Advertising Week 2014

FTC Chair: Don't Use Bogus Research to Back Health Claims

Chairwoman Edith Ramirez Said FTC to Continue Focus on Native Ads and Misleading Use of Celebrity Hype

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The Federal Trade Commission has a prominent presence at Advertising Week in New York, giving the agency a forum to remind an audience of advertisers, marketers and their lawyers that it's keeping a watchful eye on them.

FTC Chairwoman Edith Ramirez kicked off the Better Business Bureau's National Advertising Division conference today in lower Manhattan with a keynote stressing that marketers must back health claims with sound research.

FTC Commissioner Julie Brill will speak later today at an Advertising Week panel on privacy issues.

Chairwoman Ramirez reiterated the agency's ongoing focus on the need for suitable ad disclosures, on advertisers "piggybacking on the hype created by celebrities to buttress deceptive claims" and the potential negative impact of poorly-labeled native advertising.

"As it happens, too often fraud follows the money," said Ms. Ramirez, who said some companies marketing weight loss or brain-boosting products base claims on "erroneous or fabricated data." From now on, she said, the agency will demand underlying data and documentation associated with studies from marketers.

Claims made in ads for weight loss and other health-related products "must be supported by sound and sufficient science," she said.

Ms. Ramirez pointed to the FTC's May 2012 settlement with Skechers in which the sneaker maker agreed to pay $40 million to settle deceptive claim charges related to its Shape-ups footwear.

Just this morning, the agency settled with Norm Thompson Outfitters and Wacoal America, makers of undergarments intended to help people lose weight and reduce cellulite. The FTC alleged Norm Thompson's claims that its caffeine-enhanced shapewear would help shed pounds were not substantiated. Wacoal ran up against similiar allegations related to pants it said would destroy fat cells and lessen cellulite. The firms must pay a total of more than $1.5 million in refunds to consumers.

She also discussed the agency's latest initiative, "Operation Full Disclosure," a program aimed at getting advertisers to comply with disclosure guidelines for TV and print ads. Last week the FTC sent letters to more than 60 companies -- including what it said are 20 of the top 100 advertisers in the U.S. -- claiming they did not provide satisfactory disclosure in ads. The commission would not name any of the firms that were sent the letters.

"We appreciate that many of you in this room who received warning letters are taking a fresh look at your ads," said Ms. Ramirez this morning. "But we will continue to monitor advertisements to see if further follow-up is warranted."

While the most recent warning letters relate to TV and print ads, the agency also scrutinizes disclosures in digital advertising. Indeed, some online advertisers may receive letters soon from the BBB, said Genie Barton, VP and director of the Online Behavioral Advertising Program and Mobile Marketing Initiatives. The division oversees the Digital Advertising Alliance's self-regulatory privacy program for online ads that are targeted with behavioral data.

"We're contemplating the use of alternative tools such as warning letters to participating companies who are substantially in compliance, to remind them of aspects of the requirements that they may have inadvertantly missed," said Ms. Barton, speaking with Ad Age at today's event. "If anyone has doubts about compliance we urge them to come to us in a confidential manner for help."

Native advertising, an increasingly popular form of advertising that mimics editorial content, "has the potental to mislead consumers," said the chairwoman. The FTC held a workshop on issues related to native ads in December 2013.

"When ads resemble editorial content, an advertiser risks implying the information comes from a non-biased source, which it does not," she said. "We are working through the lessons learned from our workshop and expect to have recommendations to share with you in the coming year. "

The agency is also on the lookout for marketing efforts that exploit what she called, "the so-called Dr. Oz effect." She noted a case against NPB Advertising which the FTC is litigating in Florida; in that case the FTC alleges the company made false claims about the efficacy of its green coffee supplement soon after the TV celeb highlighted the use of green coffee for weight loss on his television show.

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