|Please find below the first edition of our monthly newsletter specifically for our clients marketing dietary supplements. We hope this helps you stay out in front of regulatory challenges.|
|Navigating Native Advertising |
The FTC recently released two new guidance documents: Enforcement Policy Statement on Deceptively Formatted Advertisements and Native Advertising: A Guide for Businesses. The Policy Statement addresses the broad area of “advertising and promotional messages integrated into and presented as non-commercial content.” The Business Guide more narrowly addresses native advertising, which the FTC defines as online content “that bears a similarity to the news, feature articles, product reviews, entertainment, and other material that surrounds it.” The two documents are important to be aware of given that they provide a roadmap for how the FTC is likely to enforce in the future. The following are a few key takeaways.
As mentioned above, the new guidance documents are important indicators of how the FTC intends to enforce in the area. We caution, however, that guidance of this nature should always be considered as the perspective of the FTC, which may or may not accord well with prevailing precedent in all respects. As an example, the Business Guide advises that disclosures should be “as close as possible to native ads to which they relate.” Under prevailing precedent, however, a disclosure must simply be sufficiently noticeable and understandable to reasonable consumers. There is no hardline proximity requirement. Our recent Alert provides further analysis of these new documents.
- In determining whether an advertisement is misleading as to its nature or source, the FTC will consider the overall net impression of the ad from the perspective of a reasonable member of the target audience. Factors the FTC will consider include “the similarity of [the ad’s] written, spoken, or visual style to non-advertising content” and “expectations based on consumers’ prior experience” with the particular medium.
- If an ad is likely to deceive as to its nature or source, the FTC expects clear and conspicuous disclosures clarifying the nature or source of the ad.
- The FTC is unlikely to consider headings, such as “More Content for You” and “From Around the Web,” to be sufficient disclosures.
- According to the FTC, disclosures in native advertising must often appear at the outset, before a consumer clicks on a link leading to the ad.
- The FTC recognizes that not every ad that appears in a format similar to surrounding content is likely to deceive. The FTC provides the following example: “[I]f a natively formatted ad with an image of a particular sports car and the headline ‘Come and Drive [X] today’ were inserted into the news stream of a publisher site, that ad likely would be identifiable as an ad to consumers, even though it [i]s presented in the same visual manner as news stories in the stream.”
Slack Fill Cases Against Protein Powders Continue
Makers of body building protein powder continue to face slack fill cases. See, e.g., Compl., Gates v. MusclePharm Corp., No. 3:15-cv-02870-BAS-DHB (S.D. Cal. Dec. 19, 2015). Cases allege that large, opaque containers with a third or more of empty space deceive consumers. Under FDA regulations, foods, dietary supplements, and other commodities will be considered filled as to be misleading if (1) the consumer cannot fully view the contents, and (2) the packaging contains non-functional slack-fill –defined as the empty space in a package that is filled to less than its capacity. The regulations, however, provide exemptions if the slack-fill is due to any of the following:
|1.||Protection of the contents of the package;|
|2.||The requirements of the machines used for enclosing the contents in such package;|
|3.||Unavoidable product settling during shipping and handling;|
|4.||The need for the package to perform a specific function, where such function is inherent to the nature of the food and is clearly communicated to consumers;|
|5.||The fact that the product consists of a food packaged in a reusable container where the container is part of the presentation of the food and has value which is both significant in proportion to the value of the product and independent of its function to hold the food; or |
|6.||The inability to increase the level of fill or to further reduce the size of the package (e.g., where a minimum package size is necessary to accommodate required food labeling).|
California has a similar law on slack fill. Companies selling products, such as weight loss shakes, vitamin C and Co Q-10 products, have also faced slack fill cases.
