In This Issue:
- New York State Bill Aims To Take a Bite Out of Junk Food Ads for Kids
- FTC Alleges Growth Cave "Business Opportunity" Grew Nothing but False Advertising
- Ingredient Studies Do Not Substantiate Knee Pain Relief Health Claims for the Product, NAD Says
- NAD Has No Beef With Cattle Certification's "Best Practices" Claim
- NAD Turns Up the Heat on Hot Tub Claims
New York State Bill Aims To Take a Bite Out of Junk Food Ads for Kids
New York state lawmakers recently introduced a bill to restrict false and misleading advertising of "junk" food to children. They say the purpose of the bill is to protect kids from companies that target them with misleading marketing for certain types of foods—but broadly addresses food marketing generally to vulnerable consumers.
The Predatory Marketing Prevention Act would amend existing New York advertising law (as well as agriculture and public health law) to specifically restrict false marketing of unhealthy foods to kids under 18.
New York Senate Bill S397 and New York State Assembly Bill A2584 seek to amend the state's false advertising law—Section 350-a of the state's general business law—by requiring that "special consideration" should be given to ads directed at children when determining whether false advertising of food has occurred.
S397 would tie the determination of whether the claims are false advertising to a broad definition of the targeted consumer, defined as consumers reasonably unable to protect their interests because of age, illiteracy, inability to understand contractual language or similar factors, or the person acting on their behalf.
The bill also sets out factors courts should consider in determining whether the misleading food advertising is directed at kids or not, including the subject matter, visual content, use of bright colors or animated characters, music, the age of the models in the ad, the use of child-friendly celebrities, and buzzwords popular with kids.
It does not explicitly define "junk" food but rather targets all food advertising directed at children, although the legislative intent addresses the use of "saturated fatty acids, trans-fatty 4 acids, and free sugars" that are aimed in a "targeted and persistent manner" at children. This type of marketing is inherently misleading, say the bill's sponsors, "as children often lack the same ability to resist the rewarding cues presented in unhealthy food marketing as adults."
The bill faces strong opposition from New York broadcasters who have expressed concern about the impact it might have on broadcasters and their food advertisers. They argue that the bill goes further than the Federal Communications Commission (FCC) and Federal Trade Commission (FTC) definition of children as 12 and under. They also say that the bill actually proscribes food advertising for all, not just children. Finally, they argue the bill would change the objective standard for false advertising claims to a subjective standard based on the consumer's intellectual and cognitive abilities.
Key Takeaways
The bill, which follows a similar bill introduced in the prior session, is in the early stages of the legislative process, and it is difficult to say whether it will pass in its current form or any form. It is consistent with movement in other states, including bills introduced in Texas and West Virginia, which prohibit certain food additives due to the perceived health consequences associated with those ingredients. While all of these bills will face opposition and likely changes before or if they reach a vote, it's notable that traditionally liberal and conservative-leaning legislatures are targeting the food industry. 2025 seems likely to bring change in one form or another for a range of food products and companies.
FTC Alleges Growth Cave "Business Opportunity" Grew Nothing but False Advertising
Following a Federal Trade Commission (FTC) complaint, a California federal court has issued an injunction temporarily halting the operations of a company accused of making deceptive earnings claims about its online educational program teaching others to—what else?—make money teaching others how to run online educational programs.
According to the FTC, Growth Cave and its individual owners and officers charged potential businesses owners about $50 million to participate in Growth Cave's deceptively marketed programs.
Growth Cave and its founders advertised Knowledge Business Accelerator (KBA) as a business opportunity teaching others to develop and market a "digital education program" on anything from relationship advice to investing, life coaching, or starting a business. They marketed the program as a panacea that would teach users to make thousands in passive income, said the FTC.
In reality, the FTC alleged that the claims were smoke and mirrors, and Growth Cave was a deceptive marketing scheme. Even after paying thousands of dollars in fees at between $3,500 to $50,000 a pop for the program, the vast majority of Growth Cave's customers had grown nothing except debt.
The FTC alleged that Growth Cave marketed the KBA program through its "proven" method of posting targeted ads online, where it advertised its own "digital products." In the ads, one of the founders talked about how much money people could easily make with their program online—"millions of dollars in automated income like clockwork" according to one ad—using the company's YouTube sales techniques.
