September 8, 2014
In an interesting case that caught my eye earlier today, the U.S. FTC announced a proposed settlement with Texas-based Applied Food Sciences Inc. (AFS) in relation to allegedly “baseless” green coffee extract weight loss claims.
According to the FTC, AFS, which sells a green coffee ingredient used in foods and dietary supplements, made public claims (including following publicity on the Dr. Oz Show) that subjects lost weight “without diet or exercise” using their product. These claims were based on an Indian clinical trial which, in the FTC’s view, was a “botched study” that didn’t prove anything.
More particularly with respect to the underlying study, the FTC took the position that, among other things: the study’s lead investigator altered the weights and other key measurements of subjects; changed the length of the trial; and misstated whether subjects were taking a placebo or product during the trial. The FTC also concluded that when subsequent researchers rewrote the study, based on the lead investigator’s inability to get the original study published, they used conflicting data and failed to verify the authenticity of the study’s information.
The proposed settlement would bar AFS from misrepresenting any aspect of a test or study related to its products; prohibit it from assisting others with false advertising; require it to notify trade customers of the FTC’s conclusion that the company’s claims were not adequately scientifically supported; and pay $3.5 million.
This case is a reminder that false weight loss claims are a priority for consumer protection agencies in both the U.S. and Canada, including the U.S. FTC and Canadian Competition Bureau. It is also a good reminder that performance claims in general, including in Canada, must be sufficiently supported.
In Canada, the federal requirement under the Competition Act is that performance claims be supported by “adequate and proper testing” prior to being made. While performance claims themselves are not prohibited, any testing or verification must be conducted before the claim is made. Also, the onus, if challenged, is on the person making the claim to show that it is based on an adequate and proper test.
While there is no single standard, the federal Competition Tribunal in the Imperial Brush case set out a non-exhaustive list of factors to determine whether testing is “adequate and proper”. Testing also does not need to be 100% reliable or the best scientific testing that could have been performed (i.e., it has been held that testing does not need to meet a test of certainty).
The key requirements of the performance claim provision of the Competition Act were also relatively recently summarized by the Ontario Superior Court in the Chatr Wireless case, in which the Court adopted a number of the reasons from Imperial Brush:
“The burden of proving adequate and proper testing lies upon the respondents by virtue of the express wording of s. 74.01(1)(b) of the Competition Act. The adequate and proper test must be made prior to the representation to the public. … The phrase ‘adequate and proper test’ is not defined in the Competition Act. Whether a particular test is ‘adequate and proper’ will depend on the nature of the representation made and the meaning or impression conveyed by that representation. Subjectivity in the testing should be eliminated as much as possible. The test must establish the effect claimed. The testing need not be as exacting as would be required to publish the test in a scholarly journal. The test should demonstrate that the result claimed is not a chance result …”
In practice, the Competition Bureau has challenged performance claims in a wide variety of industries over the years, including in relation to weight loss products (diet patches, skin care cream, sauna belts, weight loss devices and natural products, etc.), clothing (alleged therapeutic benefits of some types of clothing), fuel saving devices, chimney cleaning products, UV ray protection, anticorrosion devices, disease cures (e.g., cancer, AIDS, etc.) and therapeutic benefits of tanning, among others.
As such, it is incumbent on companies, as well as their advisors and agencies, to take steps to ensure that adequate and relevant testing is conducted before performance claims are made.
Written advisory opinions are also available from the Competition Bureau in relation to proposed performance claims, as well as other types of proposed advertising and marketing claims.
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