Combating Deceptive Advertising - The Role of Advertisers, the Media, and the FTC

Remarks before the Aggressive Advertising and the Law Conference

New York, N.Y.

Date:
By: 
Orson Swindle, Former Commissioner

Introduction

It is a pleasure to be here today to discuss one aspect of "Aggressive Advertising and the Law" - combating deceptive advertising. Let me start by mentioning that my remarks this afternoon reflect solely my views and do not necessarily represent the views of the Commission or any other Commissioner. I also must compliment Lesley Fair of the FTC for a superb presentation. Well done, Lesley; you are a tough act to follow!

Like you, I watch TV, listen to the radio, and surf the Net. I see firsthand the creative ads that are disseminated. Some of these ads certainly cross the line from being creative to being deceptive. I tune in to nighttime talk radio on occasion, and I am amazed at the seemingly "trash bin of advertising" quality of their ad portfolios. I'm often sending emails from home to FTC staff asking about (in fact, complaining about) an ad I've recently seen or heard.

Deceptive advertising can occur with almost any product or service - for example, mortgages, postal jobs, miracle cures, physical fitness gadgets, even Wonder Bread (which settled FTC allegations of deceptive advertising last year).(1) To illustrate a few points, I want to focus on one line of product advertising that has been particularly problematic - advertising for weight loss products, especially dietary supplements. I recognize that some of you may not advertise weight loss products or represent companies that advertise those products. Nevertheless, aspects of the Commission's approach to this problematic area - in particular, my discussion of our law enforcement strategy and our encouragement of industry self-regulation - may be instructive to those advertising or selling a wide range of other products or services.

On a side note related to my topic today - weight loss ads - I made an interesting discovery this past week. My wife and I took a short trip to Florence, Italy - a most delightful place - to celebrate her birthday. After several days there, I noticed that there are very few overweight Florentines. In addition, I noted that Florentines always eat pasta or pizza for lunch, eat large and late dinners, drink lots of Chianti and always finish the evening with gelato. I concluded that this was the diet for me!

Under Chairman Muris's leadership, we have taken a close look at the state of weight loss advertising. I doubt that I need to dwell on the importance of this topic. Being overweight or obese causes serious health problems, and unfortunately a majority of adults in the U.S. are overweight or obese. There is a huge market for weight loss products and services, and we're seeing more and more advertisements for these products that falsely promise unattainable results. The Commission therefore has "drawn a bead" on weight loss advertising. My colleague Commissioner Sheila Anthony has it right when she says we need to "clean up the diet-ad mess."(2)

As with many difficult issues, however, we all need to work together to solve the problem. Some of you have heard me say this before in speaking about privacy and security issues, and it has been a successful approach. There is an ongoing dialogue among government, industry, and consumer groups to address privacy and security concerns, and we are working together to develop solutions. The same approach - working together - applies when we talk about advertising. The FTC, advertisers and the media all have a role to play to minimize deceptive advertising. Simply stated, it's the right thing to do.

The FTC staff's Weight Loss Advertising Report makes this point clear.(3) The Report discusses the results of the FTC staff's review of 300 weight loss ads (disseminated in all major media forms), and staff's comparison of weight loss ads from 1992 with those that ran in 2001. Staff found that false and misleading claims in weight loss ads are pervasive and have increased during this period. This increase has occurred despite an unprecedented level of FTC enforcement actions over the last decade. And here we are in 2003, and I suspect the situation has only gotten worse.

The government obviously cannot solve this problem alone. We all must work together to stop deceptive advertising. Positive results from this effort would be good for consumers and good for advertising. I would like to briefly discuss the roles and responsibilities of the FTC, advertisers, and the media.

The Role of the FTC

Let me start with the FTC. For those who were here for the last panel, you heard FTC attorney Lesley Fair discuss the FTC's priorities in its consumer protection mission and some of our recent cases. Combating deceptive advertising - especially deceptive health and safety claims - continues to be a priority for the Commission.

As I mentioned, the Commission has brought law enforcement actions to combat deceptive weight loss advertising, and we will continue to do so. A few recent enforcement actions will illustrate our efforts.

