Category Archives: FTC

FTC Denies POM Wonderful Appeal

The FTC Commissioners have upheld an an administrative law judge’s finding that POM Wonderful made false claims about the health benefits of its products. See the entire 53-page opinion here.

The commissioners held that an array of POM Wonderful advertisements made deceptive claims that its juice was proven to treat heart disease, prostate cancer and erectile dysfunction.  In so doing, the FTC rejected POM Wonderful’s argument that the ALJ’s May 2012 ruling was flawed because the ads were not deceptive and were protected by the First Amendment.

Significantly, the Commission stated that health claims should be supported by two randomized, well-controlled, human clinical trials:

Competent and reliable scientific evidence shall consist of at least two randomized and controlled human clinical trials (RCTs) of the Covered Product that are randomized, well controlled, based on valid end points, and conducted by persons qualified by training and experience to conduct such studies.  Such studies shall also yield statistically significant results, and shall be double-blinded unless Respondents can demonstrate that blinding cannot be effectively implemented given the nature of the intervention.

This differed from the AJL’s ruling which stated that, while health claims should always be supported by “competent and reliable scientific evidence,” there is no requirement that substantiation must always require two randomized controlled trials (RCT).

In a concurring statement, hoewver, FTC Commissioner Maureen K. Ohlhausen, disagreed with the Commission’s findings that all ads were misleading.   Ohlhausen pointed to several ads for which she said there is no extrinsic evidence to show that consumers would reasonably interpret the claims as disease claims. “We must keep in mind … that if we are too quick to find stronger claims than the ones reasonable consumers actually perceive, then we will inadvertently, but categorically, require an undue level of substantiation for those claims.”

Expect to hear more on this one since POM Wonderful is sure to appeal this ruling to the U.S. Circuit Court of Appeals for the D.C. Circuit.

FTC Revises “Green Guides” For Environmental Claims

The Federal Trade Commission has issued revised “Green Guides” designed to help marketers ensure that claims regarding the environmental attributes of their products are truthful and non-deceptive.  The revisions include updates to the existing Guides, as well as new sections on the use of carbon offsets, “green” certifications and seals, and renewable energy and renewable materials claims.

“The introduction of environmentally friendly products into the marketplace is a win for consumers who want to purchase greener products and producers who want to sell them,” said FTC Chairman Jon Leibowitz.  “But this win-win can only occur if marketers’ claims are truthful and substantiated.  The FTC’s changes to the Green Guides will level the playing field for honest business people and it is one reason why we had such broad support.”

The FTC first issued its Green Guides in 1992 to help marketers avoid making misleading environmental claims, with subsequent revisions in 1996 and 1998.  The guidance they provide includes:

  • general principles that apply to all environmental marketing claims;
  • how consumers are likely to interpret particular claims, and how marketers can substantiate these claims; and
  • how marketers can qualify their claims to avoid deceiving consumers.

Significantly, either because the FTC lacks a sufficient basis to provide meaningful guidance or wants to avoid proposing guidance that duplicates or contradicts rules or guidance of other agencies, the Guides do not address use of the terms “sustainable,” “natural,” and “organic.”  

Revisions.  Among other modifications, the Guides caution marketers not to make broad, unqualified claims that a product is “environmentally friendly” or “eco-friendly” because the FTC states that perception study show that such claims are likely to suggest that the product has specific and far-reaching environmental benefits.  Additional revisions include:

  • advising marketers not to make an unqualified degradable claim for a solid waste product unless they can prove that the entire product or package will completely break down and return to nature within one year after customary disposal;
  • cautioning that items destined for landfills, incinerators, or recycling facilities will not degrade within a year, so marketers should not make unqualified degradable claims for these items; and
  • clarifying guidance on compostable, ozone, recyclable, recycled content, and source reduction claims.

New Sections.  The Guides contain new sections on: 1) certifications and seals of approval; 2) carbon offsets, 3) free-of claims, 4) non-toxic claims, 5) made with renewable energy claims, and 6) made with renewable materials claims.

The new section on certifications and seals of approval, for example, emphasizes that certifications and seals may be considered endorsements covered by the FTC’s Endorsement Guides, and includes examples that illustrate how marketers could disclose a “material connection” that might affect the weight or credibility of an endorsement.  In addition, the Guides caution marketers not to use environmental certifications or seals that don’t clearly convey the basis for the certification, because such seals or certifications are likely to convey general environmental benefits.

UPDATE: Initial Decision in FTC v. POM Wonderful is Mixed Bag for Both Sides

Decision day has come in FTC v. POM Wonderful (see prior post here) and both sides have claimed victory.  On May 21st, the FTC published the “initial” 335-page decision by FTC Administrative Law Judge (“ALJ”) D. Michael Chappell.   For POM, along with many food and supplement companies, the decision was good news because the ALJ rejected the FTC’s most strident and overreaching positions.  On the other hand, the ALJ found that POM violated the FTC Act by making misleading health claims.

The crux of the FTC’s Complaint was that POM disseminated false and misleading advertising and promotional materials representing (mostly by implication) that “clinical studies, research, and/or trials prove” that consuming certain POM products (POM Juice, POMx Pills, and POMx Liquid) “prevents or reduces the risk of” or “treats” heart disease, prostate cancer or erectile dysfunction.

In his decision, the ALJ squarely rejected the FTC’s contention that  randomized, double-blind, placebo-controlled human clinical trials (“RCTs”) were necessarily required.  Rather, “the appropriate level of substantiation is determined by what the evidence shows that experts in the relevant field would deem adequate.”   The ALJ thus basically agreed with POM’s position that, in addition to “gold standard” RCTs — which can be very costly — “basic science” and  “pilot” studies could also be considered, with basic science referring to test-tube (in vitro) studies, in vivo animal studies, and pre-clinical research.

