There has been some buzz lately about retailers having a responsibility to verify claims substantiation for products that they sell. In our view such concern is overblown. It is true that the FTC recently entered into consent orders with retailers (such as here and here) regarding claims for products sold in their respective stores. However, both products were sold as store brand products. In other words, in both instances the retailer was acting both as advertiser and retailer. (Note that retailers can be held liable, though, under California's notorious Prop 65) Requiring a retailer to have substantiation for claims carried on products that bear its brand is hardly a novel concept under Section 5 nor is it the same as requiring a retailer to verify the substantiation for the tens of thousands of products that it might carry in its stores.
The FTC has gone after at least one catalog company for claims in its catalog which essentially parroted the manufacturer’s claims, and the consent order in that case does not distinguish between claims created by the catalog company and any manufacturer’s claims which it simply repeats. Here’s what the FTC currently says about catalog companies in response to a question about their responsibility to insure the accuracy of claims for products manufactured by others:
“Rather than just repeating what the manufacturer says about a product, catalog marketers - including companies with online catalogs - should ask for material to back up the claims. If the manufacturer doesn't come forward with proof or turns over questionable material, a catalog marketer should see a yellow "caution light." This is especially true for products with extravagant performance claims, health or weight loss promises, earnings guarantees, and the like. In writing ad copy, catalogers should stick to the claims that can be supported and avoid embellishing manufacturers' representations. Most importantly, catalog marketers should trust their instincts when a product sounds too good to be true.”
Click here for the source document. As you can see, the FTC dances a bit around the issue of liability.
Nevertheless, while a retailer may “republish” some manufacturers’ claims in their weekly ads, most products are simply sold from the shelf without the retailer ever “disseminating” a claim. So, while the FTC would no doubt love to have retailers voluntarily keep products with outrageous claims off their shelves, it seems unlikely that the FTC is going to impose such a requirement, both because of the undue burden it would likely impose and the not insignificant legal obstacles the agency might face.
