food advertising, labeling & marketing: ftc, fda & nad current … advertising... ·...

Food Advertising, Labeling & Marketing: FTC, FDA & NAD Current Developments

Panel

Lesley Fair Senior Attorney Federal Trade Commission Bureau of Consumer Protection Caren Fitzgerald Vice President, Assistant General Counsel SpartanNash Charlie Hooper Principal Young & Laramore

Scott Xi Managing Attorney The Schwan Food Company Richard Wegener – Moderator Counsel Faegre Baker Daniels

Agenda

I. FTC Developments II. FDA “Natural” and “GMO” Claims III. NAD Selected Issues IV. What Does This Mean? An Advertising Executive Reacts V. Questions

FTC Developments – Ms. Fair

Recent FTC Enforcement Priorities

HEALTH CLAIMS IN

ADVERTISING

GREEN MARKETING

SOCIAL MEDIA AND

CONSUMER CONTENT

CONSUMER PRIVACY

AND DATA SECURITY

Health Claims

POM Wonderful v. FTC, 777 F. 3d 478 (D.C. Cir. 2015)

To substantiate their claims, advertisers need:

At minimum, the level of science the advertiser claims or implies in the ad

If there’s no establishment claim, “competent and

reliable scientific evidence,” which – depending on the

claim – may require randomized clinical testing

OR

What is “competent is reliable scientific testing?”

1 That are generally accepted in the profession to yield accurate and reliable results

2

tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons

that are generally accepted in the profession to yield accurate and reliable results

and are sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields

when considered in light of the entire body of relevant and reliable scientific evidence

3 4

Health Claims

SELL BUT DRUGS

POM Wonderful v. FTC, 777 F. 3d 478 (D.C. Cir. 2015)

Petitioners contend that it is too onerous to require RCTs to substantiate disease-related claims about food products because of practical, ethical, and economic constraints on RCT testing in that context. The Commission was unpersuaded by that argument, and so are we.

L’Oreal USA (consent order)

Health Claims

Health Claims

FTC v. Sensa Products, LLC, Adam Goldenberg, and Dr. Alan R. Hirsch (stipulated judgment)

Health Claims

FTC v. NourishLife (stipulated order)

Health Claims

i-Health and Martek (consent order); FTC v. Brain Research Labs (stipulated order); FTC v. Lumos Labs (stipulated order)

FTC v. Gerber Products Co. d/b/a Nestlé Nutrition (complaint pending)

Health Claims


GREEN MARKETING

Green Marketing

Nice-Pak Products, Inc. (consent order)

Green Marketing

ABS Consumer Products (consent order) Beyond Coastal (consent order) The Erickson Marketing Group (consent order) Trans-India Products (consent order) California Naturel (complaint filed)

Green Marketing

FTC v. Volkswagen of America (complaint filed)


SOCIAL MEDIA AND

CONSUMER CONTENT

Thumbs UP #GAMECHANGER –

check out the new PlayStation Vita

PS Vita [ruling] the world. Learn about it! playstation.com/psvita/ #GAMECHANGER

This is sick. See the new PS Vita in action. The gaming #GameChanger

Deutsch LA (consent order)

Got the chance to get my hands on a PS Vita and I'm amazed how great the graphics are. It’s definitely a #gamechanger!

Social Media and Consumer Content

One thing can be said about PlayStation Vita. It’s a #gamechanger

When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), the connection must be fully disclosed.

FTC Endorsement Guides

16 C.F.R. § 255

Disclosures

CLEAR AND CONSPICUOUS

If the disclosure of information is necessary to prevent deception, it must be

Lord & Taylor (proposed consent order)


Lord & Taylor (proposed consent order)

AmeriFreight (consent order)


To qualify for $50 “instant discount” • “I agree to leave a fair review within seven days of delivery.” • “Errors and/or damage caused by carriers should not be

considered in the review.” • “AmeriFreight reserves the right to retrospectively . . . charge

the credit card on record in case a customer fails to leave the review within the terms of this agreement.”

• “Every month the review with the most captivating subject line and best content will receive $100. . . . So be creative and try to make your review stand out for viewers to read!”

Non-Disparagement Clause You agree that regardless of your personal experience with RL, you will not disparage RL and/or any of its employees, products, or services. This means that you will not speak, publish, cause to be published, print, review, blog, or otherwise write negatively about RL, or its products or employees in any way . . . . If you breach this Agreement, as determined by RL in its sole discretion, all discounts will be waived and you agree to pay the full price for our product.

