In brief

Companies that use paid endorsers or review sites in their advertising and marketing will want to review the validity of their product or service claims, following a Federal Trade Commission (FTC) lawsuit against a wellness brand, resulting in more than USD 536,000 in refunds to consumers deceived by false claims, fake endorsements, and deceptive advertisements.

On November 7, 2024, the FTC announced it will be sending refunds to 536,000 consumers deceived by Rejuvica’s and its owners’ unsupported claims that Sobrenix, a dietary supplement marketed and sold by Rejuvica, could reduce and eliminate alcohol cravings and consumption. In addition to the refunds, the FTC’s proposed order requests a permanent injunction and other relief due to violations under the FTC Act and the Opioid Addiction Recovery Fraud Prevention Act of 2018 (OARFPA).

In depth

The FTC filed its complaint on July 18, 2023, alleging that the defendants made numerous unsubstantiated and false claims about Sobrenix, used paid endorsers in deceptively formatted advertising, and published bogus review sites to deceive consumers about their products. As a result of the FTC’s suit, the defendants agreed to a proposed order that permanently bans them from making any unsubstantiated claims about health products or services and requires them to pay USD 650,000 to the FTC to refund consumers.

Section 12 of the FTC Act prohibits the dissemination of any false advertisement in or affecting commerce for the purpose of inducing, or which is likely to induce, the purchase of food, drugs, devices, services, or cosmetics. The OARFPA Act prohibits unfair or deceptive acts or practices specifically with respect to any substance use disorder treatment service or substance use disorder treatment product. The OARFPA Act applies to Sobrenix due to the defendants having marketed it as a substance use disorder treatment product.

The FTC alleged the defendants ran afoul of both the FTC and OARFPA Acts in respect of each of the charges below:

• Deceptive Alcohol Cravings and Consumption Claims: The FTC alleged that Rejuvica and its owners violated both Acts by making false or misleading representations that Sobrenix: a) Reduces or eliminates cravings for alcohol; b) Enables users to substantially reduce or eliminate their consumption of alcohol; c) Assists users to regain control of their problematic drinking; and d) Treats alcohol use disorder or the symptoms of alcohol use disorder. In alleged violation of the FTC and the OARFPA Act, defendants represented that Sobrenix was proven to reduce alcohol cravings and consumption when, in reality, the defendants had no evidence to substantiate their claims.
• Deceptively Formatted Advertising: Defendants engaged in false advertisements by representing statements about Sobrenix that were actually paid advertising as independent opinions by impartial experts. This occurred during a television appearance featuring two public figure health experts discussing Sobrenix that was portrayed as objective news content on local television and news stations. Neither Rejuvica nor the public figures disclosed they were paid by Rejuvica, and Rejuvica highlighted these appearances in their marketing materials as “news” coverage.
• Deceptive Endorsements: The defendants represented that reviewing websites were independent organizations providing objective information when, in fact, the defendants themselves drafted the websites’ content and the products were not reviewed by anyone unconnected with Rejuvica. The review websites all contained identical badges stating the content was “expert review”, fictional names used by Rejuvica’s marketing staff, and content stating that Rejuvica product obtained the highest score of all products.

Key takeaways

The FTC is actively expanding its regulation authority over false claims, deceptive advertisements, and non-disclosures of endorsements. We have been tracking the FTC’s long-term and consistent focus on fake reviews, endorsement advertising, and healthcare influencer disclosures.

Companies, especially those with health-related products or services, will want to review their marketing practices to ensure that: 1) all influencers’ disclosures regarding their relationship to the company are clear and conspicuous; 2) all health claims are supported by competent and reliable scientific evidence; and 3) advertisements are truthful and not misleading.

If you have any questions about your advertisement and marketing programs, please contact your Baker McKenzie attorney or the authors below.