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Myths and Half-Truths About Deceptive Advertising
Summary of Remarks by
Commissioner Roscoe B. Starek, III
Federal Trade Commission
before the
National Infomercial Marketing Association
Las Vegas, Nevada
October 15, 1996
The FTC is
charged with protecting consumers from unfair or deceptive acts or practices.
In advertising and marketing, the law requires that objective claims be
truthful and substantiated. The FTC does not pursue subjective claims or
puffery -- claims like "this is the best hairspray in the world."
But if there is an objective component to the claim -- such as "more
consumers prefer our hairspray to any other" or "our hairspray
lasts longer than the most popular brands" -- then the advertiser
needs to be sure that the claim is not deceptive and that there is adequate
substantiation before the claim is made. These requirements apply both to
explicit or express claims and to implied claims. Also, a statement that is
literally true can have a deceptive implication when considered in the
context of the whole advertisement, even if that implication is not the
only possible interpretation.
The
substantiation requirement exists because every time an advertiser makes an
objective claim, the advertiser also implies that there is a reasonable
basis for the claim. This reasonable basis is substantiation. What
constitutes a reasonable basis for a particular claim can vary, depending
upon the nature of the claim, the product, the consequences of a false
claim, the benefits of a truthful claim, the cost of developing
substantiation for the claim, and the amount of substantiation that experts
in the field believe is reasonable. Health and safety claims generally
require competent and reliable scientific evidence. And if a marketer makes
a representation that a claim has a particular level of support -- for example,
"clinical studies prove . . ." -- the law requires at least that
level of substantiation.
Following
are some of the myths and half-truths that come up time and time again in
FTC enforcement actions. Several of the most persistent myths involve substantiation.
MYTH #
1 -- If A Couple Of Studies Support Your Claim, It Is Substantiated
The other
name for this one is the "1 Plus 1 Equals 11" myth. In fact, this
is more of a half-truth than a myth. If there are no other relevant
studies, and a couple are of scientifically valid, well-controlled studies
that support the claim in the view of experts in the field, it probably has
been substantiated. If, however, there are other studies that contradict or
call into question the findings of the studies, or the studies have design
flaws or were conducted by persons who had an incentive to obtain
particular results, the claim may not be substantiated. The Commission
looks at the totality of the evidence, not just what is submitted by the
target of an investigation. Independent studies are much more convincing
than studies done by someone in a position to benefit from sales of the
product or from the company's success.
Suppose
some rigorous, scientifically valid studies show a product may have some
benefits. At this point, watch out for another marketing myth: so long as
the research looks promising, I can claim proven benefits for my product.
In many cases, despite valid scientific research showing likely benefits or
indicating benefits for a particular group of individuals under specified
conditions, marketers ran afoul of the law because their claims were much
broader. If the claim is broader than the substantiation, has not been
substantiated.
MYTH #
2 -- If Your Product Has Some Benefits, Your Ads Won't Be Challenged
Or,
"The End Justifies the Means" myth. Even claims for products with
real benefits must have a reasonable basis. This is illustrated by a
Commission consent order settling allegations that NordicTrack, Inc. had
made unsubstantiated weight loss claims in its "Change Your Life With
NordicTrack" infomercial and several print ads. The Commission
challenged a number of claims that the company made about the percentage of
purchasers of its cross-country ski exerciser who lost weight, the amount of
weight they lost, how long they maintained their weight loss, and how much
exercise was needed to achieve an average weight loss of eighteen pounds in
twelve weeks.
Weight
loss claims are health claims that must be substantiated by competent and
reliable scientific evidence. Although NordicTrack based its claims on
studies, unfortunately the studies had methodological flaws that prevented
them from being adequate substantiation. Claims that applied to all
purchasers who bought a NordicTrack cross-country ski exerciser to lose
weight were based on studies limited to a selected group of purchasers who
successfully integrated the cross-country ski exerciser into their regular
exercise regimes. The "eighteen pounds in twelve weeks"
weight-loss claim was based on the amount of weight loss reported only by
persons who completed a rigorous twelve-week exercise program that nearly
half the participants failed to complete. Also, the studies failed to take
into account changes in purchasers' dietary habits and may have been subject
to bias by relying on self-reported body weight.