|State Law Enforcement Not Preempted in “Organic” Case |
The California Supreme Court joined several federal courts in finding that state enforcement of federal organic standards is not preempted. See Quesada v. Herb Thyme Farms, Inc., 62 Cal. 4th 298 (2015). The plaintiff alleged that an herb grower violated California false advertising and fraud laws by selling conventionally grown herbs as organic. The court found that while federal law excludes states from defining “organic” or setting or approving certification procedures, federal law does not prevent state enforcement of the federal standards. The court observed that allowing “prosecution of [the type of fraud alleged in the case], whether by public prosecutors . . . or through civil suits by individuals or groups of consumers, can only serve to deter mislabeling and enhance consumer confidence.” The case did not involve the trickier situation where a plaintiff might seek to challenge whether a grower should have obtained organic certification. At least one court has found that such a state law challenge is preempted.
|FDA Issues Final Guidance on | “GMO Free” “Not Bioengineered” Claims
On November 19, 2015, FDA issued final guidance for industry on voluntarily indicating whether food products are derived from genetically engineered plants. Under the guidance, food manufacturers may voluntarily label their foods with information about whether the foods were produced using bioengineering as long as such information is truthful and not misleading. However, FDA suggests that food manufacturers use terms such as “not bioengineered,” “not genetically engineered,” and “not genetically modified through the use of modern biotechnology” rather than “not genetically modified,” “non-GMO,” or “GMO free.”
FDA uses the terms “genetic engineering” and “bioengineering” to describe the use of modern biotechnology to develop new plant varieties. In technical terms, modern biotechnology means the application of in vitro nucleic acid techniques, including recombinant deoxyribonucleic acid (DNA) and direct injection of nucleic acid into cells or organelles, or fusion of cells beyond the taxonomic family, that overcome natural physiological reproductive or recombinant barriers and that are not techniques used in traditional breeding and selection of plants. FDA prefers the terms “genetic engineering” and “bioengineering” over the broader term, “genetic modification,” based on the potential for the term, without additional qualifiers, to encompass virtually any kind of alteration to the genetic composition of a plant, rather than simply the modifications resulting from modern biotechnology techniques. More analysis is available on our Food & Drug Law Access Blog. Also on November 19, FDA issued draft guidance on labeling genetically engineered salmon.
Brain Claims Draw Fire
As part of its regular monitoring and its joint initiative with the Council for Responsible Nutrition, the NAD investigated advertising claims for BrainFire dietary supplement. See BrainFire, NAD Case No. 5914 (Dec. 23, 2015). The challenged claims included descriptions, such as the following:
IMPROVED MEMORY. The ingredients in BrainFire have been shown to help increase memory recall in men and women of just about all ages. Men and women in their early twenties to late thirties started noticing significant increases in their short term memory and some increases in long term memory recall where people from 40 to the age of 65 noticed drastic increases in both.
The NAD also challenged articles that it said “appear[ed] to be editorial content” and “product reviews which appear[ed] to be independent.” The NAD closed the case without formal review after the advertiser agreed to permanently discontinue the claims. This case illustrates that “brain claims” are still drawing regulatory scrutiny, and it’s not only the FTC that’s looking at native advertising.
NAD Approves Clinical Study, but Not “Clinically Proven” Claims
As part of its regular monitoring and its joint initiative with the Council for Responsible Nutrition, the NAD investigated claims for FlexSure, a joint product containing U. tomentosa, B. serrata, L. mevenii, and L-Leucine. See Vital G-Netics/SBB Holdings, Inc., NAD Case No. 5912 (Dec. 21, 2015). The NAD found that the advertiser could make narrowly tailored efficacy and safety claims based on positive results from an eight-week randomized, multi-center, placebo-controlled, double-blind study conducted on the product in India. The NAD also found that the advertiser could support mechanism claims as long as they are qualified to convey that they are based on an in vitro study. The NAD, however, rejected the “clinically proven” establishment claims given that not all results from the eight-week study were positive and, in the NAD’s view, other studies offered by the advertiser lacked either sufficient reliability or sufficient relevance to the product (e.g., an adequate match between FlexSure and the formulations tested). The NAD also rejected testimonial and performance claims suggesting efficacy within seven days.