Alerts

AD-ttorneys@law – April 30, 2020

Alerts / April 30, 2020

In This Issue:

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Wait, Wait, Wait! Creekside Squeaks by With Last-Minute Advertiser Statement

FTC referral from NAD has remarkable mind-focusing benefits, it seems

Inquisition

Back in February, before the world changed, we covered a relatively straightforward story: the case of Creekside Natural Therapeutics, a supplement maker that promised “a natural alternative to prescription pharmaceutical products which improves focus and memory in children.”

One Creekside product, Focused Mind Jr., came under the fiery-red, Sauron-like eye of the Council for Responsible Nutrition (CRN) – with a name like that, we had to inject some drama. CRN spied certain unsubstantiated online advertising claims made about Focused Mind Jr. and contacted the National Advertising Division (NAD), which launched an investigation.

Let's Review

NAD’s conclusions were three-pronged: first, that since Creekside had failed to submit clinical studies or testing on its products, it had best remove its “clinically proven” performance claims. Second, NAD held that because the company hawked Focused Mind Jr. as an “alternative” to prescription medications, it was required to back up that claim with head-to-head testing. And since there was no testing at all, that claim needed to be shown the door, too.

A third point: Studies cited by Creekside were “not a good fit” to back up certain claims the company made about the ingredients in Focused Mind Jr.

The Takeaway

NAD claimed that Creekside failed to either comply with its recommendations or appeal its decision to the National Advertising Review Board, and it began the referral process to the Federal Trade Commission (FTC).

That got someone’s attention over at Creekside.

The company agreed to discontinue the advertising in concert with NAD’s requests; the watchdog agreed to treat the removal as full compliance. And once again, our poor newsletter is robbed of a juicy opportunity to see how a company might have defended itself before the FTC.

FDA, FTC Play Coronavirus Fraud Whack-A-Mole

Warning letters are flying fast and thick; but can regulators keep up?

Bitter Cup

If you want your stomach turned, visit the Wikipedia page for Miracle Mineral Supplement (MMS), a purported … well … miracle cure with a main ingredient of sodium chlorite.

Sodium chlorite is a toxic chemical, and when consumed by humans it can wreak havoc on the body. Yet, in our topsy-turvy world, this chemical is being pitched as a cure for everything from autism to cancer. One website claims that “[c]hlorine dioxide is a treatment that stands out from other treatment protocols for cancer for a variety of reasons. For one thing, it was not developed on the basis of a particular theory … rather, its usefulness was discovered by accident by a man named Jim ….”

Just when you think you’ve seen it all.

Wild Pitch

It’s a natural development, then, that MMS would be pitched as a preventative measure and a treatment against COVID-19. The Food and Drug Administration (FDA), which we imagine would prefer to be working on more important matters related to the virus itself, had to try to douse this marketing fire with a warning letter issued in concert with the Federal Trade Commission (FTC) in early April.

The FDA has warned people about this witches’ brew before, but had to do it all over again in the case of Genesis 2 Church. Through its website (we won’t link to it here), one gets the idea that Genesis 2 Church is claiming that MMS is some sort of sacrament and that the FDA’s warning was a government crackdown on religious freedom.

This got the agencies’ backs up: In the letter, the FDA and the FTC call the group out for a wide variety of misdeeds related to MMS, and threaten action under the Food, Drug, and Cosmetic Act and the FTC Act.

The Takeaway

We’ve covered similar actions before; human nature being what it is, we expect to cover more as time goes by.

For proof, witness the FTC’s recent letter-writing spree, which targets a rogue’s gallery of purported coronavirus scammers pushing treatments from the expected (diet supplements) to the truly strange (sonic silicone face brushes). And the FTC is adding more letters as the days pass by.

Much like the wave of class action litigation that is sure to follow in the wake of the pandemic, we expect that the FTC, the FDA and other regulators will be launching unprecedented numbers of investigations regarding fake cures.

‘Miracle’ Joint Product Gets Stiff Federal Scrutiny

But is the manufacturer’s new website just another target?

Plausible Deniability

We wouldn’t know (we’re far too young and spry, really) but we’ve heard that aging-related joint pain is no fun at all. As a result of the pain, the basics of living – walking, getting up from or down into a chair, sitting anywhere for an extended period – become problematic.

Which is why it’s disappointing that Renaissance Health Publishing, makers of the Isoprex brand joint pain reliever, engaged in activities that invited scrutiny by the Federal Trade Commission (FTC). According to the FTC’s April 15 complaint, Renaissance was selling single bottles of the product for about 50 bucks through websites and direct mail pieces – and making some big marketing missteps that targeted people with debilitating pain.

