By Mike Montemarano, Associate Editor07.11.22
At the American Conference Institute and Council for Responsible Nutrition’s Legal, Regulatory, and Compliance Forum on Dietary Supplements, Serena Viswanathan, associate director for advertising practices at the Federal Trade Commission discussed the agency’s focus on tech issues, online advertising, product endorsements, and other key concerns in the dietary supplement industry.
Privacy and data security are a big focus at the commission, she noted. “An important question companies should ask themselves is whether or not there are deceptive claims past the advertising, such as when consumers are being taken through purchasing flow. Also, are consumers able to cancel subscriptions? Are product reviews being presented fairly, or are they manipulated in some way? These are issues that the commission is very interested in.”
When it comes to enforcement, FTC is intent on having the biggest impact possible. For instance, “the FTC has gone after companies for using externalities in order to make deceptive claims. One company will pass on deceptive claims to resellers or distributors who then pass it on to bigger stores. We’re interested in the intersection between competition and consumer protection. So if some deceptive claims give a company a competitive advantage, that’s something we’re interested in.”
Further, social media companies have an important role to play in keeping “problematic claims” out of the market, Viswanathan said. “They can determine whether or not to allow certain ads on their platforms, and can take down problematic claims themselves or ban certain sellers. We can do our best to go after these sellers, but these platforms have a lot more resources than FTC, so we are encouraging them to play a role as well.
“There’s a major interest in how this applies to the debate over data and privacy. By being able to target certain social media users, online ads can target certain consumers and this could exacerbate or amplify the harm of a deceptive claim.” Deceptive health claims could be targeted on social media to sensitive groups, like cancer patients, for example.
“We also consider children to be a protected group. They interpret ads differently than adults, and might have a limited capacity to understand what is being advertised to them.”
FTC will continue to go after bad actors making unsubstantiated health claims related to COVID-19, she noted.
Additionally, “we’ll continue to prioritize advertising which seems to target substance use disorders,” Viswanathan said. “There were substance use disorder issues pre-pandemic, but I think that during the pandemic people have become much more aware of these issues and I think this is something we’re going to see more of.”
Viswanathan also argued that FTC isn’t targeting certain categories of dietary supplements. “What we’re focused on are the more serious health claims that can result in both economic injury and adverse health effects when a person uses a product instead of taking other more appropriate measures.”
“Especially during the public health crisis, we wanted to get deceptive claims about serious health conditions taken down as soon as possible. Warning letters often allow us to leverage our resources most effectively. With that said, no one should feel entitled that they’ll receive a warning letter ahead of more serious enforcement action,” she noted.
Viswanathan also said FTC is working on rulemaking to enforce against deceptive claims that may not directly fit into its existing statutory authority. “While we often rely on existing authority such as the COVID-19 Consumer Protection Act, or the Opioid Statute, or the Telemarketing Sales Rule, we have many ways to go into federal court to get preliminary injunctions for consumer relief. For other cases which don’t fit into federal statutes, we could always partner with a state attorney general to obtain monetary relief for consumers.”
Dietary supplement marketers should know that FTC gets leads about deceptive claims from a variety of sources, and no area of marketing or advertising is any more or less likely to be on the enforcement radar.
“We receive complaints from competitor companies, from Congress, and from our own monitoring, so complaints are one of our main leads. But we also work closely with reporters, state attorneys general, and law enforcement. However, a lack of complaints will not prohibit us from taking action, as there are several problematic claims that consumers might not realize, which is the case with a lot of marketing surrounding health issues. Consumers might experience a placebo effect, or just the natural waning of a certain disease process.”
Adapting to Online
With the internet increasing in its sophistication as a retail and marketing hub, there are several new issues inherent in advertising that could bring about FTC enforcement, Viswanathan said.Privacy and data security are a big focus at the commission, she noted. “An important question companies should ask themselves is whether or not there are deceptive claims past the advertising, such as when consumers are being taken through purchasing flow. Also, are consumers able to cancel subscriptions? Are product reviews being presented fairly, or are they manipulated in some way? These are issues that the commission is very interested in.”
When it comes to enforcement, FTC is intent on having the biggest impact possible. For instance, “the FTC has gone after companies for using externalities in order to make deceptive claims. One company will pass on deceptive claims to resellers or distributors who then pass it on to bigger stores. We’re interested in the intersection between competition and consumer protection. So if some deceptive claims give a company a competitive advantage, that’s something we’re interested in.”
Further, social media companies have an important role to play in keeping “problematic claims” out of the market, Viswanathan said. “They can determine whether or not to allow certain ads on their platforms, and can take down problematic claims themselves or ban certain sellers. We can do our best to go after these sellers, but these platforms have a lot more resources than FTC, so we are encouraging them to play a role as well.
Red Flags
FTC is also focused on deceptive practices, conduct, or advertising that may be targeting certain communities. For instance, FTC has prioritized removal of deceptive cognitive health and memory improvement claims that target older, vulnerable consumers.“There’s a major interest in how this applies to the debate over data and privacy. By being able to target certain social media users, online ads can target certain consumers and this could exacerbate or amplify the harm of a deceptive claim.” Deceptive health claims could be targeted on social media to sensitive groups, like cancer patients, for example.
“We also consider children to be a protected group. They interpret ads differently than adults, and might have a limited capacity to understand what is being advertised to them.”
FTC will continue to go after bad actors making unsubstantiated health claims related to COVID-19, she noted.
Additionally, “we’ll continue to prioritize advertising which seems to target substance use disorders,” Viswanathan said. “There were substance use disorder issues pre-pandemic, but I think that during the pandemic people have become much more aware of these issues and I think this is something we’re going to see more of.”
Viswanathan also argued that FTC isn’t targeting certain categories of dietary supplements. “What we’re focused on are the more serious health claims that can result in both economic injury and adverse health effects when a person uses a product instead of taking other more appropriate measures.”
Getting the Leads
FTC will continue to work with FDA, Viswanathan said, using warning letters to address deceptive claims.“Especially during the public health crisis, we wanted to get deceptive claims about serious health conditions taken down as soon as possible. Warning letters often allow us to leverage our resources most effectively. With that said, no one should feel entitled that they’ll receive a warning letter ahead of more serious enforcement action,” she noted.
Viswanathan also said FTC is working on rulemaking to enforce against deceptive claims that may not directly fit into its existing statutory authority. “While we often rely on existing authority such as the COVID-19 Consumer Protection Act, or the Opioid Statute, or the Telemarketing Sales Rule, we have many ways to go into federal court to get preliminary injunctions for consumer relief. For other cases which don’t fit into federal statutes, we could always partner with a state attorney general to obtain monetary relief for consumers.”
Dietary supplement marketers should know that FTC gets leads about deceptive claims from a variety of sources, and no area of marketing or advertising is any more or less likely to be on the enforcement radar.
“We receive complaints from competitor companies, from Congress, and from our own monitoring, so complaints are one of our main leads. But we also work closely with reporters, state attorneys general, and law enforcement. However, a lack of complaints will not prohibit us from taking action, as there are several problematic claims that consumers might not realize, which is the case with a lot of marketing surrounding health issues. Consumers might experience a placebo effect, or just the natural waning of a certain disease process.”
