The Federal Trade Commission (FTC) was recently hit with a Citizen Petition, urging it to withdraw the Notice of Penalty Offenses Concerning Substantiation of Product Claims it sent to nearly 700 companies last April.
FTC’s notice reminded advertisers that they are legally required to have a reasonable basis to support objective product claims and to deter them from making deceptive claims in the future and were warned they could face significant civil penalties if they fail to adequately substantiate their product claims. The recipients– most of which fall into the dietary supplement and natural product category–ranged from lesser-known brands to mega retailers like Amazon, GNC, the Vitamin Shoppe and Walmart.
The Citizen Petition, sent by the Consumer Healthcare Products Association (CHPA), also includes co-petitioners American Herbal Products Association (AHPA), The Food Industry Association (FMI), Natural Products Association (NPA), Personal Care Products Council (PCPC) and United Natural Products Alliance (UNPA).
“CHPA and five co-petitioners are requesting FTC withdraw its Notice for three reasons: (1) the Notice attempts to impose a substantiation standard which is prohibited by law and inconsistent with DSHEA and long-standing regulatory guidance; (2) the Notice does not establish the ‘actual knowledge’ necessary to seek civil penalties under Section 5(m)(1)(B) of the FTC Act; and, (3) enforcing the Notice would violate due process, as it is so vague, it fails to provide any company with fair notice of what is prohibited,” said CHPA Deputy General Counsel Carolyn Hermann.
“Today’s filing is an important step in putting FTC on notice that it cannot change the law through guidance, nor through a form letter sent to hundreds of marketers warning them of potentially large monetary penalties without providing any factual basis,” Hermann told NutraIngredients-USA.
Background
The Dietary Supplement Health and Education Act (DSHEA) of 1994 and long-standing guidance from the FTC and FDA make clear that claims for nonprescription drugs and supplements do not require drug-level clinical trials, however the Citizen Petition asserts the FTC has departed from these principles over time and is attempting to impose a drug-level randomized controlled clinical trial requirement.
“First, the Notice attempts to impose a substantiation standard prohibited by DSHEA and inconsistent with long-standing FDA and FTC guidance. Despite this, and several court opinions holding that a more balanced, multi-factored standard remains the law, FTC has continued to push a ’drug-level’ substantiation standard and is now moving forward with its viewpoint by circumventing Congress and the formal rulemaking process. Second, the Notice fails to establish that any company had ‘actual knowledge’ its conduct was unlawful, which is required to obtain civil penalties under the FTC Act and already recognized by the courts in FTC’s previous attempts to obtain civil penalties. Finally, enforcing a Notice that has distributed vague, unclear, and contrary regulatory guidance would violate due process, because it fails to provide any company with fair notice of what is prohibited,” explained Hermann.
While the notice could be simply viewed as a procedural gambit, Michael McGuffin, president of AHPA, said the notice has had a chilling effect.
“The FTC’s mass-mailed notices of penalty offenses had no legal effect, but they spread uncertainty among and about the responsible dietary supplement companies that received them. We urge the FTC to immediately withdraw the notices because they attempt to impose a claim substantiation standard that conflicts with established law and that may not (in the words of none other than the U.S. Food and Drug Administration) prove ‘possible, practical, or ethical’ for our class of goods. Further, the notices purport to facilitate the future imposition of civil penalties against the recipients in a manner clearly and repeatedly foreclosed by controlling court decisions. Taking the legally required action we have requested would remove the shadow that the notices have cast over the compliant dietary supplement industry that AHPA represents.”