Complaint in the Neck

First, the ads were replete with endorsements made, unfortunately, by the company’s employees, relatives of those employees or its professional associates. Second, the ads claimed that Isoprex relieves pain, reduces inflammation, rebuilds joints, repairs cartilage, provides “100% effective” relief from inflammation and swelling, and does all that as well as or better than over-the-counter drugs.

The FTC maintains that none of these claims were substantiated, even though Renaissance claimed that it had studies to back them up.

The complaint – settled the same day it was filed – charged the company with making claims of false proof and false efficacy, as well as with failure to disclose material connections with endorsers.

The Takeaway

The settlement agreement rings all the usual bells, essentially telling the company to knock it off – to cease the unproven claims, stop misrepresenting studies and tests, and disclose its endorser relationships.

But …

A quick glance at the company’s website makes us wonder how seriously Renaissance takes the settlement. Not because it isn’t adhering to the agreement – witness the following disclaimer:

“Not intended to treat or cure any disease. Not intended to treat or mitigate chronic or disease related or sourced pain. Talk to your doctor or health care provider to determine if Isoprex™ is right for you and is safe to take with your medications. Do not start or stop any prescribed medication or treatment without first consulting your doctor or health care provider.”

OK, the disclaimer is there. And there’s a newly cited study: a before-and-after measure of discomfort felt by consumers during daily activities. But the claims seem to be a mix of breathlessness (“miracle,” “perfect 10 out of 10”) and slippery subjectivity (“patients had either significant or moderate joint improvement”).

The new claims on the website look like an open invitation for further scrutiny; perhaps in this case the company should change its product so that it lives up to the advertising – not the other way around.

Commercial Producers Create New Bidding Platform

DOJ’s Antitrust Division gives new marketplace tool a nod

The Future Ain’t What It Used to Be

If you haven’t noticed, the internet has been taking it on the chin of late.

If you were alive and aware in the ’90s, you couldn’t escape the mix of idealism and utopianism that accompanied the advent of the World Wide Web. Information was about to be unshackled, and it would make everyone free.

Flash forward 20 years, and Internet Protocol technologies are being blamed for the disintegration and disruption plaguing our politics and our culture.

But perhaps anthropomorphization of the net is the real problem when, in reality, every now and then, new IP applications emerge that are useful, beneficial and pragmatic.

Credit Where Credit Is Due

So today we’d like to celebrate the efforts of the Association of Independent Commercial Producers (AICP), a trade group that represents the “interests of independent companies that specialize in the production and post production of commercials in various media – film, video, digital – for advertisers and agencies.”

The AICP has assembled a new platform that does what the internet does (or should do) best: bring together disparate market members to maximize choice and healthy competition. We’re talking about the AICP’s proposed Bidding Interphase Platform.

For those of you just dipping your toes into the subject, currently, advertisers seek out commercial production and post-production companies through direct contact, through agencies or through third-party platforms that accept project profiles for bidding.

But contacting production companies directly limits the scope of competitive bids for advertisers; and while agencies provide greater scope, they are limited by the size of the marketplace. Agencies and advertisers alike use third-party platforms to provide greater access to market participants, but their proprietary approach raises concerns about privacy and competitive bidding practices.

The Takeaway

The Bidding Interphase Platform addresses these issues in a couple of ways. First, it guarantees data privacy – advertisers will not be able to see bids until they have all been submitted, and although bidders will be notified about new entrants to the auction, no bidding data will be shared among such participants. And after a bid is awarded, none of the bidding data will be retained. Second, the platform is designed to be transparent to bidders, so that all production companies are presented with the same budgets and timelines.

Of course, the trick with privacy and transparency is that someone must guarantee both; in this case, what makes the AICP’s efforts “cleaner” than those of any private third party? A trade association effort seems more objective and trustworthy, but does such an industrywide collaboration potentially run afoul of competition laws?

The imprimatur of the Department of Justice’s (DOJ) Antitrust Division might help doubters, and AICP’s platform secured it. Back in November, the AICP sought a business letter review of the new platform from the DOJ; recently, the regulators released a letter approving the platform (by “approving” we mean “promised that it doesn’t have immediate plans to challenge its existence”). For a deeper dive into the DOJ’s assessment of the Bidding Interphase Platform, see what our colleagues in the Antitrust and Competition group have to say over on BakerHostetler’s Antitrust Advocate Blog.

So, advertisers, rejoice – or at least celebrate to the extent that your jaded souls will allow. The internet, just like real life, is tricky and fraught with peril; but in this instance, someone seems to be doing the right thing.

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FTC Case Against Rent to Own Company Airs Differences Over Redress, Individual Liability and ROSCA

The FTC’s latest target is a company called Progressive Leasing. While companies in the Rent to Own industry have typically operated their own retail locations where consumers can shop, select merchandise and enter into a transaction, Progressive operates in numerous third-party big box stores, and through contractual arrangements, its rent to own program can be offered to consumers as an additional financing option. Read more here.

Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.