NAD abandons critique of ingredient supplier NuLiv
The Source
Here's an interesting part of the diet supplement industry we don't often cover: the diet supplement ingredient manufacturer. These are the companies that provide the raw materials for the consumer brands whose claims we have so often reviewed – or, rather, whose reviews we've reviewed.
Consider NuLiv Science, an ingredient manufacturer that claims to be dedicated to making "new discoveries of traditional medicinal healing power by modern scientific protocol." NuLiv provides "advanced nutritional & wellness ingredients" through a focus on "higher end extracts and hard to source/produce ingredients." The company's AstraGin ingredient certainly seems to be representative of their self-proclaimed product space: The material is a compound created from "highly purified saponins" isolated from the Astragalus membranaceus and Panax notoginseng plants – for those keeping track, both species are ingredients used in traditional Chinese medicines (also, Panax notoginseng is usually simply called "ginseng").
Given AstraGin's background of highlighting its exotic ingredients and traditional remedies, readers of this newsletter won't be surprised by the attention the company received from the advertising authorities – even if its advertising was never aimed at the consumer market.
The Takeaway
AstraGin came under the scrutiny of the National Advertising Division (NAD) through NAD's routine monitoring program, which we might, in a poetic moment, imagine as a grizzled gang of Old West lawmen and -women ranging over the advertising wilderness.
In this case, NuLiv retreated without firing a shot: The company discontinued a number of claims about AstraGin that were challenged by NAD, including its effects on insulin sensitivity (the company claimed AstraGin increased insulin sensitivity by 38 percent), its ability to "improve the absorption of many essential life supporting and health promoting nutrients" as allegedly demonstrated by "close to a dozen in vitro studies," and its GRAS status ("Generally Recognized as Safe," a standard set by the Federal Food, Drug, and Cosmetic Act).
NAD was also concerned with the advertiser's incentive program through which NuLiv sent free product to consumers who sent the company "before and after" lab bone density and blood chemistry reports. NAD believed that the incentive program "provided free product samples as an incentive for positive testimonials" in possible violation of the Federal Trade Commission's (FTC) Endorsement Guides, which require that material connections between sellers and consumers be clearly and conspicuously disclosed. As with its claims about AstraGin, NuLiv discontinued its incentive program. Given the discontinuation, NAD did not pursue further action on the claims.
"We have modified all of our literature and marketing material for clarity," the company said in its advertiser's statement, which closed with an indication of how unexpected NAD's attention was for an upstream supplier: "[a]s of 2018, AstraGin is not available direct to retail consumers."
While we often think of advertising law as a form of consumer protection law, which it is, we should keep in mind that business-to-business companies are also advertisers, and many advertising laws and self-regulatory programs do not carve out business-to-business companies. For instance, the Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003 (CAN-SPAM) applies to business-to-business companies. California's new (albeit inappropriately named) Consumer Privacy Act applies to business-to-business companies and even to employee records. Section 5 of the FTC Act applies to deceptive or unfair acts in or affecting commerce, not just to those directly affecting consumers. As for NAD, its jurisdiction is clear – any national advertising.
"The term 'national advertising' shall include any paid commercial message, in any medium (including labeling), if it has the purpose of inducing a sale or other commercial transaction or persuading the audience of the value or usefulness of a company, product or service; if it is disseminated nationally or to a substantial portion of the United States, or is test market advertising prepared for national campaigns; and if the content is controlled by the advertiser."
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