Consumer Advertising Law Blog

Update on FTC v. Circa Direct: A Weighty Matter Finally Settled

On October 17, 2012, the US District Court for the District of New Jersey approved a settlement in FTC v. Circa Direct requiring the defendants to pay more than $2 million in assets, and to make clear when their messages are advertisements rather than news articles.  We previously wrote on this issue in an earlier blog, in which we reported that earlier this year, the District Court had declined to approve the parties’ proposed settlement.

In April of 2011, the Federal Trade Commission (FTC) filed a complaint charging Circa Direct and its owner, Andrew Davidson, with running misleading internet advertisements related to products including acai berry-based weight loss products.  According to the FTC, Circa advertised products on websites that looked like news reports, and also bought ad space on legitimate news sites where they worded ads to look like previews of news stories.

In February, the parties agreed to a settlement and submitted a stipulated order for the court’s approval. The order provided for a monetary judgment of $11.5 million and a permanent injunction against the defendants. Notably, however, it contained no admission of wrongdoing by Circa.

The New Jersey District Court declined to enter the order and concluded that it must ensure the settlement is fair. The Court specifically expressed concerns that a settlement without an admission of liability would not serve the public interest. The Court cited SEC v. Citigroup Global Markets, Inc., where the Southern District of New York held that it could not approve a settlement that similarly permitted the defendant to settle without admitting to any of the allegations against it.  The Court ordered the parties to brief the issue of whether the Citigroup standard of review should apply.  The parties agreed that the Citigroup standard, which asks “is the settlement fair, adequate, reasonable and in the public interest,” applied, but argued that a lack of an admission of liability was not relevant to the Court’s review in this case.

Subsequently, the Court ordered the FTC to further brief various issues, including whether a settlement with no admission of liability can be in the public interest.  On September 11, 2012, following submissions by the FTC, the Court issued a conditional approval of the proposed settlement.  To address the public interest, the court ordered the FTC to take steps to inform the public and “allow it to assess the truth of the FTC’s claims” by hosting a webpage discussing the settlement.  In its Order, the SEC noted that the Second Circuit had granted the parties’ request for a stay in Citigroup, finding that they had demonstrated the factors necessary for a stay.

On October 17, 2012, following the parties’ compliance with its earlier Order, the Court approved the settlement.  While the Court’s final order did not ultimately require the FTC to extract an admission of liability from the defendants, it did go further than simply “rubber-stamping” the proposed settlement.  It remains to be seen whether the District Court’s decision will set a higher standard for showing that settlements with federal agencies are in the public interest where defendants have not admitted liability.

- Christina Brenha and Roberta Horton

 

Supersized Sodas To Be Banned In The Big Apple?

Those of you who enjoy sipping on a 20 oz. soda at Yankee Stadium may soon be forced to downsize.  Citing an increasing population that is overweight, New York City officials announced on May 31 their intention to pursue a ban on certain supersized soda and other sugary beverages sold at restaurants, delis, food carts, movie theaters and sporting venues located in the Big Apple.  The first-of-its-kind restriction, which must be approved by the City’s Board of Health, could go into effect as early as March 2013.  Violators would face $200 fines.

The ban, which does not apply to supersized sodas or sugary drinks sold in convenience or grocery stores, and does not restrict the sale of supersized diet sodas, alcohol beverages, fruit juices, lattes or dairy-based drinks, has been hailed by supporters and roundly criticized by opponents.  On the one hand, supporters claim that the ban will have an impact on the obesity problem and could pave the way for similar legislation throughout the country (much like Gotham’s 2003 ban on smoking in public restaurants).  In stark contrast, fast-food and soda companies have issued statements criticizing the ban as “narrowly focused and misguided” and taking away the consumers choices “about the beverages they purchase.”

The supersized soda ban is the latest attempt by New York City officials to implement progressive public health initiatives in the City.  Residents of the Big Apple have already faced bans of trans fats from restaurants and smoking at City parks and beaches.  The City has also implemented a calorie labeling law and recently unveiled an anti-obesity advertising campaign.

The City has leeway to implement laws that protect the public health and safety, so long as the laws could have an actual health benefit and are not arbitrary or overbroad.  Given that the ban has not been approved by the City’s Board of Health, it is too early to tell if any legal challenges will be launched against the City’s ban, whether on grounds that the ban does not further public health or is otherwise arbitrary in its scope.