Mark Nutritionals markets the Body Solutions Evening Weight Loss Formula, a liquid product that consumers are instructed to take before going to bed and at least three hours after eating or drinking.(4) The product was advertised on more than 650 radio stations nationwide, and the radio spots featured testimonial endorsements from popular radio disk jockeys. The ads claimed that consumers who used the product could permanently lose substantial weight without diet or exercise, even while continuing to consume substantial amounts of high-calorie foods. In fact, the ad slogan for the product was "lose weight while you sleep." The Commission alleged that these claims were false and unsubstantiated. Can there really be much doubt? The Commission sought and obtained preliminary relief, including a stipulated preliminary injunction and an asset freeze.

Another recent case involves Slim Down Solution, a dietary supplement product that contains d-glucosamine.(5) The product was advertised and sold through nationally-disseminated infomercials that aired on popular cable television channels. According to the ads, the product absorbs fat and carries it right out of the body. Quoting from the infomercial, "Just one tiny Slim Down tablet can reduce the amount of fat in a slice of chocolate cake down to the fat in a fruit cocktail." It makes you want to run right out and buy this product before you have any dessert today. The Commission's complaint alleged that the ads falsely claimed that the product absorbs fat and causes significant weight loss without diet or exercise. The Commission also sought preliminary relief in this case and filed a stipulated preliminary injunction with the complaint. The cases against Slim Down Solution and Mark Nutritional are both currently in litigation.

What are some common themes from these cases?

  • The products are expensive and they sell big. For example, Mark Nutritionals' product costs almost $50 for a month's supply, and the company's sales exceeded $190 million to date.
  • The ads in these two cases appeared in mainstream media - on radio stations and cable TV channels.
  • The claims are appealing. What person struggling with excessive weight has not given some thought to a miracle product? And the ads reassure consumers that clinical tests prove that the products are effective. In fact, the ads for Slim Down Solution claimed that independent laboratory testing using U.S. government standards proves that the product binds dietary fat in the digestive system - the purported mechanism for losing weight. It's no wonder that many people hope that this product will be the one that works.

At the same time, the claims are quite suspect:

  • Lose substantial amounts of weight - including as many as 20 to 40 pounds - without the need to diet or exercise. (Mark Nutritionals)
  • "Lose weight while you sleep." (Mark Nutritionals)
  • Lose 10 lbs. and 2 inches in 30 days, without having to change your lifestyle or your eating habits. (Slim Down Solution)
  • "You don't change the foods you love to eat, and you still lose weight." (Slim Down Solution)

The Commission's complaints alleged the claims were false, and we filed the complaints in federal district court. As in other cases, we sought preliminary relief to stop the alleged fraudulent claims and, where appropriate, we sought an asset freeze to preserve funds for possible consumer redress.

As with most Commission cases, we are seeking broad injunctive relief. But in these cases, we are also seeking monetary relief. The defendants defrauded consumers of significant amounts of money, and we're seeking to return those funds.

The weight loss cases illustrate the Commission's increasing use of federal district court complaints, seeking preliminary relief and consumer redress, in deceptive national advertising cases. While the Commission continues to use administrative litigation, we recognize the need to use all the tools in our law enforcement arsenal to target the practices in the marketplace. There may have been a time when cases like these were the outliers - "fraudsters" operating on the periphery and conducting limited marketing. But today, these products are featured in nationally-disseminated advertising campaigns in major media outlets. To effectively target these practices and protect consumers, we will aggressively pursue those involved, put an immediate stop to the deceptive practices, and seek money to redress consumer harm.

The federal district court approach has been successful in our prosecution of telemarketing and other types of fraud. In my opinion, our increasing use of federal district court complaints in these advertising cases acknowledges that we believe that these exaggerated weight loss claims, as well as those of many other products, are outright frauds and that we intend to aggressively pursue those engaged in these practices.

In addition to bringing more cases in federal district court, we are acting more quickly in both federal court and administrative cases. We have noticed that some lawyers drag their feet through the investigative process, in negotiating settlements, and even in scheduling meetings with the Bureau Director or the Commissioners. We will not tolerate these delays in any case and especially if we have evidence of ongoing consumer harm. As I mentioned at the outset, I think the Commission's law enforcement approach to weight loss advertising can be enlightening to those advertising other products and services.

Of course, law enforcement can address only part of the problem. Consumers are their own best first line of defense. The Commission therefore disseminates consumer education brochures on diet, health and fitness.(6) We try to emphasize that there are no magic solutions when it comes to weight loss, and that consumers should evaluate weight loss products with a healthy portion of skepticism.

