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Supplement Company Settles with FTC Over Diabetes Pill Marketing Claims

Any product purporting to be a panacea for a serious health issue needs serious evidence to back up such a promise. Take Nobetes, a dietary supplement touted as “the miracle product [diabetics have] been waiting for.” The company and its two principal officers claimed Nobetes lowered blood sugar and reduced the need for insulin. They even had a “doctor” endorse the product on TV.

The Federal Trade Commission (FTC) doesn’t believe in miracle products, however. The FTC’s complaint alleges that between 2015 and 2018, Nobetes Corporation and its officers marketed and sold Nobetes on television, radio, and social media in violation of Sections 5(a) and 12 of the FTC Act, which prohibit unfair or deceptive acts or practices and false advertisements for food, drugs, devices, services, or cosmetics. Among the unsubstantiated claims made in the ads were that Nobetes can “control blood sugar within normal levels” and “fill the nutritional shortages that diabetes causes.” The company failed to provide scientific evidence to support the claims, even after the Food and Drug Administration (FDA) warned the company in 2016 that it needed to back up such assertions with reliable scientific evidence.

In addition, one of the television ads used consumer testimonials from people who stated that they were able to reduce their insulin intake with Nobetes. The company failed, however, to disclose that the consumers featured in the ads were being compensated with free products in exchange for their testimonials and that the “doctor” endorsing Nobetes in the same ad was, in fact, a paid actor. This violates the FTC’s Endorsement and Testimonial Guides, which require that any connection between an advertiser and an endorser that might materially affect the weight or credibility of the endorsement be fully disclosed.

But wait, there’s more! Consumers were offered a two-for-one deal that required them to give a credit card number to only to cover shipping and handling costs of $6.95. Yet, according to the FTC, the company then used the credit card numbers to automatically enroll customers in a continuity program, charging a $29.95 monthly fee without their authorization.

The FTC charged the company and its officers with making unsubstantiated health claims, using fake “experts” to endorse the product, neglecting to disclose material connections between spokespersons and the company, failing to disclose the terms of “free trial” offers, and billing customers without their consent. Under the terms of the settlement order, the company is required to pay a fine of $182,000 and its officers are permanently barred from advertising or selling Nobetes or any other diabetes product. They are also prohibited from using false endorsements, making unsubstantiated health claims, billing consumers without their consent, and misrepresenting the terms of any free trial or other special offer.

The FTC has been active in enforcing the Endorsement and Testimonial Guides. Just last year, the agency sent out letters to 90 marketers and their influencers warning them of their obligation to clearly and conspicuously disclose their relationships when promoting or endorsing products through social media. The Nobetes settlement is a reminder for companies to familiarize themselves with the FTC’s rules, regulations, and guidelines when marketing their goods and services and ensure that any product claims are backed up by credible evidence.

 

© 2019 Keller and Heckman LLP

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About this Author

Sheila Millar, Keller Heckman, advertising lawyer, privacy attorney
Partner

Sheila A. Millar counsels corporate and association clients on advertising, privacy, product safety, and other public policy and regulatory compliance issues.

Ms. Millar advises clients on an array of advertising and marketing issues.  She represents clients in legislative, rulemaking and self-regulatory actions, advises on claims, and assists in developing and evaluating substantiation for claims. She also has extensive experience in privacy, data security and cybersecurity matters.  She helps clients develop website and app privacy policies,...

202-434-4646
Tracy Marshall, Keller Heckman, regulatory attorney, for-profit company lawyer
Partner

Tracy Marshall assists clients with a range of business and regulatory matters.

In the business and transactional area, Ms. Marshall advises for-profit and non-profit clients on corporate organization, operations, and governance matters, and assists clients with structuring and negotiating a variety of transactions, including purchase and sale, marketing, outsourcing, and e-commerce agreements.

In the privacy, data security, and advertising areas, she helps clients comply with privacy, data security, and consumer protection laws, including laws governing telemarketing and commercial e-mail messages, contests and sweepstakes, endorsements and testimonials, marketing to children, and data breach notification. Ms. Marshall also helps clients establish best practices for collecting, storing, sharing, and disposing of data, and manage outsourcing arrangements and transborder data flows. In addition, she assists with drafting and implementing internal privacy, data security, and breach notification policies, as well as public privacy policies and website terms and conditions.

As to intellectual property matters, Ms. Marshall helps clients protect their copyrights and trademarks through registration, enforcement actions, and licensing agreements.

She also represents clients in proceedings before the Federal Communications Commission and Federal Trade Commission.

Ms. Marshall is a Certified Information Privacy Professional (CIPP/US) through the International Association of Privacy Professionals (IAPP) and a contributing author of Beyond Telecom Law Blog and Consumer Protection Connection.

Education: Washington and Lee University (B.A., 1997); American University, Washington College of Law (J.D., 2002).

Admissions: District of Columbia; Maryland

Memberships: American Bar Association

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