The Federal Trade Commission (FTC) has recently experienced legal losses due to overregulation of substantiation requirements for advertising claims, principally ones related to health. The setbacks, if they continue, could cost the FTC credibility with both the public and business and have the unfortunate effect of stifling product innovation. Well-established leader in advertising and regulatory law, William Rothbard has released an informative piece on the details of the FTC’s new found “slump” on his legal website, FTCAdLaw. By shedding light on the current issues facing the agency, Rothbard hopes to encourage an informed public and to reveal the realities of a small but mighty federal agency that has a massive influence on American business.
Most of the setbacks are related to the booming health-tech sector. Wearables, wellness apps, video chat and other health care trends are revolutionizing how consumers approach their own care, and investors and entrepreneurs are taking note. In 2014 alone, $6.5 billion was poured into health care ventures. This poses a huge challenge for the FTC, which has to keep up with the rapid growth, and establish a workable balance between the protection of consumers from overpromises of health benefits and the imperative of businesses to innovate and compete to provide those benefits. According to William Rothbard, the FTC has been challenging companies with a “one-size-fits-all clinical study requirement for health claims.” While logical in some cases, this blanket policy is beginning to backfire. According to the advertising attorney, in one important case between the FTC and health juice maker POM Wonderful, the court said “such a burdensome obligation could suppress accurate consumer information in violation of advertisers’ First Amendment rights to promote their products honestly.”
Rothbard is a former Senior Official of the Federal Trade Commission, where he served as an Advertising Attorney and Attorney Advisor to the Chairman from 1977 to 1984. He has specialized in marketing law and trade regulation for over 35 years. This makes him incredibly experienced and knowledgeable, possessing an in-depth understanding of the issues that the agency faces. He points out that the series of losses is unusual because the FTC has a high rate of success in its enforcement actions. Some examples include: reversal by the Eleventh Circuit Court of Appeal of a lower court ruling that had prohibited Hi-Tech Pharmaceuticals from proving weight loss claims with evidence other than randomized controlled trials (RCTs); reversal by the District of Columbia Court of Appeals of an FTC order that imposed a rigid requirement of two RCT’s against POM Wonderful to substantiate disease treatment claims for its juice products; and rejection of a “contempt of court” claim brought by the FTC against Bayer Corp. for violating an order by failing to substantiate claims for its probiotics supplements with an RCT. Most recently however, the FTC did get back on a track with a settlement against Lumos Labs, the creators of Luminosity, the so-called brain training app, for failing to have adequate evidence to support claims that it improves cognitive function.
William Rothbard is an accomplished Advertising Lawyer with over 35 years of experience in the field. He graduated from The University of Michigan and the University of California’s Hastings College of the Law, and then served at the FTC as an Advertising Attorney and Attorney Advisor to the FTC Chairman. Later, he served as Senior Counsel to the U.S. Senate Judiciary Committee, Subcommittee on Antitrust, Monopoly and Business Rights. His practice specializes on federal (FTC) and state regulation of the Direct Response and Interactive Advertising industries.
William Rothbard — Reveals Continued Conflict Within FTC Over Ad Regulation:
William Rothbard — Federal Trade Commission (FTC) Suffers Setback on Controlled Clinical Trials: http://www.reuters.com/article/idUSnMKWs093qa+1c0+MKW20160322