- Alan Veronick

Skechers Pays Up for its Shape-Ups

Under a settlement agreement announced with the FTC and 44 state attorneys generals, Skechers has agreed to pay $40 million to resolve allegations that it made unfounded claims regarding the health and fitness benefits of its Shape-Up and Tone-Up shoes. Last fall, when the FTC announced a similar settlement with Reebok, maker of EasyTone and RunTone toning shoes, it warned national advertisers to “exercise some responsibility” in their message. Now, David Vladck, director of the agency’s consumer protection bureau, wants advertisers to know they must “shape up [their] substantiation or tone down [their] claims,” lest misled consumers give their wallets a workout with false hopes of an effortlessly transformed derriere. 

Citing a number of Skechers’ high profile ads, including one featuring Kim Kardashian that ran during the 2011 Super Bowl, the agency’s complaint against Skechers alleged that the market leader of the billion dollar toning shoe industry claimed its products would increase consumers’ weight loss and muscle tone and strength, and improve posture, but lacked adequate substantiation to back up these statements.  Perhaps the most salacious of allegations, that Skechers supported its claims, in part, with the results of an “independent clinical study,” conducted by the spouse of a Skechers marketing executive. The study had “numerous defects” – for instance, Shape-Ups wearers who gained weight during the study were incorrectly reported as having lost weight, and some of the study participants were employed by the executive’s spouse. Skechers is also alleged to have cherry-picked results from other studies and, in regards to its Tone-Up shoes, made claims that the shoes were “designed to help burn more calories,” without conducting any product-specific studies. 

Skechers has denied any wrongdoing, stating it settled the suit to avoid the costs and distraction of “defending multiple lawsuits in multiple courts across the country.” The settlement requires the company to refrain from making any claims regarding the health benefits of its toning shoes unless they are supported by competent and reliable scientific evidence, a requirement that varies under the agreement by claim type.  Weight loss claims must be supported by “at least two adequate and well controlled human clinical studies,” whereas strengthening claims require one such study, which must run for at least six weeks. The settlement defines “adequate and well controlled” studies as those that are randomized, blinded to the “maximum extent practicable,” and, if testing for weight-loss or fat reduction, controlled for “dietary intake.” All other health or fitness claims, including those of calorie burn or muscle tone, must be based on “tests, analyses, research or studies that have been conducted and evaluated in an objective manner by qualified persons.” 

With this suit, and several other recent settlements, the FTC has made clear that it is watching advertisers’ health and fitness-related claims, and is keen to ensure that such claims are properly supported. It is also clear -- as we have observed before -- that the agency is still intent on raising the bar as to what qualifies as competent and reliable scientific evidence by incorporating stringent requirements for the satisfaction of this standard into its settlement agreements. Advertisers in the health and fitness industries should be wary that claims of health or wellness benefits lacking strong support may have more than minor consequences.

- Joanna Persio, Angel Garganta, Trent Norris

If Exercising Enforcement Powers Led to Weight Loss, FTC Staff Would All Be Size X-Small

The FTC Staff has long had a focus on deceptive weight loss claims, including a consumer education mission to urge buyers to maintain a “healthy portion of skepticism” when considering the claims of weight loss products, and a call to action urging media outlets to police against deceptive slim down claims, as well. Its most potent weapon in the diet wars is using its enforcement powers aggressively in going after marketers for making allegedly false and deceptive weight loss claims. With a recent settlement, the FTC has again stepped up its game, and any marketer of diet or wellness products should take heed.

Weight loss claims, like other health claims, require competent and reliable scientific evidence as support, and as we have reported, the FTC recently settled a matter with Iovate Health Sciences. where it defined such evidence as two controlled human clinical studies or the product or essentially equivalent product conducted by different researchers.

Recently, the FTC reached a settlement with Beiersdorf, Inc., the maker of Nivea My Silhouette! Redefining Gel Cream over advertisements in which Nivea allegedly implied the gel would reduce body size. This settlement has the same requirements as the Iovate settlement with the heightened definition of the required substantiation for weight loss claims.

