Antitrust Law Source

National Advertising Division recommends that Shark Tank product discontinue representations

The National Advertising Division (NAD), a voluntary advertising self-regulatory body administered by the Better Business Bureau, just dealt a major blow to the Pavlok Aversion Therapy wristband by recommending that it discontinue numerous unsupported claims as a violation of false advertising laws. Pavlok has said it will accept the recommendations.

Pavlok, a product by the Behavioral Technology Group, first entered the public’s general consciousness after being featured on “Shark Tank” this past May. (It did not get a deal, and involved a rather testy exchange between show stalwarts Kevin O’Leary and Mark Cuban, and the contestant.) In essence, Pavlok is a wristband that, with the press of a button, delivers an electric shock to the wearer. The product is based on behavioral conditioning first demonstrated by Ivan Pavlov (hence the product’s name). The theory is that if the wearer voluntarily delivers an electric shock to himself whenever he engages in a habit he wants to break (consuming sugar, smoking, nail-biting, etc.), then eventually he will associate the habit with a shock and will subconsciously stop the habit. Continue Reading

National Advertising Division confirms: Make sure your testimonials have evidentiary support

Many health and fitness companies know that federal and state laws prohibit unfair or deceptive practices, including false advertising. But many still have the mistaken impression that they can freely post testimonials from their products’ users without running afoul of false advertising laws. After all, the thought goes, the company is merely relaying its customers’ opinions and experiences, not making general statements of a product’s effects.

Although facially plausible, this view is not consistent with false advertising law. By way of background, Section 12 of the Federal Trade Commission Act prohibits “false advertisement” for food, drugs, devices, services, or cosmetics. “False advertisement” is defined as an advertisement that is “misleading in a material respect.” 15 U.S.C. 55(a)(1). “Misleading” includes not only misrepresenting a product, but making claims about a product that are not supported by credible evidence. This is especially true of health claims, where federal law requires supporting “competent and reliable” scientific evidence.

These same standards apply to testimonials; an endorsement or testimonial cannot convey an express or implied representation that the advertiser itself could not make. 16 C.F.R. 255.1(a). More colloquially, an advertiser cannot make unsubstantiated claims by hiding behind testimonials making the same claims. If the advertiser has no competent and reliable scientific evidence that its product cures cancer, it cannot publish a testimonial by John Doe stating that the product cured his cancer. Continue Reading

Still need a data breach response plan? The FTC offers a guide to help.

If you have not yet developed a data breach response plan, the FTC has stepped in to help. The FTC has prepared a guide, a short video and a corresponding segment on its business blog to help businesses prepare for data breach events. The guide and video provide key considerations, including having your computer forensic expert or team identified, steps to notify effected parties and law enforcement, and processes to remediate a breach event. The Guide also points to additional resources for breaches of electronic health information. Perhaps most helpful, the guide offers a simple template data breach notification letter that businesses can easily customize and have on file to help prepare themselves for a breach event. Continue Reading

FTC has ruled….and companies better beware!

In a move the surprised no one, the Federal Trade Commission (FTC) reversed the decision of its own Administrative Law Judge (ALJ) and held that LabMD’s “data security practices constitute an unfair act or practice within the meaning of Section 5 of the FTC Act.” There are two noteworthy aspects to the opinion. First, if the magnitude of the harm is great enough, the risk of its occurrence can be low and still satisfy the “substantial injury” requirement. Second, believe it or not, the word “likely” does not mean “probably.” Continue Reading