Regulation

Cactus drink marketer to pay $3.5 million to settle FTC false advertising claims

16-Jul-2014
Last updated on 16-Jul-2014 at 18:26 GMT - By Hank Schultz
Cactus drink marketer to pay $3.5 million to settle FTC false advertising claims
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The marketers of a cactus drink have agreed to pay $3.5 million to settle false advertising charges brought by the Federal Trade Commission. Such charges could be levied against many companies, said Denver-based attorney Justin Prochnow.

In this most recent case, TriVita, the company that markets a 32-ounce drink called Nopalea that is based on the Nopal cactus native to the Sonoran Desert, was alleged to have touted the drink on its websites as  "Inflammation Relief without a Prescription." The defendants' infomercials featuring celebrity endorser and former supermodel Cheryl Tiegs, market Nopalea as an "anti-inflammatory wellness drink" that relieves pain, reduces and relieves joint and muscle swelling, improves breathing and alleviates respiratory problems, and relieves skin conditions.  

Trivita's former chief science officer, Brazos Minshew, also appears in the infomercials and links inflammation to allergies, Alzheimer's disease, heart disease and diabetes.  He notes in one of the infomercials that "over 200 articles published and archived at the National Institutes of Health demonstrate one thing: the Nopal cactus will reduce inflammation."  The infomercials also feature testimonials by satisfied consumers who are actually paid employees of defendants, according to the complaint.

Consumer refunds

In the settlement, TriVita will pay $3.5 million in consumer refunds to settle the false advertising claims.  The list price for the company’s 32-oz beverage is $39.99.

According to FTC, the company violated Sections 5 and 12 of the FTC Act by:

 • making unsupported claims that Nopalea significantly improves breathing and relieves sinus infections and other respiratory conditions, and provides significant relief from pain, swelling of the joints and muscles, and psoriasis and other skin conditions.

 • making false claims that the health benefits of Nopalea were proven by clinical studies.

 • failing to disclose that supposedly ordinary consumer endorsers were in fact TriVita sales people who received commissions for selling the defendants' products.

Plenty of enforcement targets

“In the supplement industry these kinds of settlements happen a couple of times a year. There was that high profile case  a while back where the FTC shut down a series of acai weight loss websites,” Prochnow told NutraIngredients-USA.

Even with the big settlement with TriVita under its belt, there is a lot more the agency could be doing to police the industry, Prochnow said.  There is no shortage of companies willing to push the claims envelope or even to willingly step over the line.

“If you listen to my clients, the ratio of companies making false claims to those following the rules is way more than 10 to 1. I often hear from clients, what do you mean I can’t say that? I can go on the Internet and find any number websites that say the same thing.

“I tell them, I can only tell you what the speed limit is. It’s up to you to decide how fast you want to drive. Unfortunately, FTC doesn’t have enough radar guns,” he said.

Adequate substantiation

FTC is looking for what it considers to be adequate substantiation in the form of clinical data to back up any claim that is made.  The agency is not policing whether those claims comply with the category under which a product is marketed.  In other words, if a company were making a disease treatment claim on a dietary supplement, it might get into trouble with FDA but if it had adequate data to back the claim, it could be good to go with FTC.

“You saw that in the POM vs FTC case,” Prochnow said. “It’s not in the FTC’s jurisdiction to police whether it is a legitimate claim given the product category.  The fact that POM was making inflammation claims or arthritis claims was irrelevant to FTC’s decision.

"In general, when you are making claims for a wide variety of conditions, the more likely it is that you will come to FTC's attention. The agency would view a company that is marketing a cure all as one that might lack substantiation for those claims," he said.

Material connection

In addition to a lack of data to back up the drink’s purported health benefits, FTC took the company to task for the way it used testimonials in its advertising.  As a matter of law, Cheryl Tiegs does not have to disclose specifically that she was paid for her efforts;  it can be assumed that celebrity endorsers are compensated for the use of their images. But celebrities are supposed to believe the claims they make for products, Prochnow said.

It’s different with man-on-the-street type testimonials, he said.

“A company is free to use a testimonial from an employee, but you have to disclose that connection. You see this a lot when someone gets their brother-in-law, or a member of the board, to do a testimonial.  FTC’s point of view is that the consumers should have that information about the connection in order to decide how much weight to give that testimonial,” Prochnow said.

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