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FTC SUPPLEMENT CLAMP-DOWN TARGETS BOTH RETAILER AND SUPPLIER

By Lorraine Heller, 15-Jul-2009

The Federal Trade Commission (FTC) has charged both the retailer Rite Aid and its supplier for the deceptive marketing of dietary supplement products, providing a clear indication that the watchdog is ready to clamp down on all parties involved in false advertising.

FTC this week announced that the national pharmacy chain Rite Aid will pay $500,000 to settle charges for the deceptive advertising of its ‘Germ Defense’ supplements as able to prevent, treat or reduce the severity of colds and the flu.

At the same time, the advertising regulator has also charged Rite Aid’s supplier of the product, Improvita Health Products, with false and deceptive advertising in an ongoing case.
According to an FTC representative, the commission has changed its historic posture of only pursuing business-to-consumer deception and false advertising.

“FTC now will be aggressively pursuing business-to-business cases where the supplier of a raw material, a private label finished product who also provides certificates of analysis, ingredient specs, advertising, promotional or other substantiation will be held to the same standards as companies that advertise directly to consumers,” he reportedly told Loren Israelsen, executive director of trade group United Natural Products Alliance (UNPA).

Immune focus
Rite Aid and Improvita had marketed Germ Defense lozenges and tablets as dietary supplements that contained vitamins C and E, zinc, and echinacea. FTC’s complaints against the companies noted that the products claimed to: Reduce the risk of or prevent colds and flu; protect against or fight germs; reduce the severity or duration of a cold; protect against colds and flu in crowded places; and boost the immune system.

FTC charged that there is “inadequate evidence” to support these claims.
The current case provides additional evidence that FTC – which regulates product advertising – has immunity claims on its enforcement radar, as does the Food and Drug Administration, which regulates product label claims.

Lookalikes
It also indicates that FTC is “going after lookalike products”, according to Israelsen.
Rite Aid marketed the Germ Defense products by touting their similarity to products marketed by Airborne Health, which were sold as a cold prevention and treatment remedy. Airborne settled similar deceptive advertising charges with FTC last year.

As well as paying $500,000 for consumer redress, Rite Aid must also post a refund notice in a “clear and conspicuous” location in the cold-and-flu aisle at each of its stores for 60 days beginning on October 1, 2009.

FTC also filed a complaint against Improvita and two if its principles for “deceptive acts or practices” and with “making false advertisements”. Improvita allegedly supplied the Germ Defense products to Rite Aid and other retailers, and provided advertising, packaging, and promotional materials containing the unsubstantiated claims.

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