Aggressive Consumer Protection Enforcement

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The current Federal Trade Commission (FTC) is very focused on aggressive enforcement of the consumer protection laws. It has announced particular emphasis on enforcement actions against marketers that utilize deceptive or misleading health-related claims. On October 21, 2010, the First Circuit Court of Appeals upheld a district court decision finding Defendants, marketers of popular dietary supplements, liable for deceptive advertising and ordering them to disgorge more than $48.7 million in profits. The FTC’s complaint alleged that Defendants had no “reasonable basis” to support the health-related claims in their infomercials.

The First Circuit’s decision is a ringing endorsement of, and buttresses, the Commission’s hard-nosed approach in this area. Now armed with an appellate affirmance of several important points, despite the recent election results that might suggest otherwise, one would expect this enforcement program to continue unabated. The Court affirmed the legal standard proffered by the FTC, which only requires the FTC to show that a claim lacks adequate substantiation, not that the claim is “actually false.” The Court also endorsed the FTC’s rigorous evidentiary approach, requiring defendants to have some “scientific evidence” to support their claims. And finally, the Court held that damages can be based upon defendants’ gross receipts rather than their actual profits, which significantly increased the award of damages in this case.

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Mintz Levin on:

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