Last month, the Federal Trade Commission (“FTC”) settled charges against 12 companies who deceptively marketed “cognitive improvement” supplements by using sham news websites containing false and unsubstantiated efficacy claims, referencing non-existent clinical studies, and advertising fraudulent consumer and celebrity endorsements.
According to the FTC’s complaint, the defendants falsely claimed that their dietary supplements could enhance users’ focus by as much as 300%, boost brain power by as much as 89.2%, increase users’ IQ by as much as 100%, and prevent memory loss and increase short and long-term memory in persons experiencing cognitive decline due to age. The defendants’ ads also falsely claimed that the supplements had been tested in over 2,000 clinical trials. The FTC alleged that these claims were made on the defendants’ own websites, as well as through the websites of at least 36 third-party affiliate networks – many of which were deceptively formatted to look like real news sites. These advertorials included sham testimonials from consumers and falsely attributed the achievements of such celebrities as Bill Gates, Elon Musk, and Stephen Hawking to the defendants’ products.
Even though the defendants’ advertisements claimed that consumers could try the products “risk free” and that it came with a “100% Money Back Guarantee,” consumers only received a partial refund because they paid out-of-pocket for return shipping, paid an inadequately disclosed restock fee per bottle, and were not reimbursed for the original shipping and handling fees. In some instances, the defendants failed to issue consumers refunds altogether despite assurances from customer service that the refunds were being processed.
Under the FTC’s orders, the defendants are prohibited from making certain disease claims and several cognitive performance claims related to the products, unless they have competent and reliable scientific evidence to support the claims when they are made. Furthermore, the defendants are prohibited from making specific misrepresentations related to endorsements including that: (1) any person is an objective news reporter with respect to the endorsement message provided; (2) purported customers or celebrities who appear in the advertising achieved a reported result by using any of the covered products; and (3) persons depicted in advertisements, including experts, consumers, and celebrities, are providing objective, independent opinions about the efficacy of the products. Additionally, the defendants are barred from misrepresenting clinical evidence and sham websites as objective news reports.
TAKEAWAY: The FTC will continue to be vigilant in policing the dietary supplement industry, and will also seek significant monetary relief against companies it believes deceives consumers.