The Federal Trade Commission takes consumer protection seriously. Recently, the FTC filed a complaint against Teami, LLC and its owners alleging the business made claims about their product without reliable scientific evidence. In addition, the marketing was a deceptive failure to disclose material connections. The complaint may seem to include many trivial facts but, government penalties are very serious.
Summary
- Substantiate product claims.
- Disclose connections between the business and the influencer.
- Disclosures in social media posts should be above the “more” link.
FTC’s Complaint
Count 1
The FTC claims the company made false or unsubstantiated efficacy claims about their tea products. The claims include the Teami Profit Tea 1) treats cancer; 2) significantly reduces serum cholesterol and unclogs arteries; and 3) significantly decreases migraines, prevents and treats colds and prevents flus.
In addition, the complaint includes claims regarding the Teami 30 Day Detox including 1) users lose an average of five to twenty pounds every time they do the thirty-day detox; 2) only have to drink the tea to experience substantial weight loss; 3) causes rapid and substantial weight loss; and 4) burns body fat.
Count 2
The FTC claims the company acted through a deceptive failure to disclose material connection. The complaint states Teami failed to disclose adequately to consumers that the influencers were paid to endorse the Teami products. Such facts would be material to consumers in evaluating the endorsements of the products in connection with a purchase or use decision.
Takeaway
Count 1
Although there are some rules about “puffery,” a product claim should be substantiated at the time the representation was made. In the case above, there should have been enough research done by the company to provide to the FTC the claims are not false or misleading. If a business cannot substantiate the claim, the business should remove the claims all together.
Bringing product claims to an attorney with experience dealing with the FTC may sound like a hassle, however, it will definitely help in the long run after you hear the settlement amounts below.
Count 2
The FTC has provided information for influencers to explain how disclosures should be made. Particularly in the case above, the FTC reminded Teami that material connections between endorsers and advertisers (including payments) should be clearly and conspicuously disclosed. The FTC even stated “clear and conspicuous” means the disclosures should use unambiguous language that the consumer would easily notice and understand. In addition, endorsers should disclose any material connection above the “more” link in social media posts.
Following FTC guidelines posted on their website will help avoid many issues. Seeking an attorney to do a quick review is, again, going to definitely help in the long run.
FTC Judgement
The case ended with a $15.2 million judgement. The judgement will be partially suspended upon the payment of $1 million.