After involvement of the FTC, we appear to be approaching the conclusion of a nearly-three-year battle between the NAD and New Nordic USA, Inc., a company that markets a dietary supplement, Hair Volume. In 2013, as part of its routine monitoring, the NAD inquired about claims for the product. See New Nordic USA, Inc., NAD Case Report #5606 (June 24, 2013). The challenged advertising included a testimonial by a woman named Maya who is pictured with a full head of hair. Maya laments that her hair had been rapidly thinning and says that she had accepted her hair loss as inevitable in light of her mother’s early hair loss. She explains, however, that after trying shampoos and other treatments, she learned about the “importance of nutrition for healthy hair” and made the decision to focus on “the inside rather than the outside.” Other claims for Hair Volume included, “Thousands of people have already experienced the benefits of Hair Volume, which has made it the world’s leading hair tablet" and “[Hair Volume] is a unique innovation and reinvention of the old hair, skin and nail tablet.”
The NAD determined that the advertising reasonably communicated an unsubstantiated implied message that Hair Volume would reverse balding, even genetic pattern baldness in women, and restore full and thick hair. New Nordic had not conducted product testing on Hair Volume, which contains zinc and biotin, among other ingredients. Rather, New Nordic presented studies and abstracts about the potential benefits of zinc and biotin. The NAD found the studies to be insufficiently reliable to demonstrate that the ingredients, in the amounts in found in the product, provided the promised benefits. The NAD recommended that New Nordic discontinue most of the challenged claims. In its advertiser statement, New Nordic said it understood what the NAD was recommending and although it felt it had some substantiation from the clinical studies of the ingredients, the company wished to work with the NAD.
Six months after the decision, the NAD contacted the company again after determining that several of the challenged claims were still on New Nordic’s website. New Nordic agreed to remove the claims. Months after that incident, the NAD determined that two print advertisements did not comply with NAD’s recommendations. New Nordic again agreed to remove the claims.
In December 2014, the NAD brought a third compliance proceeding. This time it alleged that the “Maya” testimonial was still appearing in a national magazine. Once again, New Nordic agreed to discontinue the claims. The final straw for the NAD was when it determined that the “Maya” testimonial appeared yet again in a national magazine. In September 2015, the NAD referred the matter to the FTC.
In January of this year, the FTC’s Division of Advertising Practices issued a letter stating that New Nordic “now intends to cooperate with NAD’s inquiry” and will soon contact the NAD to “reengage in the NAD self-regulatory process.” As a result, the letter concluded that no additional FTC action was warranted at this time.
In general after two or three compliance inquiries, the NAD will refer a case file to the FTC if it determines that an advertiser has failed to comply with its recommendations. With the FTC’s ability to conduct a full-blown investigation and demand monetary redress for advertising violations (usually to the tune of full revenue from sales), FTC attention be devastating. Class actions that typically follow an FTC order add to the pain. Although there are sometimes exceptions, the road to FTC referral is usually best left untraveled.