State and Federal Agencies crack down on COVID-19 claims
Businesses should consider the environment in which they are currently marketing products
The market for consumer products is contracting overall, but judging by empty store shelves and as reported by the New York Times on March 23, anxious consumers are keenly interested in purchasing supplements, herbs, oils, tinctures, foods and beverages touted as anti-pathogens, anti-inflammatories or as providing immune support. Given this, businesses should be aware of heightened scrutiny by federal regulators and state attorneys general regarding deceptive advertising claims made in the health and wellness industry.
In light of the COVID-19 pandemic, manufacturers of dietary supplements, CBD-derived products and health foods and beverages should carefully review their marketing and advertising claims to ensure legal compliance.
It is important for businesses to remember the environment in which they are currently marketing products: the public is becoming increasingly desperate to either get in front of COVID-19 or treat it. That is the lens through which regulatory bodies, state attorneys general and consumer class action attorneys are reviewing marketing and advertising claims, and it is important in this environment for advertising not to appear predatory in any way.
On March 9, the Federal Trade Commission (FTC) and Food and Drug Administration (FDA) (together, the “Agencies”) announced that they have sent warning letters to businesses allegedly selling unapproved products that may violate federal law by making deceptive or scientifically unsupported claims about their ability to prevent or treat COVID-19. In these warning letters, the Agencies said that the “FDA is taking urgent measures to protect consumers from products that claim to mitigate, prevent, treat, diagnose or cure COVID-19 in people.”
The Agencies issued the warning letters to marketers of ionic or colloidal, silver, essential oils, herbal teas and herbal and elderberry tinctures. In each case, marketing claims were made regarding the antiviral properties of the product or the immune-boosting, preventative properties of the product. And, in each case, these properties were further touted as effective to prevent, treat or cure novel coronavirus infection and COVID-19 disease.
The Agencies have added alleged violators’ names to a published list on the FDA’s website of businesses that have received warning letters from the FDA concerning the sale or distribution of COVID-19-related products in violation of the Federal Food, Drug and Cosmetic Act (“FD&C Act”), which forbids marketing of “unapproved new drugs” or “misbranded drugs.”
Even if manufacturers and distributors of dietary supplements, health foods and beverages and CBD-derived products refrain from marketing their products as health cures or drugs in violation of the FD&C Act, businesses must remain aware that the marketing and advertising of these products remains subject to the Federal Trade Commission Act (“FTCA”) and associated guidelines issued by the FTC, the false advertising provisions set forth in the Lanham Act, and various state consumer protection, false advertising, unfair competition statutes and common law.
The FTCA prohibits deceptive advertising content consisting of “material” representations or omissions that are likely to mislead consumers and affect consumers’ decisions with respect to the advertised product or service. All reasonable takeaways, both expressed and implied, from an advertisement considered in its totality must be substantiated by a “reasonable basis,” which, in the case of health, safety or performance claims, means “competent and reliable scientific evidence."
Indeed, the Agencies’ recent enforcement letters sent to companies touting COVID-19 products make clear that such evidence may include, where appropriate, “well-controlled human clinical studies substantiating that the claims are true at the time they are made.”
Under the Lanham Act, a plaintiff with standing—almost always a competitor of the defendant—may commence and pursue a private right of action by showing the defendant made a false or misleading statement or omission of fact regarding a product, that the statement or omission was material to a consumer’s purchasing decision, and that the statement or omission harmed or would likely cause harm to the plaintiff.
Finally, all states have unfair and deceptive acts and practices (“UDAP”) statutes, which permit consumers, competitors, and/or state attorneys general to act against businesses engaged in false or deceptive advertising. Recently, the state attorneys general of both New York and Missouri have acted against televangelist Jim Bakker for touting colloidal silver products as a COVID-19 preventative and cure. Additionally, the New York attorney general recently ordered Craigslist to “immediately remove posts that attempt to unlawfully and fraudulently profit off consumers’ fears around the coronavirus disease 2019 (COVID-19).” At this point, almost every state attorney general in the country has warned consumers of COVID-19-related scams and has vowed to take action to stop them.
In short, health and wellness businesses making marketing claims regarding dietary supplements, CBD-derived products and health foods and beverages during this pandemic must tread carefully, and may wish to consult an attorney to determine whether such marketing claims run the risk of being considered misleading or false.
This article was written on March 31. Information is changing daily and some of the content included in this piece may have changed or been updated.
Alissa Gardenswartz, Airina Rodrigues and Michael Rounds are all shareholders at Brownstein Hyatt Farber Screck, LLP.