Alerts

AD-ttorneys@law - October 24, 2017

Alerts / October 24, 2017

In This Issue:

FemaLife May Swallow Bitter FTC Pill

Dietary supplement company refuses to respond to NAD recommendations

The Perfect Supplement Solution?

Remove hard-to-remove body fat. Boost your immune system. Thicken thinning hair.

On paper, FemaLife’s benefits sound great. The company made a series of boasts regarding its Super Flora Probiotic that positioned it as the answer to numerous problems: “If [your body] doesn’t receive the adequate nutrition it needs from the foods you consume,” one online ad claimed, “it can begin robbing stored nutrients from your bones, skin, nails and even your hair.” Super Flora Probiotic would help fill the gap. However, some other claims pushed the limits of appropriate claims for dietary supplements, promising consumers that the product could treat and prevent acne and help the body fight off colds and viruses.

Further, the advertising included numerous consumer and expert endorsements. One page sported six doctors, each with a callout quote promoting the use of probiotics to treat a wide range of medical conditions, even suggesting they should be used in place of antibiotics. But at the bottom of the page, in smaller italicized type, was the following qualifier: “We do not own the rights to these photos, they are for demonstration purposes only, they have not explicitly endorsed our product but are respected opinions in the medical feild [sic] pertaining to probiotics in general.”

The problem was, as nonprofit organization Truth in Advertising put it: “marketing supplements as having the ability to treat, cure, alleviate the symptoms of, or prevent developing diseases and disorders is not permitted by law.” Additionally, the Federal Trade Commission’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising,” which are frequently cited by the National Advertising Division (NAD), warn against the use of endorsements from experts who have not personally evaluated the product.

Not So Fa(s)t!

Enter the NAD, which contacted FemaLife to challenge a number of its claims. NAD demanded substantiation for some of the company’s tag lines, including:

  • “If digestive problems have been interrupting your life for far too long then you NEED to click through to the next page and learn how to put an end to all your digestive discomforts in less than 30 seconds a day.”
  • “Superflora probiotic helps give your immune system the boost it needs to fight off infections and viruses that actively try to invade your body on a daily basis.”

But FemaLife never responded, failing to return any evidence to prove the claims. Despite repeated contact, NAD claims, FemaLife remained silent.

The Takeaway

The lack of response prompted the Division to refer FemaLife’s claims to the Federal Trade Commission. FemaLife may regret its silence; the FTC has been active in pursuing diet supplements and their health claims, including products boasting fat-burning, weight-loss, pain-relief and memory-improving powers.

ERSP to Clever Investor: Enough With the Easy Money Claims!

But mentor group thanked by ERSP for positive steps on disclosure

High-Five

Clever Investor, a real estate investment mentoring and education company, boasts a rather intense website. A video banner on the site’s front page sports seminar participants high-fiving each other in a large conference room; brusque and charismatic speakers deploying emphatic gestures to pump their crowds; and most important, students – students rapt with attention, students staring at monitors with furrowed brows, students in the field – all soaking up the wisdom that the Clever Investor programs have to offer.

Along with these inspirational images, the site makes a number of claims regarding its products, which include training programs like “Quick Flips For Big Profits” and “Fast-Track Profit System.” Consider the following case studies:

“18 year old Hunter teams up with his brother to make real estate a family business . . . Their systems are foolproof and the flow charts eliminated a huge learning curve for us.”

“Michelle is on pace to do $350k this year & has a goal of 1.2 million next year! . . . Within a few months I had achieved a six-figure income.”

“Sean talks about how (sic) he’s making ‘stupid easy’ money in real estate.”

Slow down, says Electronic Retailing Self-Regulation Program. ERSP reviewed Clever Investor’s marketing based on an anonymous challenge, and expressed some important reservations.

After checking out the claims made by the company over email and online advertising, ERSP staff recommended that “unqualified earnings claims…including consumer testimonials, success stories, and representations regarding the success of [a] company spokesperson” be discontinued. Additionally, ERSP told Clever Investor to cease making claims that might lead consumers to believe that its programs promised easy money, or a risk-free experience.

The Takeaway

In an unusual development, ERSP noted its appreciation for Clever Investor’s cooperative response. The mentoring company informed ERSP at the outset of the investigation that it was conducting routine surveys measuring participant success, and was creating a new earnings disclosure based on them.

“ERSP appreciated the marketer’s willingness to conduct surveys…and voluntarily [include] the results in a comprehensive disclosure.”

