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It's not FTC action alone.
Yesterday’s Senate subcommittee hearing on deceptive weight-loss products had a clear message: catching the makers of these products is a huge task, and the FTC cannot manage it alone.
How big is the problem today? According to the FTC’s most recent fraud study, “more consumers were victims of fraudulent weight-loss claims than of any other specific fraud type covered by the survey.” In fact, these days, one in 10 fraud claims submitted to the FTC is for a weight-loss product.
Senator Claire McCaskill (D-MO), who chaired the Senate subcommittee hearing, said preventing fraudsters requires participation of numerous stakeholders, including companies that sell dietary supplements, consumer watchdogs, and media and advertising platforms, which serve as a “critical gatekeeper” to prevent false and misleading ads from reaching consumers in the first place.
“The reality is that in this Internet age, along with the proliferation of cable television, talk radio, and various online media, and increasing pressures for shrinking ad revenue among print media, both the FTC and FDA have insufficient resources to combat the number of deceptive claims in the market,” said Steve Mister, president and CEO of dietary supplement association the Council for Responsible Nutrition (CRN; Washington, DC). Mister testified on behalf of the dietary supplements industry at the hearing.
Dan Fabricant, executive director and CEO of the Natural Products Association (Washington, DC), also testified and asked the FTC to devote more attention to “fly-by-night” advertisers (advertisers that place questionable weight-loss ads online and most of whom do not have brick-and-mortar stores and can be very difficult to track down). Fabricant said that, currently, the FTC might focus more on larger firms. “It appears there is a predilection by regulators to pursue more sizeable and more protracted cases, perhaps at the expense of more regulatory muscle on the front end against companies of any size or revenue stream. If FTC doesn’t act and take down fly-by-nights in the front end early in the game, more will attempt to get into the game,” he said. “More-aggressive enforcement of the so-called fly-by-nights needs to be just as important to the FTC as large-scale enforcement against larger-revenue firms.”
Mary Engle, associate director for advertising practices at the FTC, described the FTC’s current challenge of pursuing fly-by-night companies, including trying to pinpoint the actual company responsible and the company’s physical location. Many times, the physical address linked to a company simply leads to a post office box instead of to a physical company office. “What we’re seeing a lot nowadays is that some company will be working with a number of affiliate marketers through an affiliate network, so there is a whole host of different companies that are placing the little ads that you see, and then when the consumer clicks on [an ad,] if the consumer buys the product, then that affiliate gets paid, but that’s not actually the company that’s selling the product; there’s another company who’s behind the product. And it requires us to send out multiple rounds of subpoenas to the web hosts and the ad networks to try to find out who’s behind this. And it takes significant amount of resources…it is time-consuming.”
Senator McCaskill said media broadcasters and publishers must be more vigilant in screening out deceptive ads and preventing their distribution. Media representatives were invited to yesterday’s hearing but declined to attend-which McCaskill called “alarming.”
McCaskill asked Engle why the FTC has not attempted to sue a media company for airing deceptive ads. Engle said that while the FTC does have the authority to enforce against media companies in this way, and dependent on First Amendment issues, she said the agency first prefers to work cooperatively with media members. For instance, the FTC’s recently announced program, Gut Check, provides media broadcasters and publishers with guidelines on how to spot a fraudulent advertisement.
CRN’s Mister also talked about the importance of self-policing. He described CRN’s successful partnership with the Council of Better Business Bureaus’ National Advertising Division (NAD). CRN has funded the NAD over $2 million to specifically examine dietary supplement advertising claims, and the NAD has so far challenged over 200 questionable claims.
FTC continues to be active in policing the weight-management products market. In the past 10 years, the agency has brought 82 weight-loss related law enforcement actions, and since 2010, it has collected nearly $107 million for consumer redress.
Nutritional Outlook magazine