The Federal Trade Commission ("FTC") has settled an investigation into the business practices of A.S. Research, LLC ("A.S. Research) for allegedly making false and misleading health claims in connection with its advertising and sale of the supplement Synovia. 13,221 consumers who bought Synovia will receive checks totaling $774,755. The settlement with A.S. Research prohibits the company "from misrepresenting the results of any scientific study or endorsement and requires them to disclose any material connections they have with endorsers." This FTC investigation and settlement serve as a good reminder to businesses that they must adhere to FTC marketing regulations or face stiff penalties and potential reputational harm.
How do businesses avoid FTC investigations?
Allegations Against A.S. Research
The FCT charged A.S. Research with violating Sections 5(a) and 12 of the FTC Act for its publication of misleading health claims and phony customer testimonials in connection with the sale and distribution of Synovia. The FTC investigation revealed that A.S. Research had created false customer profiles which touted positive Synovia product use experiences. These testimonials detailed numerous Synovia benefits, including relief of joint pain, stiffness and swelling. Additionally, many of the testimonials appeared to have been posted by a "Steve Young," a purported "early user" of Synovia when, in actuality, he was an owner and officer of A.S. Research. The FTC complaint also alleges that A.S. Research's advertising featured expert product endorsements from doctors that were not, in fact, qualified to comment on Synovia's ability to provide joint pain relief or any other health benefit.
Avoiding FTC investigations
As readers of this blog know, the FTC is charged with preventing false and deceptive business practices. Businesses that misrepresent customer experiences and/or expert product evaluations will soon find themselves on the receiving end of an FTC investigation. The FTC is especially interested in product advertising that includes statements concerning the efficacy of products for the treatment of illnesses and diseases. The FTC prohibits product advertising that includes claims involving prevention, treatment, or curing of disease, unless the product seller has competent and reliable scientific evidence including, where appropriate, well-controlled human clinical studies, that substantiate that the claims are true when made.
To most, it is obvious that inventing false user profiles and non-existent doctors in order to publish phony product testimonials violates federal and state truth-in-advertising laws. However, there are more nuanced areas of the law that businesses should also be aware of when preparing their marketing campaigns. As such, working with a knowledgeable marketing attorney before launching an advertising campaign can go a long way towards avoiding regulatory pitfalls and investigations in the future.
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Originally Published by Klein Moynihan, December 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.