National Advertising Division Conference In Brief

The National Advertising Division, a self-regulatory agency that reviews advertising claims, administered by the Council of Better Business Bureaus, held its annual conference Oct. 4 and 5 in New York City. The event, "What's New in Comparative Advertising, Claim Support and Self-Regulation," covered claim substantiation for all types of products at all levels of government and within NAD.

Health claims in FTC spotlight: Lesley Fair, senior attorney in FTC's division of consumer and business education, said health claims substantiation was one of five major areas of focus at the agency in the last year. Specifically, she cited actions against CVS, Rite Aid and Walgreen for immunity claims made for private label Airborne products, noting store brands "are not exempt from Section 5." She also highlighted action against Iovate for weight-loss and immunity claims and said a particularly interesting part of that order was the requirement that the company have disease claims evaluated by FDA before they are used. "Of course, FDA approval is not generally required for Section 5 compliance," she noted. Of lessons learned from an action against Central Coast Neutraceuticals for unsubstantiated claims, phony endorsements and deceptive free trial practices, she noted two in particular: to exercise particular care when using the "ingredient du jour" and free trials are sure to draw attention (¹ (Also see "$100 Million Acai Case Could Be Tip Of FTC's Enforcement Iceberg" - Pink Sheet, 23 Aug, 2010.)). Privacy regulations, consumers in crisis with mortgages, marketing to children and new media marketing were the other four areas of focus, she said.

CRN review program makes "a dent": NAD's initiative to study claims made in supplement advertising - funded by a grant from the Council for Responsible Nutrition through 2014 - is making a dent in bad supplement advertising, said Mark Levine, the senior staff attorney at NAD who coordinates the program. The group's efforts, coupled with class action lawsuits and actions by consumer groups, are clamping down on bad ads. "We've had nearly 100 percent participation and 100 percent compliance, which is amazing," he said. Many FTC actions against supplement claims were also NAD cases, he noted. Although the division does take on some "silly" cases, like the use of shark cartilage to prevent cancer, "we see some really important stuff as well in this category," Levine said, citing Syntra-5 , which claimed to lower blood sugar (² (Also see "NAD Tries To Steer Syntratech From Diabetes Claims, Rx Comparisons" - Pink Sheet, 19 Apr, 2010.)). Some manufacturers can support a claim generally, but on compliance NAD may ask the manufacturer to tone down certain claims, like quantified calorie and fat burn claims for Celsius nutritional drink.

FTC commissioner on substantiation standards: Julie Brill, appointed FTC commissioner in April, said the two double-blind, placebo-controlled study standard required in orders against Nestle and Iovate will not be a hard and fast rule. The new orders do not represent a change from settled law or existing practices, she said. The more tailored orders provide more transparency and guidance and help companies comply with orders. "We think this is a good thing for everyone," she said. Requirements that certain companies under order get FDA clearance of unqualified health claims still allows room for qualified health claims, she said. However, "I believe it is very difficult to adequately qualify a disease claim in this way," she warned. Brill declined to comment on any situation in which anything other than two double-blind placebo-controlled studies would be required or on studies of ingredients instead of the final product. "We really do take cases as they come," she said. Her comments reflected those made by Richard Cleland at a United Natural Products Alliance seminar (³ (Also see "FTC To Tailor Claim Substantiation Requirements To Each Case" - Pink Sheet, 4 Oct, 2010.)).

FTC endorsement and testimonial guides, one year out: Mary Engle, head of the division of advertising practices at FTC, highlighted three changes to keep in mind in the now year-old endorsement and testimonial guidelines: disclosure of payment for a study touted in an ad, removal of the "results not typical" safe harbor and examples of how to disclose a material connection between an advertiser and endorser. Engle and a panel of attorneys discussed several hypothetical situations using the new guidance, released last October (⁴ (Also see "FTC Testimonial Guide Moves Past "Results Not Typical," Enters Blog Era" - Pink Sheet, 12 Oct, 2009.)). For example, when a company solicits videos from consumers about a product, the company could be held liable for any claims in them, Engle said, adding the company's motives will be considered. "We always look at the good faith of the company and the actions they took to stay on the right side," she added. When disclosing materiality, the prominence of the disclosure depends on the layout of the website and other factors, she said. In a recent case, FTC enforced against Reverb, a public relations firm that had its employees post reviews of video games on iTunes and not disclose their affiliation with the manufacturer. "A lot of the corporate world has gotten the message but not the PR firms, so we want to get that out there," she said.