In the complaint, the FTC claimed that Beiersdorf spread false or misleading representations about My Silhouette in a television advertisement and via sponsored results for Google searches relating to body size, like “stomach fat,” or “thin waist.” The My Silhouette television ad showed a woman finding her skinny jeans and discovering that they now fit. The internet ads stated “Nivea My Silhouette Can Reduce the Appearance of Your Curves!” What is interesting is what is not claimed. There is no express claim that this product will cause weight loss, let alone a promise of a significant reduction.

The proposed settlement prohibits Beiersdorf from representing that My Silhouette or a similar product applied to the skin promotes significant weight loss or body size reduction. As fencing in it further prohibits the company from claiming any drug, supplement or cosmetic causes weight or fat loss or any reduction in body size “through the use of a product name, endorsement, depiction, or illustration,” absent verification by two clinical studies. More generally, any claim Beiersdorf makes about the health benefits of any drug, supplement or cosmetic must be supported by reliable scientific evidence. Finally, the proposed settlement requires that the company pay $900,000 to the FTC.

As FTC Chairman Jon Leibowitz counseled, “The real skinny on weight loss is that no cream is going to help you fit into your jeans. The tried and true formula for weight loss is diet and exercise.” The real skinny for advertising lawyers is to take a very conservative and careful view as to what claims may fairly be implied by your ads. Iovate redefined the competent and reliable scientific evidence standard; this case makes clear that even fairly subtle implied claims may not escape the enforcement radar.

- Amy Mudge and Ellen Mossman

Pop Goes the Weight Loss Claim: NAD Turns Thumbs Down on Mulberry Bush Product

The NAD (along with the FTC) continues its emphasis on weight loss claims. A recent NAD decision highlights the NAD initiative with the Council for Responsible Nutrition to expand NAD’s review of dietary supplement advertising claims. NAD launched an inquiry into advertisements made by New Nordic US Inc. concerning its Mulberry Zuccarin dietary supplement. The company’s advertisements claimed, among other things, that the supplement stabilized blood sugar levels, helped over 1,500 customers lose weight, and assisted an individual in losing six dress sizes.

New Nordic agreed that its claim that “1,500 customers lost weight” was not supported by the “level of scientific evidence consistent with other allowable claims reviewed in previous NAD decisions.” Consequently, it agreed to discontinue its use of the statement until it could establish sufficient evidence. The company, however, cited several studies and other evidence as support for its other claims.

Consistent with the FTC’s recent fine tuning to its competent and reliable scientific evidence standard, the NAD looked at New Nordic’s studies with a jaundiced eye, noting that they were conducted on the active ingredient in the product rather than the product itself, that dosage levels were different and that many were conducted on animals rather than humans. Not surprisingly, NAD concluded that the evidence submitted was insufficient to support New Nordic’s claims and recommended that New Nordic discontinue its claims. The company agreed.

Given its partnership with the CRN, look for more dietary supplement matters to come before NAD.

- Randy Shaheen and Quin Landon

Court Rules Plaintiffs’ Claims Too Lean In Hydroxycut Class Action

A federal judge recently dismissed a putative class action against the manufacturers and retailers of Hydroxycut, finding that the plaintiffs failed to plead their allegations with the level of particularity required under the Federal Rules.  Representing a nationwide class of “all persons who purchased Hydroxycut-branded products,” the plaintiffs alleged violations of various state consumer protection laws, breach of warranty, and unjust enrichment.  The complaint, filed December 22, 2009, sought to hold liable not only the makers of Hydroxycut, but also several national retailers that sold the weight-loss products.  The dismissal highlights the increased difficulty plaintiffs face in challenging advertising as false and misleading where plaintiffs do not have the particular details to support each of their claims.  It also has implications for retailers who make representations about the products they sell.

The plaintiffs did not allege any physical injury stemming from their use of the Hydroxycut products.  Rather, the plaintiffs claimed that the products were marketed as safe and effective, when later reports suggested those claims to be untrue.  Among other reports, the complaint cited a 2009 FDA press release that warned consumers to discontinue using the products due to reported health concerns.  Plaintiffs claimed that they failed to get the benefit of their bargain when they purchased what they believed to be a safe and effective weight-loss product, but later learned of the products’ negative health implications.  The court denied the defendants’ motion to dismiss on standing grounds, finding this type of economic injury was sufficient at the pleading stage.