MYTH #
3 -- Testimonials Are Substantiation
Think of
this as the "Elvis Used It and Loved It" myth. Infomercials rely
heavily on consumer testimonials to sell products and services. Frequently
companies asked to provide substantiation point to the testimonials they
used in their ads, send letters from happy customers, and may even provide
affidavits from individuals who used a product or service and found that it
did exactly what the advertising promised.
Testimonials,
however, are not substantiation. The Commission rarely finds anecdotal
evidence like this to be a sufficient basis to support a claim. In fact,
the FTC has explicitly rejected it as substantiation for health-related
claims. The Commission may consider anecdotal evidence in assessing the
scope of injury to consumers and whether the use of Commission resources on
a particular case is in the public interest.
The
statements of an expert endorser, such as a doctor, require even more
substantiation. A person who speaks as an expert should be an expert, and
what the expert endorser says about a product should be based on an
evaluation or tests that other experts in the field generally would find
sufficient to support the expert's conclusions.
When creating
an ad that uses testimonials, keep in mind that the testimonials make
claims that need to be substantiated -- they are not substantiation
themselves.
MYTH #
4 -- So Long As Endorsers Really Use The Product And Really Like It, You
Can Safely Use Their Endorsements
This is
the "But Elvis Really Used It and Really Loved It" myth. The use
of consumer testimonials not only involves the underlying claims made by
the persons giving the testimonials; it also gives rise to a claim that
their experience is representative, or typical, of the results that
consumers can generally expect to achieve. This is called a
"typicality" claim, and, like other claims, it needs to be
substantiated. If it is not substantiated, it needs to be qualified by a
clear and prominent disclosure of the generally expected results for users
of the product or the limited applicability of the endorser's experience to
what consumers may generally expect to achieve.
Anyone
relying on testimonials -- an almost universal technique in infomercials --
should be familiar with the FTC's Guides Concerning the Use of Endorsements
and Testimonials in Advertising. These can be found in Volume 16 of the
Code of Federal Regulations, Part 255. The Endorsements and Testimonials
Guides give a plain English description of the FTC's policies, along with
clear examples drawn from the FTC's enforcement experience.
MYTH #
5 -- If You Contradict A Deceptive Claim With A Disclosure, You Immunize
Yourself From Liability
Or, the
"Say It Isn't So" myth. The Commission looks at the net
impression created by an advertisement. Disclosures that flatly contradict
a deceptive claim, or that purport not to make the claim, are generally
ineffective. The best advice is not to make a claim so broad that it cannot
be substantiated. Instead, narrow the claim to what there is substantiation
for so that a separate disclosure about how narrow the claim is is not
needed.
MYTH #
6 -- "Results May Vary" Is An Adequate Disclosure
We call
this . . . the "Results May Vary" myth. "Results may
vary" and variations on that theme are not adequate disclosures, yet
the FTC sees them again and again, usually in fine print flashed briefly
across the bottom of a television screen while a consumer or expert gives a
glowing endorsement. If a "results may vary" disclosure is
prominent enough to be noticed, consumers are likely to believe that it
simply means that not everyone will achieve the promised results. It does
not disabuse them of the very powerful claim that the results are typical
of what they can expect to achieve if they use the product.
MYTH #
7 -- Dietary Supplement Ads Are Not Regulated
Or, the
"Free Bite at the Apple" myth. There appears to be a widespread
misunderstanding that claims about dietary supplements do not need to
satisfy the same advertising standards as claims about other products. Both
the FDA and the FTC regulate claims for dietary supplements. The FDA has
responsibility for label claims, and the FTC seeks to ensure that claims
made in advertising do not deceive consumers.
Under the
Dietary Supplements Health and Education Act of 1994, the FDA preapproves
health claims on supplement labels under a "significant scientific
agreement" standard. Confusion apparently arises from the Act's
exemption from FDA preapproval for all label claims about "nutritional
support" -- that is, claims about the structure or function of the
human body. The Act does, however, require the manufacturer to have
substantiation that structure and function claims are truthful and not misleading.
