The Facts: FTC & Food

The Facts: FTC & Food

May 29, 2013

By Kimberly O'Hara
The Food Journal

The FTC was established initially to deal with antitrust issues (promotion of fair competition for the benefit of consumers). For the majority of time it’s been in existence, that’s been its primary focus.The 1954 Memorandum of Understanding between the FDA and the FTC was updated in 2009, but the Commission still “has primary responsibility with respect to the regulation of the truth or falsity of all advertising (other than labeling) of foods…” prohibiting “unfair or deceptive acts and practices under Section 5 of the FTC Act.” The FDA takes primary responsibility for “preventing the misbranding of foods.”The Memorandum also states, “In the absence of express agreement between the two agencies to the contrary, the Commission will exercise primary jurisdiction over all matters regulating the truth or falsity of advertising of foods…” 

According to Mary Engle, Associate Director for Advertising Practices for the FTC, “We are seeing many more cases against dietary supplements because the potential consumer injury is great when the supplement claims to treat or prevent a disease. Plus, if the supplement doesn’t provide the claimed health benefits, the consumer isn’t getting anything for his money. At least with conventional foods, you are getting the food. For example, in our case against Dannon, you still had a tasty yogurt to eat, even if the yogurt didn’t provide the claimed digestive health benefits.“  

In the area of deceptive advertising targeting children, the FTC is the gatekeeper, keeping up with increased advertising on the Internet, including under the radar messaging in different games and social-networking websites. ”There is definitely more social media, and it is a challenge for us to keep up on it,” says Engle. “That said, in the social media space, people are really vocal about complaining, or there may be a news article about an issue, and we learn of potential problems from those sources.”

What is the FTC’s process of identifying a claim as deceptive?

The FTC originally created a Deception Statement in 1983 “to address the concerns that have been raised about the meaning of deception.” They also issued a Statement Regarding Advertising Substantiation, outlining if “a substantiation claim is express (e.g. "tests prove," "doctors recommend," and "studies show"), the Commission expects the firm to have at least the advertised level of substantiation. "The focus of deception analysis has shifted since then from advertising that had a “tendency and capacity to deceive” to advertising that is “likely to mislead”; from simply “consumers” to “consumers acting reasonably under the circumstances”; and includes a requirement of materiality. Deception can also occur through omission of information. For health and safety claims, the FTC has traditionally required“competent and reliable scientific evidence”; however, even this standard has been flexibly defined to mean “tests, studies or other research based on the expertise of professionals in the field that have been objectively conducted and evaluated by qualified people using procedures that give accurate and reliable results.” Puffing, the exaggeration by salesperson or in advertisement of the quality of the goods offered for sale, is allowed. 

What’s the FTC’s time line:

The FTC assigns 57 people to the advertising practices mission but that encompasses the whole range of what they do. At any given time, there are a handful of people working on food, more depending on what cases or projects are underway. They have investigators who help gather information, particularly with online investigations, or if there is a case in court, helping to prepare witnesses. FTC can take law enforcement action in either administrative proceedings or in federal court. So far in 2013, the Commission had announced one food-related action; there’s fewer than one FTC order against a food company/brand a year on average. Consumers can report a false claim to the FTC’s Consumer Response Center online with the FTC Complaint Assistant or by telephone or mail, but typically food cases are initiated because the FTC staff will see a potentially problematic advertisement, or a consumer group or competitor or Congress may raise an issue. These complaints are often made through a letter to the Chairwoman, the Director of the Bureau of Consumer Protection or sent to Mary Engle, Associate Director for Advertising Practices for the FTC, directly. With a competitor, complaints are often filed by a law firm for some unnamed client. The FTC can surmise it is a competitor but the firm is not required to identify their client.

Advertising to Children:

An FTC article based on a speech delivered by J. Howard Beales III, Director of the Bureau of Consumer Protection before the George Mason Law Review 2004 Symposium on Antitrust and Consumer Protection states, “There’s a great deal more that the food industry should be encouraged to do on a self-regulatory basis.” The article's authors also conclude in terms of childhood obesity, “Although the idea of banning certain kinds of advertisements may offer a superficial appeal in this context, it is neither a workable nor an efficacious solution to the health problem of childhood obesity. The Federal Trade Commission has traveled down this road before. It is not a journey that anyone at the Commission cares to repeat.” 

Energy drinks are continuing to grow and advertise despite the fact that people have died presumably from consuming them, as reported by the New York Times in March. In a letter from Congressman Edward Markey to the FTC Chairman in 2012 re: energy drinks targeted to children, he asks, “Please describe the manner in which the FTC coordinates its efforts with the FDA or other federal agencies that share jurisdiction or responsibilities in this area.”San Francisco City Attorney Dennis Herrera is suing Monster Beverage Corp, saying that Monster "aggressively'' markets its products to youth by sponsoring youth sports tournaments and "prominently'' featuring profiles of youth ranging in age from 6 to 17 on its Monster Army social-networking website.  

Coke, a participant of the Children’s Food and Beverage Advertising Initiative (CFBAI),recently made an announcement it would stop advertising towards kids under twelve. According to the FTC’s 2012 Review of Food Marketing to Children and Adolescents, (based on 2009 calculations), “Three food categories led the way in child-directed new media expenditures – breakfast cereals ($21.6 million), QSR foods ($19.4 million), and snack foods ($10 million).” (Interview with Elaine Kolish, VP of CFBAI)

The FTC’s Green Guidelines:

The first Green Guides were issued by the FTC in 1992 to assist marketers in understanding if they may be making claims about the environmental attributes of their products that may be misleading or not truthful. (Hentges Commentary) These are voluntary guidelines, not enforceable regulations, but the FTC can prosecute false and misleading advertising claims under the FTC Act. Mary Engle says, “Our hope is that advertisers will read what we have indicated will likely violate the FTC Act and as an industry will come into compliance with the guides. We would not issue regulations in that area unless Congress passed a statute requiring us to." In October of 2012, the FTC issued Revised “Green Guides” to “take into account recent changes in the marketplace.” In fact, keeping up with social media, the FTC hosted a Twitter chat for public questions. In a video on the Bureau of Consumer Protection web site, Laura Koss, attorney for the FTC, says simply, “Green claims have to be backed up with sound science.” 

The FTC is not focused on the punishment of the violator but rather continuing to protect consumers from misleading claims. The EPA, FDA and FTC must continue to work together to handle the scope of enforcement the public may need. Consumer response (and self-regulation) will continue to be especially important when it comes to products that are “supplement claims” requiring no review pre-market. According to the Gerhardt Harvard study (see link), “FTC enforcement has recently become more important to the FDA as the resources of the FDA are depleted. The FDA’s budget has been persistently too minimal, and Congress has not authorized sufficient funds for the FDA to fully police this area. Recently, the sale of misleadingly labeled products has been downplayed at the FDA due to budgetary constraints and the FDA has increasingly been forced to rely upon the FTC to combat minor-scale fraud in otherwise traditionally FDA-regulated field.” Scrutiny is also continuing to rise on the state level, with Departments of Justice stepping in to refute claims (Lempert Report, 2010) as well as national health organizations.