In line with a trend that we have previously reported on, the court construed the plaintiffs’ misleading advertising claims as being “sounded in fraud” and thus subject to the higher pleading standard of Rule 9.  That standard requires the plaintiffs to explain the who, what, where, when, and how of the alleged misrepresentations.  Importantly, that standard does not permit plaintiffs to lump multiple defendants together -- instead, plaintiffs must differentiate their allegations among the multiple parties being sued.  In this case, although the complaint stated that the plaintiffs were exposed to and read defendants’ advertising claims, the complaint failed to allege the specific representation that each of the 20 named plaintiffs saw or read.  In addition, although the complaint provided examples of some of the defendants’ representations that were made online, on television, and on the product packaging, the plaintiffs failed to describe whether those same representations were made on each of the 14 Hydroxycut products covered by the complaint.  Such barebones allegations, according to the court, were insufficient under the Federal Rules.

The complaint also attempted to hold several retailers, including national drug and vitamin chains as responsible for the underlying representations of the Hydroxycut maker.  With one exception, the retailers did nothing but place the Hydroxycut products on the shelf.  According to the court, that conduct alone was insufficient to hold the retailers liable under the plaintiffs’ consumer protection, warranty, and unjust enrichment claims.  Unless the retailers had participated in, controlled, or adopted the allegedly misleading advertising, the claims against the retailers failed.

The only allegation that a retailer promoted or marketed the products concerned statements made on one vitamin seller’s website.  According to the complaint, these representations included claims that Hydroxycut was “the most extraordinary powerful fat burner ever developed” and that it contained “key components that have been scientifically proven to help you lose weight fast.”  The court ultimately dismissed the claims against the retailer because the complaint failed to state which plaintiffs, if any, had seen these specific representations on the website or had relied on them in purchasing the product.  Nevertheless, because the court acknowledged that these representations “could potentially support a consumer protection claim,” the court’s order should serve as a reminder to retailers to tread cautiously when making claims about the products they sell.

As to both the manufacturers and the retailers, the court’s dismissal gives the plaintiffs another chance to fatten up their claims.

- Amy Mudge & Allyson Himelfarb

FTC Complaint Includes at Least 3 Life Lessons That Should Make Any Advertiser’s “Best Life” List

Some of us are certain that the cure to all aging, memory loss and weight gain woes can be found in the Brazilian Amazon. According to the Federal Trade Commission, if so, it hasn’t been identified just yet. The FTC recently filed a complaint with the Northern District of Illinois, which granted a temporary restraining order against Central Coast Nutraceuticals and other related parties for false advertising and other deceptive practices related to its AcaiPure and Colopure products.

There are at least 3 life lessons from the complaint:

1) Free Cannot Come with Strings Attached: The FTC asserted the “free” and “risk free” trials were anything but. According to the FTC’s complaint, Central Coast failed to disclose adequately that consumers would automatically be charged for other products unless they opted out and would be enrolled in an automatic monthly membership for the products they ordered. The FTC has long been focused on negative option programs and what constitutes clear and conspicuous notice of material terms, including holding workshops and publishing a lengthy Staff Report last year. Any recurring charges must be expressly authorized and if future charges will vary, advance notice must be provide to customers. The FTC thanked Visa and the Better Business Bureau of Central, Northern & Western Arizona for their assistance in rooting out these practices. And Visa had this to say: "We have tightened enforcement of our rules against banks whose merchants generate excessive levels of cardholder disputes because of deceptive marketing. We also make it a priority to partner with law enforcement and agencies like the Federal Trade Commission and support their investigations such as this case."

2) Use Extra Caution with Health Claims: Central Coast claimed AcaiPure “Was Not Created For Those People Who Only Want to Lose A Few Measly Pounds” and that it would quickly reshape your body. The producer also claimed that its Colopure could eliminate “excess weight and toxic buildup,” thereby helping to prevent colon cancer. The FTC has longstanding guides detailing its views on what substantiation is required for dietary supplement makers and for weight loss products. As we have recently blogged, the FTC has been tightening its requirements for substantiation of health-related claims. Investigating health claims has long been a top enforcement priority for the FTC and we believe will continue to be so.

