Marketers of Health Supplement Settle FTC Charges Over Deceptive Advertising

By Peter Steinman
Michelman & Robinson, LLP

Oct 17, 2016

Recent FTC action, and $150 million judgment, is a reminder that advertising rules must be followed and health claims need to be backed by scientific evidence.

The Federal Trade Commission (FTC) recently announced a settlement with Supple, LLC over charges that the manufacturer employed false advertising to promote its liquid, health supplement, “Supple,” including that the product “provided complete relief from chronic and severe joint pain caused by arthritis and fibromyalgia and was scientifically proven to eliminate joint pain.” The defendant manufacturer sold more than $150 million in supplements between 2011 and 2015, an amount that they are now forfeiting. The action serves as a reminder to marketers, particularly those that utilize infomercials extensively in their campaigns, to avoid making unsubstantiated medical claims when advertising a health product.

Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts or practices in or affecting commerce.” Further, misrepresentations or deceptive omissions of material facts constitute deceptive acts or practices prohibited by this section of the Act. Notably, Section 12(a) of the FTC Act, 15 U.S.C. § 52(a), prohibits the dissemination of any false advertisement in or affecting commerce for the purpose of inducing, or which is likely to induce, the purchase of food, drugs, devices, services, or cosmetics. Supple is a “drug” as “drug” is defined in Section 15(c) of the FTC Act, 15 U.S.C. § 55(c).

In a federal action, the FTC charged the manufacturer with utilizing a variety of platforms to market Supple as “clinically proven” to provide various health benefits without adequate substantiation — i.e., scientific or medical studies proving any of the claimed health benefits. The FTC also charged that Supple used unsubstantiated "expert endorsements” to promote its product, including those of Dr. Monita Poudyal, who was falsely portrayed as an independent, impartial medical expert — when in actuality, she was the wife of Supple CEO Peter Apatow. The FTC alleged that Supple, LLC did not disclose Poudyal’s relationship to Apatow during the time she was promoting the supplement.

The charges and resulting settlement are consistent with the FTC’s increased oversight and enforcement of its rules requiring advertisers to disclose material connections between a product endorser, including compensation (monetary or otherwise), and the manufacturer or owner of the endorsed product. The settlement also highlights the FTC’s particular attention to products claiming to provide health benefits; the case is part of a growing enforcement trend within the FTC.

The settlement, embodied in a stipulated order, requires Supple to have scientific evidence to support any future claims regarding the health benefits of the supplement and prohibits misrepresentations regarding the results of any scientific studies. The settlement includes a $150 million judgment, the majority of which was suspended based on the Supple and owner Apatow’s financial condition.

Brands, marketers and advertisers must be vigilant in complying with the FTC’s false advertising rules and endorsement guidelines and be ready to support any health claims with verifiable and reputable scientific studies. Jessica Rich, Director of the FTC’s Bureau of Consumer Protection stated the FTC’s position succinctly: “Consumers should not have to take it on faith that products claiming to provide pan relief will live up to their billing.” If you are a marketer of health products, save yourself some pain, and money, and speak to experienced advertising counsel, who can work with you to develop a strong compliance program and minimize FTC exposure.