International Law

Oregano Supplement Marketers Advertising Fraud

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In the coming years, we are going to see some serious battles over claims by health supplement marketers.

The current state of advertising supplements and making medical health claims is summarized in this FTC press release.

"The marketers of a line of dietary supplements have agreed to pay $2.5 million to settle Federal Trade Commission charges that claims about their oregano oil and capsules were false and unsubstantiated in violation of federal law.

According to the FTC's complaint, North American Herb & Spice Co., LLC, and its owner, Judy Kay Gray, falsely claimed that Oreganol P73, Super Strength Oreganol P73, and Oregacyn (currently sold as OregaRESP) are scientifically proven to prevent or treat colds and flu.

The defendants also claimed that the products boost the immune system and kill a variety of germs and pathogens, including cold and flu viruses, avian bird flu virus, hepatitis C, Staphylococcus aureus, Helicobacter pylori, mold, parasites, and yeasts.

Sold at prices ranging from $29.99 to $69.99, the products purportedly contain P73, which is described as wild, handpicked Mediterranean oregano.

The products were advertised on Web sites, including www.p-73.com, and in magazines such as Alternative Medicine, H2O, Health Supplement Retailer, and Women's Health & Fitness.

The final order imposes a $2.5 million judgment and places restrictions on the defendants' future conduct.

It prohibits them from claiming that their products prevent or treat colds or flu, are clinically tested or scientifically proven to be effective, or have other health or safety benefits, unless the claims are true, not misleading, and based on reliable scientific evidence.

In addition, the defendants are banned from misrepresenting the existence, validity, results, or conclusions of any test or study. The order also contains standard record-keeping provisions to allow the FTC to monitor compliance."

The main difficulty with the conceptual legal underpinnings of these type of judgments is the increasing sophisticated investigation into effective placebos.

The scientific work is increasingly showing that for a placebo to be effective, representations about it have to be false, and helps that the placebo is expensive and not cheap.

From Baba Shiv, Ziv Carmon, Dan Ariely (2005) on price and the placebo effect:

"In three experiments, the authors show that consumers who pay a discounted price for a product (e.g., an energy drink thought to increase mental acuity) may derive less actual benefit from consuming this product (e.g., they are able to solve fewer puzzles) than consumers who purchase and consume the exact same product but pay its regular price."

If further scientific research bears this out, it will stand in direct contrast to one of the main tenets in the FTC case against Q-Ray Bracelet.

"The court also ruled that the claims were not supported even if some studies showed that the bracelets had a placebo effect, noting that, for a placebo to work, "the consumer must be duped" and that "the advertiser must trick the customer into believing that an inherently ineffective bracelet actually relieves pain."

Yes, that is right - for a placebo to be effective, the consumer must be effectively duped, pay a large price, and lo and behold the ineffective inert compound mixed in with right efficacious beliefs turns in a miracle.

Full post as published by Misleading Advertising Law on August 12, 2008 (boomark / email).