Over the past seven months, and just as recently as three weeks ago, the Federal Trade Commission (“FTC”) has released several warning letters to businesses selling CBD products. These letters concern the FTC’s review of potential violations of the Federal Trade Commission Act of 1914, §§ 41-58, as amended, (the “FTC Act”) made in websites and marketing materials of CBD-related businesses. Participants throughout the CBD industry may take prudence in reviewing not only these health claims called to question by the FTC, but also by how these other industry participants have responded to the FTC’s warning letters.
The FTC and the CRS Evidence Standard
The FTC is an independent federal agency centered on maintaining marketplace competition that benefits both businesses and consumers. The FTC identifies its purpose as, “seek[ing] to protect consumers by enforcing laws and rules that promote truth in advertising and fair business practices, and by educating consumers and businesses about their rights and responsibilities.” FTC Warning Letter to 4Bush Holdings, LLC, dated September 9, 2019.
In its warning letters, the FTC expressed concerns with companies “making false or unsubstantiated advertising claims about the health benefits of products containing cannabidiol (CBD).” The FTC notes that these advertising claims cited by the FTC potentially violate Section 5(a) of the FTC Act, which prohibits unfair or deceptive advertising. Specifically, the FTC Act prohibits businesses from stating in its marketing materials that a product, and as relevant here, a CBD product, provides a prevention, treatment, or cure of a human disease unless such business has “competent and reliable scientific evidence, including, when appropriate, well-controlled human clinical studies substantiating that the claims are true at the time they are made” (“CRS Evidence”). CRS Evidence is required for traditional advertising through the use of a company’s website, product name or metatags, as well as for consumer endorsements or testimonials; even if such testimonial represents the consumer’s honest opinion.
What Type of Advertising and Health-Related Claims Are Being Cited?
- Website Reviews
In its warning letters, the FTC has relied on its reviews of businesses’ websites, including social media accounts for statements made regarding the use of CBD for certain human diseases. For example, the FTC has recently cited the following from www.magicgreenoildrops.com:
CBD has now been clinically proven to:
* * *
Reduce social anxiety, cognitive impairment, and discomfort in patients
diagnosed with Generalized Social Anxiety Disorder (SAD)
Decrease cancer spread by “turning off’ genes involved in tumor development
Combat neurodegenerative disorders like Alzheimer’s by removing plaque that
Reduces cigarette addiction by modulating the rewarding the effects of nicotine
[R]estore respiratory stability to those experiencing sleep Apnea
Clears acne by inhibiting lipid synthesis on the skin
Regulates blood sugar and lowers insulin resistance
Provide relief to those suffering from IBD (Chron’s [sic] or Colitis) through its
Improves symptoms of MS (multiple sclerosis) by providing durable protection to
- Customer Testimonials
The FTC has also flagged statements made by customer testimonials, such as:
Rated 5 out of 5
Adria (verified owner)- July 12, 2019
This cream is wonderful and has really helped my arthritis
1:1 CBD Pam Cream – 1000mg CBD 2 Oz
Rated 5 out of 5
Peter Prinsen (verified owner)- June 24, 2019
I have arthritis in both feet and after using the 1000 mg product for a few days got significant relief
from the pain. Orthotics has helped a little but nothing has helped as much as the cream.
CBD Pam Cream – 1000mg CBD 2 Oz
- Citations of studies
Further, industry participants should be wary of statements made concerning studies, as citation of their findings may not be enough to qualify as CSR Evidence. For example, the FTC has cited the following as a potential violation:
- “A 2015 study found that CBD may be neuprotective [sic] in adult and neonatal ischemia, brain trauma, Alzheimer’s disease, Parkinson’s disease, Huntington’s chorea, and amyotrophic lateral sclerosis (Lou Gehrig’s disease).”
In light of the FTC’s stance presented through its various warning letters related to CBD products, industry participants should carefully review their own websites, customer testimonials and other marketing materials for compliance with the CSR Evidence standard and the FTC’s warning letters. For example, many of the respondents of the warning letters have consistently removed words such as “treatment” and references to diseases. This is true not only for their online materials but also their non-public facing and offline materials as well. Detailed review of the responses and statements of action made by businesses subject to the warning letters may serve useful as a starting point as industry participants begin to generate compliance policies and procedures to avoid FTC attention.