United States:
FTC Investigation Results In $774,755 In Consumer Refunds
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The Federal Trade Commission (“FTC”) has settled
an investigation into the business practices of A.S.
Research, LLC (“A.S. Research) for allegedly making false
and misleading health claims in connection with its advertising and
sale of the supplement Synovia. 13,221 consumers who bought Synovia
will receive checks totaling $774,755. The settlement with A.S.
Research prohibits the company “from misrepresenting the
results of any scientific study or endorsement and requires them to
disclose any material connections they have with endorsers.”
This FTC investigation and settlement serve as a good reminder to
businesses that they must adhere to
FTC marketing regulations or face stiff penalties and potential
reputational harm.
How do businesses avoid FTC investigations?
Allegations Against A.S. Research
The FCT charged A.S. Research with violating Sections 5(a) and
12 of the FTC Act for its publication of misleading health claims
and phony customer testimonials in connection with the sale and
distribution of Synovia. The FTC investigation revealed that A.S.
Research had created false customer profiles which touted positive
Synovia product use experiences. These testimonials detailed
numerous Synovia benefits, including relief of joint pain,
stiffness and swelling. Additionally, many of the testimonials
appeared to have been posted by a “Steve Young,” a
purported “early user” of Synovia when, in actuality, he
was an owner and officer of A.S. Research. The FTC complaint also
alleges that A.S. Research’s advertising featured expert
product endorsements from doctors that were not, in fact, qualified
to comment on Synovia’s ability to provide joint pain relief or
any other health benefit.
Avoiding FTC investigations
As readers of this blog know, the FTC is charged with preventing
false and deceptive business practices. Businesses that
misrepresent customer experiences and/or expert product evaluations
will soon find themselves on the receiving end of an FTC
investigation. The FTC is especially interested in product
advertising that includes statements concerning the efficacy of
products for the treatment of illnesses and diseases. The FTC
prohibits product advertising that includes claims involving
prevention, treatment, or curing of disease, unless the product
seller has competent and reliable scientific evidence including,
where appropriate, well-controlled human clinical studies, that
substantiate that the claims are true when made.
To most, it is obvious that inventing false user profiles and
non-existent doctors in order to publish phony product testimonials
violates federal and state truth-in-advertising laws. However,
there are more nuanced areas of the law that businesses should also
be aware of when preparing their marketing campaigns. As such,
working with a knowledgeable marketing attorney before launching an
advertising campaign can go a long way towards avoiding regulatory
pitfalls and investigations in the future.
Related Blog Posts:
FTC Obtains $10M Settlement for Negative Option Marketing
University of Phoenix Settles FTC Deceptive Advertising Law
Allegations
The Importance of Accurate PPE Marketing
Originally Published by Klein Moynihan, December
2020
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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