Posted on: 04/20/2004
WASHINGTON--After a year-long consideration, the Federal Trade Commission
(FTC) found its practices for investigating health-related claims are consistent
with federal regulations and the First Amendment. FTC denied a petition filed
in April 2003 by Emord & Associates (www.emord.com)
on behalf of the First
Amendment Health Freedom Association (FAHFA) requesting the agency consider
rulemaking to amend its practices concerning advertising claims in the health
arena.
The petition requested FTC make four changes to its practices in investigating health-related claims in advertising for foods, drugs and dietary supplements. It asked FTC staff be required to evaluate the scientific evidence prior to commencing an investigation; identify the specific ad content considered to be misleading; note specific grounds for FTC's belief that substantiation for the claim is inadequate; and issue warning letters as a primary enforcement mechanisms versus conducting formal investigations. The petitioners alleged FTC's current investigative practices have an "impermissible chilling effect" on health-related advertising claims, which is in violation of the First Amendment; FAHFA also alleged FTC staff members have too much discretion in commencing investigations of health-related claims, which is in violation of the Administrative Procedure Act.
"The Commission's practices and procedures for investigating deceptive claims are the same whether an advertiser is making a health-related claim or some other type of claim," FTC said in a letter to Emord explaining the decision. FTC responded to each of the four requests in turn. For example, FTC noted companies making health claims are often the most reliable source of scientific evidence on a product, and that commencing investigations is legally supported even if to determine whether a violation occurred. The agency added it does initial assessments into the merits of a case, including consultation with scientific experts, and continues the discussion with outside experts and the company throughout the investigation.
Finally, FTC supported its existing investigation structure, noting the
agency has issued guidance on evaluating health-related claims and
substantiation requirements. "Given the government's substantial interest
in preventing harm to consumers from deception, the Commission puts the
obligation on the advertiser in the first instance to make truthful and
substantiated claims," FTC wrote. "Formal enforcement is typically necessary
to deter harmful activities in the future and, in appropriate cases, to redress
damages caused by the original deception." FTC's decision and letter are online
(www.ftc.gov/opa/2004/04/fyi0426.htm).
Jonathan Emord said FAHFA is reviewing FTC's decision and determining its next move. "For years, FTC has engaged in an extensive campaign of enforcement against dietary supplement companies--not only large firms and individuals who have engaged in intentional acts of deception but also small firms and individuals who have unknowingly failed to meet an all too uncertain FTC 'competent and reliable scientific evidence' standard, falling short of the mark despite the best of intentions," Emord told INSIDER. "By refusing to limit enforcement actions to instances involving inherently misleading claims and to institute a warning letter system in all other instances, FTC's decision makes clear that it intends to maintain its heavy handed enforcement regime, ignoring the chilling effects on speech and the devastating consequences to America's entrepreneurs."
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