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January 26th, 2015
FTC Focuses on Search Terms in Settlement with Maker of Children’s Dietary Supplements
The FTC recently settled a children's dietary supplements complaint with NourishLife, LLC and its owner, Mark Nottoli. Among other things, NourishLife claimed that its supplements would help children with autism spectrum disorders or apraxia to develop healthy speech and language capacity. Under the settlement, the defendants agreed to stop making deceptive claims about their products, including those marketed and sold under the brand names "Speak" and "Speak Smooth." While the FTC focused on the content of the claims at issue - and imposed a fine of $3.68 million - its examination of the advertising search terms purchased by NourishLife was especially noteworthy.
According to the FTC's complaint, between 2008 and late 2013 NourishLife advertised that its "Speak" supplements were clinically proven to maintain and develop healthy speech and language abilities in children, including in children who have autism and other disorders. The FTC maintained that the company did not have competent and reliable scientific evidence to support these aggressive claims.
Search terms. But the FTC was not only concerned with NourishLife's lack of sufficient substantiation. The settlement order also focused on the way NourishLife delivered its claims. For example, in addition to addressing NourishLife's direct mail, brochure, point of sale and online advertising, the FTC's complaint focused on search terms purchased by NourishLife as part of a Google AdWords buy. According to the FTC, if consumers entered terms such as "toddler speech problems," "help my child talk," "verbal apraxia treatment," "autism treatment," "speech delay treatment," "child speech development," or "3 year old not talking" into Google's search engine, a sponsored link for Speak would appear at the top or the right-hand side of the search results. The FTC thus included the search terms in the list of the company's allegedly false and misleading representations.
Interestingly, NAD also recently concluded in a novel case involving search engine marketing that a travel site's paid search results could mislead consumers. There, the advertiser's paid search results included specific fare information that didn't correspond to, and was cheaper than, the price of the actual flights searched by the consumer.
Endorsements. According to the FTC, NourishLife's advertising included unsubstantiated testimonials from parents. The parents claimed that, after taking Speak products, their children were "speaking in more complex sentences," "were less gittery [sic], more focused" and that Speak products helped non-verbal children to talk. The FTC further alleged that NourishLife owned and operated a website, apraxiaresearch.com, which solicited parents to try NourishLife products in exchange for free supplements. According to the FTC, NourishLife never disclosed that parents were being compensated as part of this program, nor did they disclose their affiliation with the Apraxia Research website.
Monetary penalty. In addition to injunctive relief, compliance reporting requirements, a requirement that the company provide a customer list, and other relief, the FTC's settlement order also imposed a monetary fine of $3.68 million.
This case should remind advertisers that they should always have sufficient, competent and reliable scientific evidence for health claims - particularly those about brain function - and that "material connections" to endorsers must always be disclosed. The NourishLife and NAD travel site cases also highlight for advertisers that their paid search terms may be reviewed by regulators, competitors and self-regulators, and false or misleading claims contained in such terms may subject the company to liability. If you have questions about these cases, or about any other advertising compliance issues, please contact Terri Seligman at (212) 826 5580 or email@example.com, Hannah Taylor at (212) 705 4849 or firstname.lastname@example.org, or any other member of the Frankfurt Kurnit Advertising Group.
Other Advertising Law Alerts
New Low-Budget Waiver is Now Available for Digital Commercial Productions
Advertisers and agencies that are signatories to the SAG-AFTRA Commercials Contract can now take advantage of a new waiver issued by SAG-AFTRA and the Joint Policy Committee on Broadcast Talent Union Relations when producing low-budget digital commercials.
November 10 2017
FTC Updates Endorsement Guide FAQs and Settles First-Ever Action Against Individual “Influencers”
Recent developments demonstrate the FTC's continued interest in social media endorsements.
September 11 2017
FTC Announces Reforms to Its Investigative Process
Recently, the FTC announced a set of internal reforms intended to improve the process by which the Commission investigates unfair, deceptive and fraudulent business practices. The reforms relate to the Civil Investigative Demands ("CID") that the FTC's Bureau of Consumer Protection issues to request information from investigation targets.
September 7 2017