In one last tweak, ERSP staff asked Clever Investor to include this new disclosure conspicuously alongside all testimonials and earnings claims.

CSPI Prez: FDA’s Nutrition Label Delay ‘Shocking’

Claims delaying implementation would adversely affect consumer health

Morbid

In early October, the FDA released a proposed rule that, in part, would allow food and beverage companies to hold off on updating their Nutrition Facts labels. Large food companies can put off updating their labels until 2020; smaller food companies can wait until 2021.

However, consumer health advocates argue this extension would have immediate and grave health effects. According to the Center for Science in the Public Interest, obesity is a searing public health problem. Statistics released by the Centers for Disease Control and Prevention state that more than 20 percent of the total population of every state in the country is self-reporting obesity. In half of those states, the figure is 30 percent or higher. Another study suggests that the estimated annual medical costs of obesity are $147 billion in 2008 dollars.

This public health problem, argues Center for Science in the Public Interest President Dr. Peter G. Lurie, will only be exacerbated by a recent decision by the Food and Drug Administration.

New Direction

The new label rules mandated by the FDA in May 2016 require companies to disclose “added sugars” – ingredients allegedly related to higher risks of weight gain, heart disease and other problems – as a separate category, in grams and as a percent of a daily recommended consumption. Serving sizes are to be determined in a more realistic fashion – the serving size of ice cream, for instance, will be two-thirds of a cup instead of half a cup – and calorie values will receive more label real estate.

Once armed with more accurate and meaningful information, Dr. Lurie implies, consumers will make better-informed and healthier choices in the marketplace.

The Takeaway

Opinions are highly divided on whether this additional delay is beneficial. While some major brands have chosen to move forward with the new guidelines, many other companies feel they need more time to implement the label changes, which require significant time and effort to calculate. Consumers, industry members and any other interested parties may submit electronic or written comments on the proposed rule by Nov. 1, 2017.

L’Oreal, Matrix Can’t Wash Away Shampoo Class Action

Plaintiffs claim hair feels brittle, dull, lifeless after products prove keratin-free

Lather

Back in January 2017, plaintiffs Brandi Price and Christine Chadwick launched a class action suit against L’Oreal USA and Matrix Essentials.

The women claimed they had purchased a number of the companies’ products – Matrix Biolage Keratindose Pro-Keratin + Silk Shampoo, Pro-Keratin + Silk Conditioner and Pro-Keratin Renewal Spray, to be precise – expressly for the supposed hair-healing properties of keratin, which the pair assumed was in the products based on the product names and marketing.

The problem, they maintained, was that the products contained no keratin at all.

Price and Chadwick claim that they tapped a “subject-matter expert” to review the products’ ingredients, and that each came up empty in the keratin department. According to plaintiffs, this finding was contrary to L’Oreal’s nationwide marketing of the products, which directly claimed the products as keratin therapy in marketing copy:

“Formulated with Pro-Keratin and Silk, our keratin shampoo provides targeted reinforcement for over-processed, weak or fragile hair.”

Rinse

Under various New York and California state laws, the pair sued in the Southern District of New York for breach of express warranty, breach of contract/common law warranty, fraud, unjust enrichment, violation of unfair competition statutes and false advertising.

L’Oreal and Maxim countered with a motion to dismiss.

Among other approaches, the defendants argued that since the product names used the term “Pro-Keratin” instead of “keratin” in isolation, the plaintiff’s case could not stand. They also attempted to attack the express warranty count by claiming a lack of privity between the parties, and argued that the unjust enrichment charge was duplicative of the plaintiffs’ other claims. L’Oreal and Matrix also fought back against the plaintiffs’ request for injunctive relief, claiming that there was no “real or immediate threat” that required it.

Repeat (The Takeaway)

The court sent L’Oreal back to the showers with its order responding to the motion.

On the issue of the naming convention of the products, the court ruled that the use of “Pro-Keratin” was not enough to shield the defendants from the accusations, since, as the court stated with almost comic understatement: “It is unclear what ‘Pro-keratin’ is.” Likewise, the use of keratin in marketing copy undermined their motion.

The court let the express warranty count stand, despite the lack of privity between the parties, citing a 2014 Southern District decision neutralizing privity arguments where “claims are based on allegations related to [the defendant’s] assertions in sales materials and advertisements.”

Finally, the court granted dismissal of the unjust enrichment claims, agreeing that the count was duplicative of other of the plaintiffs’ claims. It also dismissed the request for injunctive relief, finding no immediate threat justifying its adoption.

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.

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