Under this standard, the ALJ found that the claims that the POM Products could “support prostate health” and “promote erectile health” could be supported.  But he found that the claims that the POM Products could prevent, treat or reduce the risk of prostate cancer, erectile dysfunction and heart disease were not supported by scientific evidence and that they therefore violated the FTC Act.  In other words, he held that POM’s structure/function claims were supported and not misleading, but its health claims and/or qualified health claims were deceptive.

Finally, the ALJ rejected the FTC’s request that POM obtain pre-approval from the FDA for any future health claims as being “unsupported by governing precedent.”   The FTC sought a pre-approval requirement to create a “clear and precise” bright-line rule to eliminate any confusion or ambiguities.   As the ALJ observed, “neither FDA pre-approval, nor FDA standards for obtaining such approval, constitutes the required level of substantiation under the FTC Act or applicable case law.”

On its website, POM claimed victory:

“Through its lawsuit against POM, the FTC tried to create a new, stricter industry standard, similar to that required for pharmaceuticals, for marketing the health benefits inherent in safe food and natural food-based products.  They failed,” explained Craig Cooper, Chief Legal Officer for POM Wonderful LLC.  “While we are still analyzing the ruling, it is clear that we will be able to continue to promote the health benefits of our safe, food products without having our advertisements, marketing or public relations efforts preapproved by the FDA and without having to rely on double-blind, randomized, placebo-controlled studies, the standard required for pharmaceuticals. We consider this not only to be a huge win for us, but for the natural food products industry.”

Likewise, the FTC issued a statement touting that the ALJ upheld the FTC’s Complaint that “POM deceptively advertised its products as treating, preventing, or reducing the risk of heart disease, prostate cancer, and erectile dysfunction.”

It is expected that both the prosecuting arm of the FTC and POM will seek review of the decision by the full Federal Trade Commission and, of course, there may be further appeals to the U.S Court of Appeals.

This decision is most significant in its implicit recognition that companies selling food products that are unquestionably safe have the right to engage in commercial speech to inform consumers about the qualities of those products without government constraints such as FDA pre-approval or a requirement of double-blind, randomized placebo-controlled clinical trials.

Finally, it is worth noting that the claims held to be misleading were primarily found to have been health claims by implication.   As the ALJ observed with regard to POM’s heart disease claims:

The evidence shows that [POM] disseminated advertisements that impliedly represented that the POM Products treat, prevent, or reduce the risk of heart disease and, in many of these same advertisements, are clinically proven to do so, by lowering blood pressure, reducing arterial plaque, and/or increasing blood flow to the heart. [POM] made these claims indirectly and obliquely, typically by presenting, through words and images, a logical syllogism that: free radicals cause or contribute to heart disease; the POM Products contain antioxidants that neutralize free radicals; and, therefore, the POM Products are effective for heart disease.   Against this background, many of the advertisements further state or represent that the POM Products have been shown in one or more clinical, medical, or scientific studies, to reduce plaque, lower blood pressure, and/or improve blood flow to the heart, in a context where it is readily inferable that the referenced study results involve heart disease risk factors and, therefore, constitute clinical support for the effectiveness claim.

FTC v. POM Wonderful: Decision Day Approaches

A decision is expected by April 17, 2012 — at the latest — in the closely watched matter of the FTC v. POM Wonderful, Doc. No. 9344.

The FTC’s administrative complaint charges “the makers of POM Wonderful 100% Pomegranate Juice and POMx supplements with making false and unsubstantiated claims that their products will prevent or treat heart disease, prostate cancer, and erectile dysfunction.”   The targeted advertisements include statements such as:

  • “SUPER HEALTH POWERS! … 100% PURE POMEGRANATE JUICE. … Backed by $25 million in medical research.  Proven to fight for cardiovascular, prostate and erectile health.”
  • “NEW RESEARCH OFFERS FURTHER PROOF OF THE HEART-HEALTHY BENEFITS OF POM WONDERFUL JUICE.  30% DECREASE IN ARTERIAL PLAQUE … 17% IMPROVED BLOOD FLOW … PROMOTES HEALTHY BLOOD VESSELS … ”
  • Clinical studies prove that POM Juice and POMx prevent, reduce the risk of, and treat heart disease, including by decreasing arterial plaque, lowering blood pressure, and improving blood flow to the heart;

Unlike other companies, however, POM is determined to fight these allegations to the end.  Its primary argument is that the FTC has improperly changed its standard for how advertisers substantiate the truth of their claims.  Specifically, “(1) the FTC now requires advertisers to obtain prior FDA approval before making certain types of health related claims about food, beverages, and dietary supplements, … and the FTC is requiring prior FDA approval regardless of whether or not the claims are true or supported by competent, reliable scientific evidence; and (2) the FTC is also requiring two ‘well controlled’ clinical studies for non-disease claims, which also represents a dramatic change in the level of substantition required to establish the truth of these types of claims.”   According to POM, this new standard is improper because it did not go through the the formal rulemaking process and, more significantly, it “constitutes a ban on both deceptive and non-deceptive speech, the latter of which is protected by the First Amendment.”   

In effect, POM is arguing that for an undisputedly healthy product, the FTC is seeking to bar properly supported, qualified health claims that are protected under the First Amendment.  For its part, the FTC maintains that the advertisements were still “deceptive.”

This matter has been fully tried before an FTC Administrative Law Judge and all post-trial briefs have been filed.  A decision expected by April 17, 2012 at the latest.  Needless to say, it is likely that the FTC’s own court will find in favor of the FTC so expect this one to be appealed.