This substantiation requirement for labels is similar to the FTC's
substantiation requirement for advertising generally. A special Commission
on Dietary Supplement Labels is now evaluating the type of evidence that
the FDA will require as substantiation, and has consulted the FTC about its
policies for substantiation of advertising claims for dietary supplements.
The FTC
has brought numerous cases involving false or unsubstantiated claims for
dietary supplements and is likely to continue to do so. The Dietary
Supplements Health and Education Act did not change the FTC's requirements
that advertising claims related to safety or health -- including structure
and function claims -- must not mislead consumers and must be substantiated
by competent and reliable scientific evidence before they are made.
MYTH #
8 -- If All You Do Is Produce The Infomercial, You Are Not Responsible For
Deceptive Claims
Wrong.
This is also known as "The Dog Ate My Homework" myth. The
Commission looks to see whether an infomercial producer actively
participated in the preparation of the challenged advertisement and whether
the producer knew or should have known that the claims were false or
unsubstantiated. The extent of participation is important: simply renting
space for the taping of an advertiser's script is unlikely to lead to
liability. But creating ad copy, developing a media plan, or buying media
time could lead to liability when combined with the requisite degree of
knowledge.
Being the
"producer" does not remove the possibility of being liable as a
principal. The individual's title is not as important as who actually holds
the reins. In many cases, the so-called "producer" had authority
over the content, format, and editing of the infomercial and also received
the lion's share of the revenue.
Anyone
involved in the preparation and dissemination of an infomercial that
contains blatantly misleading claims -- for example, "lose weight
without diet, exercise, or surgery" -- risks an FTC inquiry and a
potential enforcement action.
How are
the risks minimized? Screen the ads for possibly deceptive claims. Ask for
substantiation. If an ad probably makes false or unsubstantiated claims,
change the ad to drop those claims. If it cannot be changed, end your
involvement with its creation and dissemination.
MYTH #
9 -- No Rules Apply To Advertising On The Internet
Not true.
Despite this "Wild, Wild West" myth, the FTC's advertising
standards are the same on the Internet. As reflected in NIMA's 1996-97 Fact
Book, the Internet represents a small but rapidly growing marketing
channel. The FTC is committed to vigorous enforcement of consumer
protection statutes in the online environment, and the FTC has already
brought a dozens of cases that primarily or exclusively involve online
marketing. So far, these cases mainly have involved fraudulent credit
repair schemes, advance fee loan scams, and false and unsubstantiated
claims about business opportunities.
The FTC is
now seeing cases in which deceptive ads are placed on web sites in addition
to being disseminated through more traditional channels. The Commission
recently issued a consent order settling allegations that Zygon
International marketed a variety of consumer products -- including dietary
supplements and learning devices -- without substantiation for the claims
it made about the products' characteristics. For the most part, Zygon
marketed its products through traditional channels -- radio and print
advertisements and a mail-order catalog -- but it also maintained a web
site.
Advertisers
on online services and the Internet should not wait for a consumer uproar
that could result in overly intrusive regulation. There are great benefits
to self- regulation and to building consumer confidence.
Online
advertising shares many characteristics with infomercials. Like
infomercials, online advertising allows companies to provide consumers with
more detailed information than they typically would receive in other
advertising media. Also, the technology may blur the lines between what is
and is not an advertisement. For example, online entertainment may in fact
be an advertisement or contain advertisements. Sound familiar? FTC requires
infomercials to disclose that they are paid advertisements. This raises the
question whether online entertainment that is also advertising ought to
contain similar disclosures.
Conclusion
The FTC
has been trying to stay on top of the new developments in technology and
marketing. The FTC has held hearings and conferences with industry
representatives, consumer advocacy groups, and other members of the public
to better comprehend the changing global marketplace. The FTC understands
the positive effects of new technologies on marketing: many consumers are
likely to have access to potentially unlimited amounts of information, a
global marketplace, and more convenient shopping. On the other hand, these
new technologies create new opportunities for deceptive marketing.
Clearly,
the most dramatic development is the convergence of rapidly evolving
communications technologies. The Commission's hearings and our law
enforcement experience indicate that the private sector can and should play
a valuable role in protecting consumers and encouraging the use of new
technologies for marketing.
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