William Rothbard – Explains Recent Losses For Federal Trade Commission

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 - Explains Recent Losses For Federal Trade Commission
William Rothbard – Explains Recent Losses For Federal Trade Commission

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


William Rothbard – Reveals Continued Conflict Within FTC Over Ad Regulation

William Rothbard - Reveals Continued Conflict Within FTC Over Ad Regulation
William Rothbard – Reveals Continued Conflict Within FTC Over Ad Regulation

SANTA MONICA, CA – Acclaimed advertising and regulatory attorney William Rothbard has commented on the continued conflict within the Federal Trade Commission over the proper standards for advertising regulation. A lawyer with experience on the subject and a former Senior FTC Official, Rothbard is a recognized expert on FTC advertising law. He has explained the details of the discord in the hope of informing the public of an important debate occurring at the highest levels of the agency that has significant implications for consumers, marketers and innovators.

Rothbard notes that the FTC is under immense pressure to understand and develop an appropriate regulatory response to the explosion of marketing for high-tech consumer gadgets. As technology continues to increase the number of ways consumers are plugged in, the agency finds itself with the difficult task of regulating what has been coined, ‘the Internet of things.’ According to tech CTO Dave Evans, 127 items are added to the internet every second. A major concern is whether regulation can keep up with a rapidly expanding virtual world and do so in a way that protects consumers from the risks of misinformation about important new products, such as health-related apps, while not running the risk of overregulating and dampening technological innovation. William Rothbard, who has an in-depth knowledge of the agency, worries that the FTC may be erring on the side of too stringent regulation – a concern shared by one side of the debate raging inside the agency.

In a recent settlement involving a family of health apps known as the ‘Mole Detective’ and the ‘Mel App,’ Rothbard has written that Republican FTC Commissioner Maureen Ohlhausen found herself at odds with the Democratic majority. The apps are intended to help consumers recognize moles that could potentially pose a risk of melanoma and encourage them to seek preventive care when needed. Ohlhausen dissented from the settlement because she felt it required too many types of claims for the apps and other health-related consumer products to be supported by randomized controlled trials, the most onerous and expensive form of scientific testing. She feared that imposing such a burden could chill innovation and the dissemination of useful, truthful health information to consumers.

With the resignation last year of the only other Republican FTC Commissioner, Rothbard writes that Commissioner Ohlhausen is now the “sole voice of restraint in this FTC’s relentless march to subject the widest possible berth of health-related claims to the requirement of controlled human clinical trials, rather than the more flexible, traditional standard of “competent and reliable scientific evidence” as determined by the experts in the relevant field. “The FTC, a non-scientific agency, is now aggressively usurping that role, deeming itself the ’expert’ and imposing a single, one-size-fits-all standard on which there is no clear scientific consensus outside the world of pharmaceutical testing.” Will consumers be worse off? Rothbard, along with Commissioner Ohlhausen, fears the answer could be yes.

William Rothbard is the founder of the Law Offices of William I. Rothbard in Los Angeles. With over 35 years of experience as an attorney with a specialization in advertising law and business litigation, and as a former Senior Official at the FTC, Rothbard is a highly respected leader in the field. Rothbard is an active speaker and writer and has served as the Editor of the California Bar journal ‘Competition’. He is a regular contributor to the Direct Response Marketing Alliance newsletter and blogs on FTC issues at www.FTCAdLaw.com


William Rothbard – On Avoiding FTC Actions: Presentation at Affiliate Summit West: http://www.reuters.com/article/idUSnMKWS1L4qa+1e8+MKW20150713

William Rothbard — Federal Trade Commission (FTC) Puts an End to ‘Gag Clause’: http://finance.yahoo.com/news/william-rothbard-federal-trade-commission-033810205.html

William Rothbard – Federal Trade Commission (FTC) Puts an End To ‘Gag Clause’

William Rothbard - Federal Trade Commission Puts an End To Gag Clause
William Rothbard – Federal Trade Commission Puts an End To Gag Clause

SANTA MONICA, CA – The consumer review has never had more power over the success or failure of companies and their products than it does today. Initially, customers were able to use the Internet to praise or condone purchases in a few forums, which had a limited effect. Now, however, reviews on retailer websites such as Amazon and review-specific websites like Yelp result in enough negative feedback being able to bury a product or service. Assuming the reviews are legitimate and well-founded, this is good news for the consumer, but not for the retailer or marketer who learns an item isn’t a good one, resulting in a retail ‘natural selection’. Advertising and Marketing Law authority, William Rothbard recently highlighted a case in which an online marketer attempted to silence its customers from giving negative reviews – and the Federal Trade Commission quickly acted.

Rothbard addresses a particular case involving a Florida-based weight loss marketer. The online company was selling ingestibles that it claimed were safe, effective, and comparable in effect to gastric bypass surgery. It asserted users could lose over 100 lbs. in one year while eating whatever they liked. It boasted it was “scientifically proven to have a 90% success rate” even though, in truth, it had no clinical studies at all,” Rothbard revealed. Further, he said, “the marketer used extremely questionable methods to secure positive reviews through promises of discounts and the use of paid bloggers that were not revealed to be such.” Unfortunately, few things are ‘too good to be true’ to the most desperate individuals, and the company used inflated and outlandish statements to rake in approximately $20 million.