3) Endorsers Need to Endorse the Product and Do Not (Repeat DO NOT) Mess with Oprah: The FTC has also revised its Testimonial and Endorsement Guides. We have blogged before about what is new and what is old. One thing that is timeless is the requirement to actually have an endorsement from one you claim endorses your product. The FTC asserts Central Coast claimed implied phony endorsements from Oprah Winfrey and Rachael Ray, including posting a picture of Oprah on its website and claiming Rachael called Acai her “number one superfood”. Both (here and here) provided the FTC with declarations used in the TRO proceedings.

- Amy Mudge and Michael Thorpe

Competent and Reliable Scientific Evidence Just Isn't What It Used to Be

The FTC has been promising for awhile to tighten the definition of its "competent and reliable scientific evidence" standard.  Last week, the agency made good on that promise in consent orders reached with a Nestle subsidiary and Iovate Health Sciences.

The orders provide that for certain claims "competent and reliable scientific evidence" is defined as

"at least two adequate and well-controlled human clinical studies of the product, or of an essentially equivalent product, conducted by different researchers, independently of each other, that conform to acceptable designs and protocols and whose results, when considered in light of the entire body of relevant and reliable scientific evidence, are sufficient to substantiate that the representation is true."

"Essentially equivalent" is in turn defined as

"a product that contains the identical ingredients, except for inactive ingredients, (e.g., binders, colors, fillers, excipients), in the same form and dosage, and with the same route of administration (e.g., orally, sub lingually), as the covered product; provided that the Covered Product may contain additional ingredients if reliable scientific evidence generally accepted by experts in the field demonstrates that the amount and combination of additional ingredients is unlikely to impede or inhibit the effectiveness of the ingredients in the Essentially Equivalent Product." 

(There are other new provisions not discussed here, including a requirement that certain claims require FDA approval.)

These new definitions apply in the case of Nestle's Health Care Nutrition division to claims that any drink containing probiotics or any nutritionally complete drink, with certain exceptions, reduce the duration of diarrhea in children under the age of thirteen or reduce absences from daycare or school due to illness.  In the case of Iovate, the new definitions apply more broadly to claims that any dietary supplement, food or drug causes weight loss, including rapid weight loss.

We think the key points from these new definitions is that the FTC has now predetermined that certain claims must be substantiated by:

1. two human clinical studies;
2. that should be evaluated in light of the entire body of scientific evidence; and
3. are conducted on a product with identical active ingredients to the advertised product and in the same form, dosage and route of administration, unless there is sufficient reason to believe that the differences are unlikely to affect the efficacy of the advertised product.

Of course, the FTC has in the past required two clinical trials to substantiate certain claims so the requirement itself is not new.  What is new is determining that up front in a consent order.  Essentially, the FTC has taken the guesswork out of its definition of "clear and competent scientific evidence" and presumably minimized the risk of embarrassing court losses like Lane Labs.

However, for advertisers, the FTC's new definition has potentially significant ramifications.  Several questions, though, remain unanswered.  First, how broadly does the FTC intend to apply its new 2 clinical trial requirement?  Our guess is that the Commission may try to insert the language (or the FDA approval requirement if the claim is a disease claim) in many orders covering health related claims.  Second,the requirement that any supporting tests be conducted on an essentially equivalent product could have a significant impact on advertisers, depending upon how broadly or narrowly the FTC interprets the exception for differences that are unlikely to make a difference.  Advertisers that comes out with a low fat version of a product or makes some other relatively minor product change may now struggle with whether the relevant health claims for the modified product have to be resubstantiated.  Other companies that found it prohibitively expensive to conduct their own research for their product, but instead relied upon clinical studies of the principal ingredient may similarly face some difficult decisions. 

