Recent events show that advertisers in all sectors may need to reevaluate their current and future advertising campaigns as the Federal Trade Commission (FTC) has recently begun to ramp up its advertising enforcement efforts and is implementing stricter standards on many fronts.
On October 6, 2010, the FTC released its proposed updates to the "Green Guides" which outline increased regulation of advertising claims related to the environment. These new regulations would dramatically alter the landscape for advertisers by severely restricting the use of general environmental claims like "green" or "eco-friendly." Such general claims will no longer be allowed to be made on their own, but will need to be qualified by an explanatory phrase such as "recyclable," "non-toxic" or "made with renewable materials" that has itself been sufficiently substantiated through research or studies. The new Green Guides strongly caution advertisers to ensure that their environmental benefit claims have sufficient support to meet these new heightened standards, and that those that do not will face greater FTC scrutiny. (For more information on the new Green Guides, see Wiley Rein's previous article at www.wileyrein.com/green_guides.)
In a parallel development, the FTC has recently ramped up its enforcement efforts and requirements relating to health and safety advertising claims. The FTC has long required that when making a health or safety advertising claim an advertiser must have scientific tests or studies to substantiate the statements. Historically, the FTC has required that the advertiser have only one sufficiently credible test or study to meet this standard. However, recent developments have made clear that similar to the upgraded Green Guides, the FTC has begun to adopt a policy requiring more concrete substantiation evidence.
Recent enforcement actions against Nestlé HealthCare Nutrition and Iovate Health Sciences have shown that the FTC is seeking to apply higher standards to the substantiation of health and safety-related claims. The FTC had brought enforcement action with Nestlé HealthCare Nutrition relating to advertising claims for its "BOOST Kid Essentials" product, taking issue with Nestlé's claims that BOOST provided certain illness prevention and other health benefits to children. Similarly, the action against Iovate related to advertising claims related to the prevention of colds, flu and allergies.
In reaching a settlement, the FTC has required both companies to obtain Food and Drug Administration (FDA) approval prior to making any further health claims. Furthermore, the FTC has required that any future health-based advertising claims be supported by at least two, independently run human clinical studies that are randomized, double-blind and placebo-controlled. While the FTC has been careful in both cases to state that these study requirements do not necessarily apply to all advertisers, the volume of enforcement actions being brought indicates otherwise.
Recently the FTC has been pursuing a similar enforcement action against the makers of Pom Wonderful pomegranate juice for advertising claims they have made related to the health effects of their products. In response to the enforcement proceedings Pom has filed suit in the U.S. District Court for the District of Columbia seeking to prevent the FTC from enforcing the new "two study" requirements. Pom alleges that the new standards inappropriately intrude upon advertiser's First Amendment rights to promote its products.
Pom likely faces an uphill battle with its efforts in the courts. On October 21, 2010, the Court of Appeals for the First Circuit handed the FTC a victory in its long-standing enforcement case against two companies that marketed dietary supplements using health claims the FTC alleged were under-substantiated. This case originated in 2004, prior to the "two study" requirements announced in Nestlé and Iovate, but the court showed great deference to the FTC's determination of "what evidence would in fact establish" the claims at issue. Courts are likely to continue to defer to the FTC in determining whether one study is sufficient, or if in fact two, or more, studies are required for any given advertising claim.
The new health claim substantiation standards, and the new Green Guides clearly show that the FTC is moving towards a regime where advertising claims will require greater substantiation to avoid enforcement actions. While health and safety claims appear to be the current focus of FTC's efforts, these principles will apply to all advertisers as the current administration continues to exercise stricter enforcement standards. Companies in all categories should ensure that they are proactively reviewing their current and future advertising campaigns to ensure that the claims they are making will have the appropriate substantiation.