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February 13, 2013

The Balance Between Deception and Accuracy in Advertising is a Fine Line, Panel Suggests

In magazines, on billboards, attached to juice cartons and online, POM Wonderful peddled its 100 percent pomegranate juice as a preventative tool in the fight against heart disease, prostate cancer and erectile dysfunction. In the ads, POM told consumers the juice was clinically proven to treat, prevent and reduce these adverse conditions.

In January 2013, the Federal Trade Commission found POM’s health claims to be deceptive rather than truthful, and forbade POM marketers from making any claim that a food, drug or dietary supplement is “effective in the diagnosis, cure, mitigation, treatment, or prevention of any disease,” unless the claim is supported by two randomized, well-controlled human clinical trials.

“In many respects this is a historic reversal of where the commission has been on the relationship between diet and disease,” said Howard Beales, professor at George Washington University School of Business, on the POM decision by the FTC. Beales was one of several panelists to discuss hot topics in advertising at the 2013 _ Consumer Protection Conference in Washington, D.C., sponsored by the ABA Section of Antitrust Law.

Beales found what he described “numerous stretches” in the POM decision, with discrepancies between what most consumers would interpret as deceptive and what the FTC concluded was deceptive. In particular, he took issue with the evidence that the FTC used to make its justifications, including the emphasis placed on randomized clinical trials.

But Mary Engle, associate director of the FTC’s division of advertising practices, defended the action. “What we found in this case was they didn’t have the science. They weren’t claiming that POM juice was health promoting, or healthful, or as good as broccoli and blueberries like they argued in their briefs,” said Engle. “They were making specific claims about benefits with three specific diseases.” By drilling down on particular prevention, reduction or risk benefits rather than more general health claims, the FTC found POM went too far in a negative way and misled consumers, Engle said.

For the National Advertising Division, the investigative arm of the U.S. advertising industry’s self-regulatory process, competent and reliable scientific evidence is very important.

“It really does constitute a lot of our casework. Literally dozens of NAD cases involve … claims about dietary supplement performance, claims about health and nutrition, or other similar science-based claims,” David Mallen, director of NAD, said. “We do recognize that there is an important distinction between claims that promise to treat, prevent and reduce … disease.”

Mallen said that NAD looked at POM’s advertising several years ago and advised the company to find competent, reliable scientific evidence to support its disease-prevention claims. Mallen said that if the company had followed NAD’s guidance, it would have avoided FTC intervention.

Another recent trend in advertising is claims surrounding a product’s environmentally friendly qualities. The FTC issued green guides last year to educate advertisers about they can say in text copy and brand names; or what they can display through symbols, emblems, logos and depictions in its labeling, advertising and marketing.

“If we see deceptive claims out there, we’ll take action,” Engle said. Mallen added the NAD applies green guides “where applicable,” but said the NAD also evaluates issues not covered in the green guides, including claims of being “natural.” NAD recommends modifications where necessary.

Christopher Cole, partner in Crowell & Moring LLP’s advertising and product risk management group in Washington, D.C., said he has witnessed an “explosion of class action litigation” in cases declaring false claims about the definition of “natural.” He noted 30 cases are pending on that issue alone.

During the discussion, Engle also recognized FTC action on “up to” claims, referencing a recent case involving replacement windows and the company’s claims on “up to 47 percent energy savings.” Beales expressed concern about the language of the FTC’s warning letters, saying the language changed the meaning of “up to” entirely. In essence, Beales said companies now have to rely on average performance that most consumers receive, rather than the maximum potential that consumers could receive for the service.

The panelists agreed that the advertising framework has changed remarkably and that all industry groups and government entities need to work together to sort out rules that level the playing field for all products in the marketplace.

Beales acknowledged to the audience that “I don’t always agree with what the FTC does, but it is always worried about the public interest.”

Learn More About:  Antitrust