Our two cents worth is that determining in advance the necessary quantity and quality of substantiation for claims ahead of time is an exercise in trying to balance risk: setting too strict a standard that discourages innovation and consumer communications versus allowing advertisements prone to misleading claims because the substantiation bar is set too low (or that courts will interpret general substantiation requirements in a way to harm consumers). Perhaps the benefits outweigh the harm when the product and claims at issue are ones that are unlikely to be truthful in any circumstance (e.g. "lose weight while you watch TV").  In that situation, there is little risk of inadvertently suppressing innovation or consumer communication and significant risk that misleading claims might otherwise be made.  However, when the product and claims are ones that could in some circumstances be substantiated the risk/benefit analysis seems reversed.  In this scenario, product innovation and communication of truthful information to consumers might be overly discouraged while the heightened standard does little to further prevent the communication of misleading information.  In either event, if you know anyone pondering a career path, going into clinical research might not be such a bad idea. 

- Randy Shaheen and Diem-Mi Lu  

Trudeau Slips Out of the Noose . . . For Now

Kevin Trudeau -- infomercial seller of cures for cancer, AIDS, and obesity -- has been a target of the FTC for over a decade. A recent decision by the Seventh Circuit has put off sanctions for his most recent activities for at least a little while longer. Although the court agreed that Trudeau should be held in contempt for violating the terms of a consent order with the FTC, the court vacated a $37.6 million sanction and a three-year ban on all infomercials, remanding to the district court for further proceedings.

We have blogged in this space before about some of Trudeau’s past run-ins with the FTC. The current chapter in the FTC-Trudeau saga arises from alleged violations of a 2004 consent order, which banned Trudeau from making further infomercials -- with the exception of infomercials for books. Even for books, Trudeau agreed not to “misrepresent the content of the book” in the infomercial. His infomercial for The Weight Loss Cure “They” Don’t Want You to Know About trumpeted the book as containing an “easy,” “simple” weight loss program able to be completed at home. In fact, the book’s dozens of dietary and lifestyle restrictions included a 500-calorie daily diet and injections of a prescription hormone not approved for weight loss. For this violation of the 2004 Consent Order, the district court held Trudeau in contempt, a result that the Seventh Circuit affirmed three weeks ago.  The district court also attempted to sanction Trudeau by ordering him to pay $37.6 million and banning him from appearing in infomercials of any kind for the next three years. This, the Seventh Circuit found “troubling.” 

BCP Director on Guides Revisions, Advertising Enforcement

On Wednesday, the FTC’s BCP Director, David Vladeck, testified before a Senate subcommittee responsible for consumer protection issues about deceptive advertising and the FTC’s enforcement and education efforts. We think of particular interest to our readers, the Director’s oral testimony provided updates on the state of the FTC’s revisions of its Endorsements and Testimonials Guides and Green Guides. (Click here for video of the entire hearing.)

The Director addressed two controversial issues that have emerged from the Endorsements and Testimonials Guides revisions (which we have previously blogged about here, here, and here). First, he explained that eliminating the “results not typical” safeguard will simply place advertisers using testimonials on equal footing with other advertisers who currently cannot take advantage of the safe harbor. Thus, advertising using testimonials will have to meet the same substantiation standards as any other advertising. Second, the Director briefly addressed the proposal that consumer bloggers be required to disclose any compensation they receive from advertisers. Although he stated that he believed this was the right rule, he did not strongly commit, stating that the FTC will carefully consider comments before finalizing the new guides.

The Director also provided a brief update on the status of the Green Guides revisions. The FTC recently got clearance from OMB to conduct its proposed consumer perception study, the results of which are expected in the Fall. With this baseline data on how consumers interpret green claims, the proposed revised Guides may be out by the end of the year.

The Commission’s prepared written testimony provides a good overview of its advertising agenda, which will focus on a few areas of particular concern:

• Health and safety claims, such as weight loss, cold prevention, and cancer cure claims;

• Endorsements and testimonials;

• Green claims; and

• Scams exploiting the economic downturn.

 Of note, the testimony states that deceptive weight loss claims would continue to be a top priority and that the FTC would increase its scrutiny of health claims in food advertising.

The written testimony also laments that the FTC’s funding has not kept pace with the increasing complexity of advertising claims and media, but praised Staff for their ability “to do more with less.”

- Matt Shultz

6-Pack Abs or 7 Figure Judgment?

Have you ever suggested changes to an advertisement but then had the client ask "what's the problem, every word that I've written is true?" To answer that question, in presentations we often use a case the FTC filed way back in 2003 as the perfect example of a claim that might be literally true but yet deceptive. (Of course a claim can also be literally false but true -- more about that some other time.) That case, In re Telebrands Corp., finally came to an end recently, with the parties announcing a settlement of $7 million.

