On April 29, 2020, a federal judge in Los Angeles, California approved a stipulation filed by the Federal Trade Commission (“FTC”) in which Marc Ching, individually and d/b/a Whole Leaf Organics, agreed to a preliminary injunction barring Ching and his company (collectively, “Whole Leaf”) from promoting an herbal supplement as effective against COVID-19 and various CBD-based products as effective cancer treatments, and entered an order setting forth the terms of the stipulated preliminary injunction (the “Order Re Stipulated Preliminary Injunction”).

Whole Leaf stipulated to the injunction three days after the FTC filed a complaint against Chin and his company in U.S. District Court for the Central District of California, together with a parallel administrative proceeding, to permanently stop these unsubstantiated claims. According to the FTC filings, Whole Leaf promoted Thrive, a $36.99 supplement consisting mainly of Vitamin C and herbal extracts, as an “anti viral wellness booster” and “the perfect way to strengthen your immune system against pathogens like COVID-19, the coronavirus.” Although the company claimed that these benefits were clinically or scientifically proven, the FTC stated, unequivocally, that “there is no competent and reliable scientific evidence that Thrive or any of its ingredients treats, prevents or reduces the risk of COVID-19”, a “potentially deadly disease for which there is no proven treatment."

The FTC filings also sought a permanent injunction to stop Whole Leaf from promoting, as effective cancer treatments, several CBD supplements containing cannabidiol and herbal extracts, which it sold for between $39.99 and $125.00 a bottle. The company’s website touted these products as “the most effective innovation in cancer and immune-related proactive supplement support in the last ten years”. It also claimed that they are “effective at slowing mutated cell division, and reduc[ing] the supply of food and oxygen to cancer cells,” and that all of these benefits were clinically or scientifically proven. As noted by the FTC, no competent and reliable human clinical trials of the products had been conducted to substantiate these claims.

The FTC’s actions were prompted, in part, by Whole Leaf’s failure to respond to a warning letter it received from the Food and Drug Administration (“FDA”) in November of 2019 which targeted its human and animal drug claims for its CBD products, including its cancer-curing claims. The FDA’s warning letter put the company on notice that it was making “unapproved new drug claims” in violation of the Federal Food, Drug, and Cosmetic Act (“FDCA”) and gave it fifteen days to stop making these claims. Whole Leaf ignored the letter and continued to make its unsubstantiated claims.

The court’s Order Re Stipulated Preliminary Injunction, which will remain in effect pending the resolution of the parallel administrative case, bars Whole Leaf from expressly or impliedly claiming that its products treat, prevent, or reduce the risk of COVID-19, treat cancer, or cure, mitigate, or treat any disease unless that claim is substantiated by competent and reliable scientific evidence.

The FTC’s administrative case, which is scheduled to be heard on January 7, 2021, seeks an order permanently halting Whole Leaf’s allegedly deceptive product claims, including the claims made with respect to its Thrive and CBD products.

Takeaway

This is the first lawsuit filed by the FTC to stop false or misleading COVID-19 claims. However, since the outset of the pandemic, the FTC has issued dozens of warning letters or cease and desist letters to marketers who are making such claims. As noted by Bureau of Consumer Protection Director Andrew Smith, in nearly all cases, the FTC’s letters have been effective in stopping the claims. However, in Whole Leaf’s case, its failure to stop its cancer treatment claims in response to the FDA’s warning letter, coupled with its new COVID-19 prevention claims, prompted the FTC to file a lawsuit and an administrative action. The clear message here is that false or misleading claims to cure, mitigate or treat any medical condition or disease including, in particular COVID-19, remain a top enforcement priority. Marketers must understand that the FDA requires prior approval and authorization of any product they promote by making “new drug” type claims. In addition, marketers must ensure that any disease treatment, reduction, or prevention claims are supported by competent and reliable scientific evidence before they are made, i.e., support consisting of human clinical testing of the product or an essentially equivalent product, that is sufficient in quality and quantity, based on standards generally accepted by experts in the relevant disease, condition, or function to which the representation relates, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true. As stated by Director Smith, “There’s no proof that any product will prevent or treat COVID-19 or that any CBD product will treat cancer. Let’s be clear: companies making these claims can look forward to an FTC lawsuit like this one.”