FTC Continues to Target Weight-Loss Claims and Fake News Websites3 Jun, 2014 By: Gregory J. Sater
On May 15, the Federal Trade Commission (FTC) filed a complaint against several companies and individuals arising out of their online advertising for a dietary supplement called “Pure Green Coffee,” which made weight-loss claims at buypuregreencoffee.com, buygreenweightloss.com, and other sites. The complaint involves three notable issues:
- The FTC went after a number of websites for the product that were set up to look like legitimate news websites or blogs when, in fact, they were ads. These “fake-news” websites, including dailyconsumeralert.org, healtylivingreviewed.com, healthydietingreports.org, and econsumerlifestyle.com, were owned either by the defendants or by online affiliates who were paid to send them leads. The sites included logos from actual news organizations such as CNN, comments posted by purported consumers, and video clips about green coffee from The Dr. Oz Show. In the words of the FTC: “The purported news Web pages used to lure consumers to the Pure Green Coffee websites failed to disclose in a clear and conspicuous manner that they are not objectively evaluating the defendants’ products, programs, and services and, in fact, are being paid to promote the products, programs, and services [because they are paid online affiliates].” The FTC added: “In truth and in fact, the purported news Web pages are fake. Commentators pictured on the sites are fictional, and they never conducted the tests or experienced the results described. The ‘responses’ and ‘comments’ following the reports are simply additional advertising content, not independent statements from ordinary consumers.” This shows that the FTC is really starting to actively police the online advertising ecosystem and, more particularly, the world of affiliate marketing. As a result, anyone operating a website that looks like a neutral news site or consumer review site but in fact is a paid promotion should beware. The same goes for anyone who receives online traffic thanks to affiliates that operate such sites. Conversely, legitimate marketers who are being competitively harmed by deceptive online review sites or news sites of others should be encouraged by this enforcement activity, and should consider reporting their competitors’ deceptive conduct to the FTC.
- In the complaint, the FTC also criticized the defendants’ use of testimonials from satisfied users of their product, because the users who gave the testimonials were not actual purchasers of the product – rather they had received a free 30-day supply thereof. This fact was not adequately disclosed, according to the FTC. Also not disclosed was the fact that, in addition, these testimonialists had been paid $200 for providing video testimony about the product, which the defendants would have the right to post online to promote the product. According to the FTC, these were two “material connections” that had not been adequately disclosed. Every marketer needs to remember that there is a duty to disclose clearly and conspicuously all material connections between them and any testimonialist and that, in the eyes of the FTC, this includes a testimonialist getting free product and/or payments for video or other forms of endorsements.
- The complaint also addresses the issue of clinical studies. The defendants in the case evidently provided the FTC with a published clinical study of the active ingredient in Pure Green Coffee, which showed weight loss and body fat reduction without diet or exercise. The FTC, however, viewed the study as unreliable. For example, the study did not reveal how administrators truly had been blinded, considering that the subjects who had taken the placebo took a different number of capsules (three per day) from the subjects who had taken the product (two per day), which could have revealed to the study administrators who was in the control group and who was in the test group. The takeaway is that it’s important not just to have a study, but also to have a good one! Marketers who believe they have solid clinical support for their claims should “kick the tires” by having their studies reviewed by a qualified attorney and by a neutral scientific expert before feeling confident about their substantiation.
With the ongoing surge in online marketing (and “surge” is too mild a word now that ad spending online surpasses ad spending on TV), including in highly influential social, news and purportedly neutral “product review” sites on the Internet, we can expect to see more FTC cases like this one calling for more transparency and superior claims-substantiation.
Gregory J. Sater is a partner in Venable LLP‘s Advertising, Marketing and New Media Group. He can be reached via E-mail at firstname.lastname@example.org.