Although regulatory actions regarding cosmetics products generally involve the finished product cosmetics manufacturer or marketer, scrutiny in other industries by the FDA, the FTC, and the National Advertising Division (“NAD”) against suppliers provides a valuable warning. In particular, although a supplier is generally not the entity advertising directly to the consumer purchasing a cosmetics product, recent regulatory actions show that claims by ingredients suppliers must meet the same level of scrutiny as the finished products being presented to consumers at the retail shelf. Suppliers, manufacturers, and marketers are responsible for checking the facts first. Blindly relying on upstream supplier claims can lead not only to regulatory action, but also indemnity claims resulting from consumer lawsuits. Marketers, manufacturers, and suppliers should seek and examine the underlying substantiation and take reasonable steps to confirm the data is reliable.
For example, in September 2014, the FTC announced a settlement of an action against the supplier of GCA®, also known as Green Coffee Antioxidant, a green coffee bean extract used in dietary supplements and foods. In the complaint against Applied Food Sciences (“AFS”), the FTC alleged that the entity sponsored a “seriously flawed human clinical trial” and its “susbsequent dissemination to trade customers of false and unsubstantiated weight-loss claims based on that trial… provided trade customers with the means and instrumentalities to deceive consumers by repeating those same false and unsubstantiated weight-loss claims in marketing dietary supplements or foods containing GCA.” According to the complaint:
(1) altered the weights and other key measurements of the subjects; (2) changed the length of the trial; and (3) confused which subjects took either the placebo or GCA at various points during the trial. When the principal investigator failed to find a publisher for his summary of the purported trial, AFS hired ghost-writers, who – like AFS – themselves received numerous, conflicting data sets from the principal investigator, but accepted the final version as correct.
Despite these serious, and quite obvious flaws, AFS used the conclusion from the study to advertise the purported efficacy of GCA to make baseless weight-loss claims and, subsequently, its trade customers used those same materials to market their products to consumers. The stipulated order announced in September prohibits AFS from misrepresenting any aspect of a test or study and from providing anyone else with the means of falsely advertising, labeling, promoting, or using purported substantiation materials in marketing materials. Also, AFS was required to pay $3.5 million.
Takeaway…As cosmetics brands seek to promote the efficacy of products with clinical studies and lofty claims, they must be cognizant of the risks associated with blindly accepting claims and vague substantiation materials. Instead, manufacturers and marketers should use reasonable due diligence to confirm the facts support the claims they are making, and look beyond the glossy marketing materials and sales pitches to discern whether the truth is what it appears to be.