The Commission also conducted a workshop last November - attended by industry members, scientific experts, representatives of media organizations, and law enforcers - to discuss issues involving weight loss advertising, to formulate alternative approaches to reducing deceptive claims, and, essentially, to begin the dialogue about how we can all work together to address these problems.(7)

The Role of Advertisers

So what does this mean for advertisers? Obviously, advertisers are responsible for the claims they make about their products. They must comply with the basic principles of advertising law, such as having substantiation (and, where appropriate, competent and reliable scientific evidence) for the claims they make about their products. There are a variety of sources of information to assist advertisers in complying with the law, and the FTC is one of them. The Commission has issued a number of business education pieces, including "Dietary Supplements: An Advertising Guide for Industry."(8)

Legitimate firms advertising legitimate products in an appropriate manner have a real stake in resolving the problem of deceptive advertising. While legitimate marketers take care to avoid misleading claims, they can lose sales to unscrupulous marketers that make false claims promising dramatic results. Even worse, if consumers lose faith in advertising, the entire industry suffers.

For many decades, the FTC has recognized the important role of effective self-regulation. I therefore applaud the advertising industry's successful self-regulatory efforts, conducted by the National Advertising Division (NAD) of the Council of Better Business Bureaus. The NAD investigates complaints against advertisers brought by both consumers and other advertisers. Self-regulatory programs such as this complement the Commission's law enforcement effort, and the net effect is greater consumer protection in the marketplace.

We have more work to do in the area of weight loss advertising, and industry members need to play a large role. A number of industry groups participated in our Weight Loss Advertising Workshop to discuss ways that industry can help reduce false weight loss advertising. Several spoke about their efforts to formulate guidelines, to give teeth to those guidelines, and to basically "police their own" and bring cases to the NAD involving questionable weight loss claims. I hope this dialogue and industry efforts in this area continue and succeed.

I personally have confidence in the private sector to do the right thing. Vigorous and effective self-regulation of your industry - whether it involves weight loss advertising or other types of advertising - is a responsible course of action. You are far better suited to "get it right" than is government. You have the right incentives to do so - happy customers, growing business and profits. It is essential that you lead the way.

The Role of the Media

A third major player involved in reducing deceptive weight loss advertising is the media. Although the Commission's law enforcement approach to weight loss advertising or our encouragement of industry self-regulation may be applicable to advertisers of other products or services, my comments about the media's role are limited to the unique area of weight loss product advertising.

The FTC staff's Weight Loss Advertising Report showed that weight loss ads that were deceptive on their face were disseminated through all forms of major media, including women's magazines, newspaper inserts, and cable television channels. Obviously, we would have an easier task if these blatantly false ads were never disseminated in the first place.

Earlier this year, Chairman Muris asked the media to work with us in trying to stem the tide of false weight loss ads by instituting better screening and by refusing to run obviously false ads.(9) I fully support the Chairman's request. Let's put an end to this outright fraudulent advertising in all respects.

We are not suggesting that the media institute a massive screening program or network-style clearance procedures for all types of advertisements. We are asking for the media's assistance solely in the weight loss product area. Besides the economic harm when consumers spend money on weight loss products that don't work, there are serious health consequences for consumers who are obese or overweight. And unlike many other types of ads, we believe that weight loss advertisements are particularly suited for better media screening. We plan to help the media in this process. Let me explain.

The FTC staff is working to develop a list of claims that are not scientifically possible. At the FTC's Weight Loss Advertising Workshop, staff asked scientific experts whether there was a list of claims for over-the-counter weight loss products that are generally agreed to be false. FTC staff is using information from the experts at the workshop to refine a list of false claims. We're talking about outrageous claims - like "lose 30 lbs. in 30 days" or "lose weight while still enjoying unlimited amounts of high-calorie foods" - which are scientifically impossible to achieve.

We will then distribute the list of false claims to the media to provide clear guidance for screening ads. The screening process that we are asking the media to voluntarily adopt involves simply comparing the claims in an ad with the claims on our list. We are not asking the media to review scientific studies or substantiation for weight loss ads, nor are we insisting that media outlets require television network-style clearance procedures for weight loss ads. I certainly commend the television networks for their screening process. But we realize that not every media outlet can support that type of review, which is why we're developing the list of claims.

