FTC Cracking Down and Issuing Fines for Misleading Claims by CBD Corporations

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FTC Cracking Down and Issuing Fines for Deceptive Claims by CBD Companies

On December 17, the FTC issued a press release announcing the first law enforcement action against misleading claims in the growing market for cannabidiol (CBD) products. According to the press release, some companies claimed their oils, balms, gums, coffee, and other goods could treat serious illnesses such as cancer and diabetes. We have written extensively on the FDA’s role in preventing health claims from CBD companies on their products, and covered the overlap between the FDA’s and FTC’s enforcement functions here.

The Federal Food, Drugs, and Cosmetics Act (“FDCA”) gives the FDA regulatory authority over product labeling and seeks to ensure that consumer products (foods, dietary supplements, cosmetics, tobacco products, and drugs) are not mislabelled, meaning that the labels do not Contain false and misleading statements. However, the role of the FTC under the Federal Trade Commission Act (“FTC Act”) is to regulate “advertising” in order to protect the public from unfair and misleading claims.

The overlap is obvious, but the distinction between packaging / labeling and advertising is not always clear. Some courts have expanded the powers of both the FDA and the FTC by interpreting the “label” to include products that are sold on the Internet, especially if the products are purchased directly from a website. This has led the two agencies to work together more closely on regulating the advertising of food and nutritional supplements, blurring the line between the end of authority of each agency and the beginning of authority of the other.

In this particular enforcement case, the FTC announced it would take action against six sellers of CBD-containing products for allegedly making a number of scientifically unsupported claims about their ability to treat serious health conditions such as cancer, heart disease, high blood pressure, Alzheimer’s disease, and others. In addition to each company’s obligation to immediately discontinue these unsupported health claims, companies must pay monetary judgments to the agency. The FTC complaint settlement orders “prohibit respondents from going forward similar misleading advertising and require that they have scientific evidence to substantiate any health claims made about CBD and other products.”

According to Andrew Smith, director of the FTC Consumer Protection Bureau:

The six settlements announced today send a clear message to the burgeoning CBD industry: Don’t make false health claims that aren’t backed by medicine. Otherwise, don’t be surprised if you hear from the FTC. This crackdown on CBD companies specifically seeks to protect consumers from false, misleading and misleading health claims made in advertisements on websites and via social media.

The six offenders involved in this approach are as follows:

  1. Utah-based Bionatrol Health, LLC, was selling CBD oil, claiming without explanation that its product “is safe for all users, treats pain better than prescription drugs like OxyContin, and prevents and treats age-related cognitive decline and chronic pain. ”
  2. Epichouse LLC (First Class Herbalist CBD), based in Utah, sold a variety of CBD products on its website. Epichouse “touted CBD as safe for all users, able to treat pain better than prescription drugs like OxyContin, and able to prevent a wide variety of serious conditions including cancer, diabetes, and heart disease.”
  3. CBD Meds, Inc., based in Winchester, California, promoted CBD oil on its website and on YouTube. Winchester “made a number of false or unfounded claims, including that CBD is effective in treating, preventing, or ameliorating serious diseases and conditions such as arterial blockage, cancer, glaucoma, autism and schizophrenia, among others.”
  4. HempmeCBD (EasyButter, LLC) sold a variety of CBD products, claiming its CBD products could treat or cure serious illnesses such as cancer-related symptoms, substance abuse, and AIDS.
  5. California-based Reef Industries, Inc., sold CBD products through its website and Twitter, making unsubstantiated claims that “CBD can prevent, cure, relieve, or treat diseases and serious health conditions such as Alzheimer’s, arthritis, and autoimmune diseases, and irritable bowel syndrome.
  6. Steve’s Distributing, LLC (Steve’s Goods) sold a variety of CBD and CBG goods through its website and social media, claiming that the products are “effective alternatives to prescription drugs and a wide range of diseases and serious illnesses, including Alzheimer’s , treat, cancer and diabetes.

We expect enforcement of this type to be a major topic from both the FTC and FDA in the coming year, and we urge all companies selling these types of products to consult an attorney to ensure that your Advertising and labeling complies with all applicable laws.

If you have any questions about what to say or not to say about a cannabis product, be it on a label, on social media or on any other platform, or if you have any questions about how, where or from whom these products can be purchased or sold, contact our team of regulatory and hemp CBD lawyers.