Rothbard concedes that these claims and underhanded promotion methods “may have been what caught the FTC’s eye initially,” but what made this company a prime target was its audacious tactic of preventing the sharing of negative feedback. “It sought to accomplish this,” Rothbard stated, “through the insertion of a “Gag Clause” in its hyperlinked terms that consumers were not warned about and unknowingly agreed to as a condition of sale.” Bad reviews or damaging blog posts that ‘negatively impacted’ the company or its products could see them threatened with legal action — as some actually were. A positive promotion discount that lowered the price of the product from $1580 to $480 was a doubled edged sword — any customer disparaging the company or item would immediately be charged the full amount. The FTC quickly responded and shut the company down. “The FTC is using its ‘unfairness authority’ to challenge the Gag Clause,” Rothbard explained. “[It is] alleging it is unfair because it caused substantial consumer injury that was not reasonably avoidable and not outweighed by countervailing benefits to consumers or competition.” While this argument is sparingly used by the Commission, William Rothbard believes judges will not be reluctant to use it in  cases like this, adding: “If someone else would try attempt this, they will surely deserve and meet the same fate.”

William Rothbard has an over 30 year career in advertising law and served as an attorney with the Federal Trade Commission from 1977 and 1984. During that time, he served as Attorney-Advisor to then FTC Chairman Michael Pertschuk, as well as in several other positions within the agency. He later served as Counsel to the United States Senate Judiciary Committee. Rothbard’s expertise and credentials make him extremely well-qualified to counsel and represent clients in federal and state law enforcement matters involving advertising issues and to comment on current developments and matters of public interest in the field of advertising law and FTC regulation. A complete copy of Rothbard’s article is available to view at FTCAdLaw.com


William Rothbard — Federal Trade Commission (FTC) Suffers Setback on Controlled Clinical Trials: http://www.reuters.com/article/idUSnMKWs093qa+1c0+MKW20160322

William Rothbard – Explains Supreme Court’s Debate on Freezing Defendants’ Funds: http://finance.yahoo.com/news/william-rothbard-explains-supreme-courts-043544360.html 

William Rothbard – Federal Trade Commission (FTC) Suffers Setback on Controlled Clinical Trials

William Rothbard - Federal Trade Commission (FTC) Suffers Setback on Controlled Clinical Trials
William Rothbard – Federal Trade Commission (FTC) Suffers Setback on Controlled Clinical Trials

SANTA MONICA, CA – Marketing Law specialist William Rothbard is known for his keen eye regarding Federal Trade Commission actions with the potential to have a lasting effect on Ad Law. Having previously pinpointed and blogged about several FTC proceedings of legal consequence, he recently singled out the results of two cases as a notable setback to one of the Commission’s pursuits – mandating multiple Randomized Control Trials (RTCs) for health claims.

A primary objective of the Federal Trade Commission is to identify marketers that make inflated or false claims about products or services and hold them accountable. This battle reached a peak with the increased sales of dietary supplements over the Internet. Since such products do not require the same level of stringent testing as drugs do (namely, RCTs) and can enter the market without prior government approval, it is easier for supplement marketers to make extravagant claims. While the FTC has moved aggressively to address this problem, its demand for accountability soon transformed into what Rothbard refers to as a “crusade to mandate randomized controlled trials for health claims” for non-drug products. The pinnacle of this crusade may have been the FTC’s successful lawsuit against POM Wonderful, where the Commission ordered a remedy requiring at least two Randomized Trials to substantiate so-called ‘disease treatment’ claims. Last year, however, the U.S. Court of Appeals for the District of Columbia reversed this decision, ruling that a single trial was sufficient. “For other health claims,” Rothbard added, “the more flexible traditional standard of scientific evidence would still apply.”

Last year, a New Jersey federal district court overruled another attempt by the FTC to impose excessive testing requirements on supplement marketers, this time in a “contempt of court” case brought against Bayer. A 2007 consent order requires Bayer to have “competent and reliable scientific evidence” to support claims for its dietary supplement products.  The FTC claimed Bayer failed to meet this standard in advertising for its Phillips’ Colon Health (PCH) probiotic. Even though Bayer had numerous studies on the active ingredient, the FTC contended it was still in contempt for violating its order because the “competent and reliable scientific evidence” standard, in its view, required an RCT and Bayer had not done one on the product itself.

Rothbard pointed out that the court, in denying the contempt charge, found that the federal law regulating dietary supplements and the FTC’s own substantiation guidance do not require RCTs for supplement claims. Bayer could not be held in contempt for failing to do an RCT where neither the law, FTC guidelines, nor the term, “competent and reliable scientific evidence,” gave it fair warning that one was required. Despite the court’s decision, Rothbard strongly cautioned dietary supplement marketers to assume that the FTC will still expect them to conduct a Randomized Control Trial to support their claims and will hold them accountable if they don’t. “Nevertheless,” he noted, “in settlement negotiations and in court, they at least now have some fresh legal ammo with which to fire back.”

William Rothbard is a renowned business litigator and advertising and regulatory law specialist based in Los Angeles. A graduate of University of California’s Hastings College of the Law, his career spans over 35 years’ within his chosen field, including posts at the Federal Trade Commission as an Advertising Attorney and Attorney Advisor to the Chairman. This unique inside view allows him to give superior counsel to clients operating in the direct response advertising and online marketing industries. He also advises clients on trademark matters. Rothbard currently heads his own private practice where he specializes in Advertising Law, with particular focus on Federal Trade Commission and state advertising regulation.



William Rothbard – On Avoiding FTC Actions: Presentation at Affiliate Summit West: http://www.reuters.com/article/idUSnMKWS1L4qa+1e8+MKW20150713

William Rothbard – Speaks at National Ingredient Association Conference: http://www.msn.com/en-us/news/other/william-rothbard-speaks-at-national-ingredient-association-conference/ar-AAcWYUh