natural products industry continues to expand and advertising activity escalates, the Federal Trade Commission is becoming more and more attentive to our marketplace and diligent in searching out and punishing companies that advertise using illegal health claims - And not with just a “slap on the hand.” Redress settlements are now commonly in the millions and multi-millions.
As a marketer, do you understand how the FTC functions and what types of claims and language might put you at risk?
How the FTC Works
The FTC is the primary federal agency regulating advertising, and oversees products sold directly to the consumer. They 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.
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.
Avoid 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 ingredients, 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).
Published FTC Guidelines
In 1998, the FTC published guidelines specifically 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. 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.
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.
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. It is also critical to disclose in the ad any material (read: financial) connection between endorser and advertiser.
Play Smart and Manage Your Risk
The regulatory environment will continue to evolve, but the FTC will no doubt get bolder as infractions continue to mount. They will fish where the fish are, and that leaves both manufacturers and suppliers who advertise in a virtual fishbowl. The best defense is to play it smart by calculating your risk, keeping a long-term perspective, and seeking out professional guidance to avoid potholes in the road.
Jeff Hilton is co-founder and president of Integrated Marketing Group (IMG), a marketing and branding agency servicing a national and international clientele. Hilton has been recognized by Advertising Age as one of America's Top 100 Marketers and has more than 25 years of broad-based business experience, including 12 years spent within the natural products industry. He has guided the national brand-building efforts of numerous recognized consumer products including, Continental Airlines, Mrs. Field's Cookies and Major League Baseball.
Jeff Hilton, President -
(801) 538-0777 www.imgbranding.com