Telebrands marketed Ab Force, one of those electric belts that you wear around your abdomen that vibrate and purportedly tone your stomach muscles. Except Ab Force never made any such claims, at least not directly. Instead they mentioned advertisements consumers might have seen for similar products and touted the fact that Ab Force is “just as powerful and effective” but is substantially cheaper than those other ab belts. In other words, that it worked just as well but for less money. In the FTC's eyes that claim was literally true, all of the products were equally worthless. Telebrands similarly defended its advertisements by arguing that it had made no performance claims for the product. However, the FTC asserted that the advertisements implied that the product helped tone your abs. The FTC’s argument was based in part upon the numerous pictures of men and women with fab abs who just happened to be wearing the belt. However, the FTC also argued that Telebrands violated Section 5 by invoking claims that consumers may have heard for other products even if Telebrands did not actually say what those claims were.

Ordinarily consumer perception surveys filter out preconceived beliefs consumers may have relating to a product because advertisers are not typically responsible for such claims. For example, consumers may have a preconceived belief that organic foods are healthier but that doesn’t mean a company labeling its product as organic has to substantiate a health claim, even if it’s aware of consumers’ beliefs in that regard.

In the case of Ab Force, however, Commissioner (and perhaps soon Chairman) Leibowitz made an exception to that rule.  The exception, which he made clear was limited to the facts in that case, was based upon the fact that the entire ad campaign focused around commercials for other ab belts (and thus invoking consumers’ preconceived beliefs seemed to be the only purpose of the ads) and evidence that the advertiser deliberately sought to invoke preconceived beliefs. So next time your clients come to you with a draft ad that’s literally true yet misleading, you might want to remind them about the ab belt that worked just as well as all the others.

Click here for an excerpt from one of the ads.

FTC View on False Ads Is an Open Book

The FTC’s case against Kevin Trudeau began in 1998 when it charged him with making false and misleading claims in infomercials.  Mr. Trudeau had claimed, among other things, that various products he was selling could cause significant weight loss and cure addictions to heroin, alcohol, and cigarettes.  This original case resulted in a stipulated court order that required, along with $500,000 in consumer redress and a $500,000 performance bond, that Mr. Trudeau could not make false claims regarding products in the future.

In 2003, Mr. Trudeau was again before the FTC on charges that he violated the 1998 order by stating in infomercials that a product called Coral Calcium Supreme could cure cancer.  That case resulted in a court order entering a preliminary injunction that barred Mr. Trudeau from making these types of claims.  Mr. Trudeau was found in contempt of that injunction when he continued to make the cancer cure claims.  In 2004, a court order resolving the Coral Calcium matter required, among other things, that he “must not misrepresent” the content of his books.  The Order presumably only applies to misrepresentations of books and not to the content of the book itself because of the FTC’s mirror image doctrine which allows advertisers to promote claims made in books without substantiation of those claims so long as the advertising only purports to express the opinion of the author or to quote the contents of the publication; the advertising discloses the source of the statements quoted or derived from the contents of the publication; and the advertising discloses the author to be the source of the opinions expressed about the publication.

 In 2007, the United States District Court for the Northern District of Illinois, found Mr. Trudeau in contempt of the earlier issued injunction because of infomercials that misrepresented the contents of his book The Weight Loss Cure “They” Don’t Want You to Know About.  The court found that the infomercials contained a number of misrepresentations, among them were that it stated that a dieter could finish the program when the book states that “Phase 4 is for the rest of your life” and that dieters could eat “anything” they want when the book prescribes that the dieter should eat “only 100% organic food,” no “fast food,” and so on. 

In an August 2008 ruling (FTC v. Trudeau, Memorandum Opinion and Order, Case No. 03 C 3904 (August 7, 2008)), Judge Robert W. Gettleman denied Mr. Trudeau’s motion to reconsider its earlier contempt finding, enjoined Mr. Trudeau (or any person or entity acting in concert with him) from participating in the production or publication of any infomercial in which Mr. Trudeau (or any related entity) has an interest for three years, and entered a judgment in favor of the FTC and against Mr. Trudeau for the sum of $5.173 million dollars.