FTC v. Roca Labs (complaint filed)



CONSUMER PRIVACY

AND DATA SECURITY

Data Security and Consumer Privacy

Third Circuit: Wyndham [argues] that if the FTC unfairness authority extends to Wyndham’s conduct, the FTC also has the authority to ‘regulate the locks on hotel room doors, to require every store in the land to post an armed guard at the door, and to sue supermarkets that are sloppy about sweeping up banana peels. The argument is alarmist to say the least. And it invites the tart retort that were Wyndham a supermarket, leaving so many banana peels all over the place that 619,000 customers fall hardly suggests it should be immune from liability under Section 5.


FTC v. Wyndham, 799 F.3d 235 (3d Cir. 2015)

business.ftc.gov

FDA “Natural” and “GMO” Claims Ms. Fitzgerald

“Natural’ Claims

FDA & “Natural”

►Has so far declined to define “natural” across the board ►1991-1993

► Declined to define “natural” after requesting comments ► Cited resource limitations and other agency priorities1

►2006-2007 ► Declined to act on citizen petition requesting rulemaking

►2010 ► Declined to act on referrals from Federal District Courts

1. 56 Fed. Reg. 60421, 60466-60467 (Nov. 27, 1991)

FDA Current Position

►Current Position ► Definition of “natural flavor”1

►Informal Policy on Natural Claims:

► “The agency will maintain its policy regarding the use of ‘natural,’ as meaning that nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in the food”2

1. 21 CFR §101.22(a)(3). 2. 2. 58 Fed. Reg. 2302, 2407 (Jan. 6, 1993).

FDA Sought Comments on “Natural”

►FDA announced last Fall that it was soliciting public comments concerning “natural” in food labeling

►Comments invited on 4 key issues: ► Whether its appropriate to define “natural”? ► If so, how should the FDA define it? ► How should the FDA determine its use on food labels? ► Should products that contain GMO’s qualify as “natural”?

►Extended comment period closed May 10

Will The FDA’s Position Change?

“Non-GMO” Claims

FDA’s Position

►No labeling requirement for genetically modified foods

►BUT, no GMO food should disclose material facts if significantly different from traditional food in terms of ► nutrition ► food safety ► functional properties

► In all other cases, label statement is voluntary (See FDA Draft

Guidance for Industry: Voluntary Labeling Indicating Whether Foods Have or Have Not Been Developed Using Bioengineering)

The States’ Landscape Is More Confusing

What Will Congress Do?

Whole Foods

Whole Foods will require vendors to disclose GMO status by 2018

NAD SELECTED ISSUES Mr. Xi

How The NAD Process Works

►Complaint letter written by the “challenger” ► Identify the advertising and set forth why claims are false or

misleading ► Include relevant evidence such as product testing or evidence of

consumer perception ►Two rounds of evidence submitted ►No formal discovery; but NAD will ask for claims substantiation ►Meetings with NAD ►NAD decision ►Overall – less expensive and “quicker” than false advertising

litigation

Compliments Federal Regulatory Authority

NAD Examples

►Decisions compliment federal regulations

►Taste & preference claims

►Are distributors “advertisers” for labeling claims?

“Fresh” Claims

FDA policy appears at 21 C.F.R. § 101.95:

►Food not subject to freezing, thermal processing, or any kind of chemical processing

►Applies if suggestion that food is not processes or preserved ►Claim for “fresh” ingredients is handled on a case-by-case basis ►“Fresh Frozen” / “Frozen Fresh” can be used when food is quickly

frozen while still fresh or recently harvested ►“Freshly Made / Prepared” can be used when recently made from a

recipe ►“Freshly Baked / Roasted” will be judged on a case-by-case basis

Taste & Preference Claims

►“Apples to Oranges” Comparisons, ConAgra, NAD (2012) ► Three Meat & Four ► Cheese vs. Meat & ► Sauce Lasagna ► 31 oz. vs. 19 oz. ► Line claim? ► Disclosures

Are Distributors “Advertisers” For Labeling Claims?

►NAD holds distributors responsible for manufacturer’s labeling claims. Takara Int’l., NAD 2015

►Claims: ► “Traditional Butter Cookies” ► “Original Danish Recipe” ► “Produced & Packed in Denmark” ► “Visual of Danish Royal Crown” ► “Butter and Non-Butter Fat Ingredients”

Takari International Implications

►Distributor can be an “advertiser” simply by selling a product still wrapped in its original packaging

►Distributor should be cognizant of all claims found on the product’s packaging; i.e., distributor must examine and confirm each statement made by the manufacturer and/or obtain indemnification from the manufacturer

► Bottom line – decision presents real compliance problems

WHAT DOES THIS MEAN? AN ADVERTISING EXECUTIVE REACTS Mr. Hopper

Questions

Lesley Fair Senior Attorney Federal Trade Commission Bureau of Consumer Protection Caren Fitzgerald Vice President, Assistant General Counsel SpartanNash Charlie Hooper Principal Young & Laramore

Scott Xi Managing Attorney The Schwan Food Company Richard Wegener – Moderator Counsel Faegre Baker Daniels

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