FTC Courtesy Warnings to CBD Marketers About Unsubstantiated Claims Likely Drawing to an End
Since passage of the “Farm Bill” which legalized hemp-derived CBD containing less than 0.3% THC, the FTC has twice issued warning letters to companies that allegedly made false and unsubstantiated “disease treatment” claims for CBD products.
The March 2019 letters - sent jointly with the Food and Drug Administration - alleged that various advertisements expressly and/or impliedly represented that products could effectively treat diseases, including cancer, Alzheimer’s disease, fibromyalgia and “neuropsychiatric disorders,” and that the products had anti-emetic, anti-convulsive, anti-inflammatory and analgesic properties.
The joint FTC and FDA letters warned the companies about the potential legal consequences of making unsupported health and efficacy claims in advertising, and strongly urged them to review all product claims to ensure they are supported by competent and reliable scientific evidence.
The companies were instructed to notify the FTC within 15 days of receipt of the letters of the specific actions taken to address the agency’s concerns.
In September 2019, the FTC sent another round of warning letters to companies advertising CBD-infused products as treatments for serious diseases. This round of warnings were sent to three companies that sell oils, tinctures, capsules “gummies,” and creams containing cannabidiol. The letters warned the companies, which the FTC did not identify publicly, that it is illegal to advertise that a product can prevent, treat, or cure human disease without competent and reliable scientific evidence to support such claims.
According to at least one FTC lawyer, each company has advertised that its CBD products treat or cure serious diseases and health conditions. The most recent round of letters also indicated that one of the recipients stated that efficacy claims were backed by reasonable evidence, while another advertised CBD as a “miracle pain remedy” for both acute and chronic pain, including pain from cancer treatment and arthritis.
These recipients were urged to review all claims made for their products, including consumer endorsements and testimonials, to ensure they are supported by competent and reliable scientific evidence. The letters also warn that selling CBD products without such substantiation could violate the FTC Act and may result in legal action that could result in an injunction and an order to return money to consumers. The recipients were once again instructed to notify the FTC of the specific remedial actions taken.
It is relatively safe to assume that “courtesy warnings” for such conduct are nearing, or have already reached, an end. Continued unsubstantiated CBD claims by marketers are likely to be met with aggressive compulsory process (e.g., civil investigative demands) and enforcement proceedings that seek injunctions, fencing-in relief and monetary restitution.
The FTC requires that marketers possess a reasonable basis for advertising claims before disseminating them, not after. The FTC vigorously enforces claim substantiation requirements relating to express and implied claims, especially when they involve health and disease prevention. Objective claims for products or services represent explicitly or by implication that the advertiser has a reasonable basis supporting these claims. These representations of substantiation are considered material to consumers. That is, consumers would be less likely to rely on claims for products and services if they knew the advertiser did not have a reasonable basis for believing them to be true.
A marketer’s failure to possess and rely upon a reasonable basis for objective claims constitutes an unfair and deceptive act or practice in violation of Section 5 of the Federal Trade Commission Act.