Self-Regulatory Bodies Send Cases to FTC

Advertising Law

Facing no response from advertisers, both the Digital Advertising Accountability Program (Accountability Program) and the Digital Selling Self-Regulatory Council (DSSRC) referred cases to the Federal Trade Commission (FTC) for regulatory review.

The Accountability Program reached out to mobile app developer PlantSnap, Inc., asking about its possible collection and use of data for interest-based advertising, specifically precise geolocation data. Although the self-regulatory body made “repeated inquiries,” the company failed to respond, necessitating a referral to the FTC.

“Our track record with companies has been overwhelmingly positive, with roughly 98 percent participation,” Jon Brescia, vice president of the Accountability Program, said in a statement. “Self-regulation relies on that kind of commitment—not just from the ad tech industry, but also from the publishers who interface directly with the end users.”

The referral is only the third made by the Accountability Program, with 107 public actions taken.

In the second case, the DSSRC requested substantiation for claims made by Aloe Veritas, Inc., a global multilevel direct selling company that offers wellness and skincare products. DSSRC targeted product and health claims disseminated on the social media pages of some of the Aloe Veritas direct sellers (referred to as “lifestyle coaches”) and found on the company’s website.

The lifestyle coaches’ claims included “I have been blown away by the results people are having with this all-natural, drug-free, opioid-free, steroids-free and NSAID-free therapeutic cream” and “Aloe vera leaf is a miraculous healing food that is one of the oldest healing remedies and natural antibiotics in the world. Taken internally, aloe works wonders for assimilation, circulation and elimination.”

On the company’s website, Aloe Veritas touted the earning capabilities of lifestyle coaches with claims such as “We give you the means to achieve an extraordinary level of success” and “It is completely up to you to decide how much profit you wish to make and which rung on the career ladder you wish to reach!”

Explaining that its lifestyle coaches are “passionate” about the company’s products, the advertiser said it reached out to coaches about the content highlighted by the DSSRC with a reminder about the company’s policy regarding product performance claims.

Aloe Veritas also said it planned to bolster its compliance by appointing a compliance officer, conducting ongoing corporate training, implementing an advertising and social media policy, adding a compliance section to the company’s weekly newsletter, and sending out notifications to lifestyle coaches that are in violation of company policies.

As for the earnings claims, the advertiser told the DSSRC that it never intended to convey a message that engaging in the direct selling of its products would yield a minimum level of income or lead to an extravagant or lavish lifestyle. To remedy the problem, Aloe Veritas said it would create an income disclosure policy and procedure document and implement ongoing training.

The DSSRC determined that it was necessary and appropriate that the express and implied product performance claims be removed from circulation and that the advertiser take steps to ensure that similar product and health claims are not disseminated in the future. It further recommended that the company include a clear and conspicuous disclosure indicating the typical earnings that could be expected by a reasonable consumer in connection with future earnings claims.

Despite its initial involvement in the process—and promises to make changes—Aloe Veritas failed to appeal the decision or provide a responsive statement indicating that it will comply with the DSSRC’s recommendations. As a result, the self-regulatory body referred the matter to the FTC for review.

To read the Accountability Program’s press release, click here.

Why it matters: Advertisers that fail to respond to the inquiries of self-regulatory bodies can find themselves facing additional oversight from government regulators. Companies should also ensure they are familiar with all of the procedures involved in the self-regulatory process. In the DSSRC case, the advertiser initially participated in the inquiry but then failed to provide a responsive statement about whether it would comply with the recommendations to modify or discontinue the claims at issue. The result: a referral to the FTC.



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