As Chairman Muris emphasized, "this is not rocket science."(10) Most broadcasters and publishers already screen ads for taste and appropriateness. We're asking the media to take steps to screen out obviously false ads.

I know some media outlets explain that it is easier to screen for taste because you reject certain categories of ads - firearms ads, ads containing nudity, etc. There is concern about the effort needed to review the ads for specific claims and about the difficulties that may arise if marketers modify their claims to skirt the list of false claims developed by the Commission. Although it might take more effort to screen out certain claims instead of rejecting ads categorically, and although not every false ad may be eliminated, I think that some effort would produce measurable results. Just because we might not achieve perfection doesn't mean that we shouldn't try to rid the airwaves or newsprint of obviously false ads. Media outlets also raise First Amendment concerns, to which we are obviously sensitive. However, there is no Constitutional right to run false commercial advertising.

This certainly is not just my personal appeal for the greater good - the media themselves have incentives to adopt these screening procedures voluntarily. Better screening increases the credibility of all advertising. And better screening also protects your reputation. Why do media outlets screen ads for taste and appropriateness? In part, it is because they do not want to offend consumers. This recognizes that the advertising you run can reflect negatively on your publication or television or radio station. So what is the effect when your customers see or listen to blatantly false ads or, even worse, purchase products featured by your publication that cannot live up to their claims? It may be difficult to weigh these costs (that is, the quantifiable cost of forgoing advertising versus the unquantifiable cost of reputation damage and customer alienation), but I hope you'll conclude that the costs of taking modest steps to screen obviously false weight loss ads are far less than the costs of doing nothing.

Conclusion

Clearly, weight loss advertising is just one of the areas on which the Commission focuses its attention. I could have spoken just as easily about lending practices, negative option marketing, or even privacy and security practices.

I spoke earlier of the collective efforts of many with varying points of view wrestling with the broad issue of privacy and security of information. We have had a sometimes heated dialogue in progress for several years. The effect has been to improve privacy and security practices through, for the most part, a self-regulatory process. Similarly, it will take all of us in a combination of dialogue and action to rid the market place of fraudulent and deceptive advertising.

It is in your best interest to join the fight. For our part, we will encourage, attempt to educate, and, in our paramount role, enforce the laws aggressively. We're looking broadly at the question of who has liability for deceptive advertising claims. We will be taking action against those who should be held accountable - including advertisers, ad agencies, and expert endorsers.

And the core value behind all of our conduct ought to stem from something my grandmother taught me a long time ago: Do not lie!

Please work with us. Lead the way. There need not be an FTC in your future.

Endnotes:

1. Interstate Bakeries Corp., Dkt. No. C-4042 (consent order Apr. 16, 2002), and Campbell Mithun LLC, Dkt. No. C-4043 (consent order Apr. 16, 2002), <www.ftc.gov/opa/2002/03/wonderbread.htm>.

2. Commissioner Sheila F. Anthony, "Let's clean up the diet-ad mess," Advertising Age, Feb. 3, 2003, at 18.

3. FTC Staff Report, Weight Loss Advertising: An Analysis of Current Trends (Sept. 2002), <http://www3.ftc.gov/bcp/reports/weightloss.pdf>.

4. FTC v. Mark Nutritionals, Inc., et al., Civ. No. SA02CA1151EP (W.D. Tex. complaint filed Dec. 5, 2002), <www.ftc.gov/opa/2002/12/marknutritionals.htm>.

5. FTC v. Slim Down Solution, LLC, et al., Civ. No. 03-80051-Civ-Paine (S.D. Fla. complaint filed Jan. 22, 2003), <www.ftc.gov/opa/2003/01/slimdown.htm>.

6. Many of these materials are published on the Commission's website at </bcp/menu-health.htm>.

7. FTC Weight Loss Advertising Workshop, Nov. 19, 2002. Information about the workshop, including the agenda and transcript, can be found at </bcp/workshops/weightloss>.

8. "Dietary Supplements: An Advertising Guide for Industry," available at <http://business.ftc.gov/documents/bus09-dietary-supplements-advertising-guide-industry >.

9. Remarks of Timothy J. Muris, "Do the Right Thing" (Apologies to Spike Lee), (Feb. 11, 2003)

10. Id.