According to the complaint, the company promised that for a large fee it would "do all the work" for its customers, who would then go on to make $10,000 to $15,000 a month "consistently," and that it was "literally IMPOSSIBLE to fail." The company also promised a "$10,000 Profit Guarantee" and claimed that "there has not been a single person that, after launching their course, they have not made a minimum of $10,000 profit in their first 30 days of launching" their program.
But these promised "massive results" that seemed too good to be true were indeed allegedly false. Most KBA purchasers and even those who purchased a "done-for-you" service could not launch a course and never made any income. Growth Cave also did not provide any service or support. Even those that did launch the course hardly made any profits at all, said the FTC.
According to the FTC, Growth Cave marketed an opportunity to make millions teaching courses "on a topic you're knowledgeable or passionate about." Meanwhile, the only ones who made millions on these programs were Growth Cave and its principals, doing what they allegedly appear to be passionate about: deceptive marketing.
To capitalize on their customers' financial distress, Growth Cave and its owners also sold customers credit repair services that—you guessed it—allegedly resulting in nothing but more debt. The company's "credit repair" service merely consisted of instructing customers to apply for multiple business cards.
In addition to the temporary injunction, the court froze the company and individual defendants' assets while the case proceeds.
Key Takeaways
The FTC's enforcement action against Growth Case highlights a priority area for the FTC under the new administration. In announcing the formation of a Joint Labor Task Force to protect workers, Chair Ferguson stated that the FTC would continue targeting "deceptive business opportunities, which lure Americans into buying a business on the basis of false or misleading representations about the value and potential earnings of the business."
Ingredient Studies Do Not Substantiate Knee Pain Relief Health Claims for the Product, NAD Says
The National Advertising Division (NAD) concluded that a company selling a gel for knee pain relief failed to properly substantiate its product and ingredient claims that its gel featuring "all-natural" arnica, dragon's blood, and other similar ingredients provided knee pain and swelling relief.
Through its routine monitoring program, NAD challenged claims The Magni Group made that its MAGNILIFE Knee Pain Relief Soothing Gel provides pain and inflammation relief. NAD challenged the claims: "Rapid Pain Relief," "Say goodbye to knee pain without surgery!" and a claim that the product "relieves stiffness, tenderness, swelling, aching and burning pain associated with knee discomfort."
From the start, Magni Group faced a difficult substantiation burden given the powerful health claims it made. To substantiate its claims, the company would have to provide competent and reliable scientific evidence that supports efficacy for the actual product itself (not just some or another of its ingredients). NAD concluded that the company had not met its burden.
As a threshold matter, NAD found that any claims that the product (rather than the ingredients) provided the claimed benefits were unsubstantiated because Magni Group had not offered any testing on the product itself. Product efficacy—for a product that did not consist of no more than a singular, tested, and approved ingredient—requires product testing. Magni Group apparently had none.
And when it came even to product ingredients, NAD concluded that the evidence provided also fell short. The company provided several abstracts of studies performed on mice or rats or in vitro (test tube) studies—none of which are sufficient to support efficacy at helping human knees. FTC guidance on health products provides that animal and in vitro studies are insufficient to substantiate health-related claims without further randomized human clinical trials, said NAD. FTC guidance also steers advertisers away from substantiating claims by relying on summaries and abstracts because "the advertiser cannot ascertain from summaries whether the research substantiates the claims." No surprise, NAD concluded that the company could not rely on abstracts of studies and on animal studies to make health claims about the product's ability to treat and relieve knee pain in humans.
Key Takeaways
Ingredient testing can have its place and it may support certain product-related claims—assuming rigorous testing and a product which then incorporates that ingredient in the same quality, quantity and delivery mechanism. Magni Group did not meet that standard here.
NAD Has No Beef With Cattle Certification's "Best Practices" Claim
The National Advertising Division (NAD) has been a hotbed in recent years for animal welfare certification advertising challenges. Recently, NAD shut down a Fast-Track SWIFT challenge to claims made by a beef industry nonprofit that its program and certification represents the "best practices" and "highest standards" in the beef industry.
Animal welfare nonprofit Animal Partisan brought the challenge against Certified Angus Beef (CAB), challenging claims on its website that its Beef Quality Assurance (BQA) certification exemplifies beef "Raised With Respect. Backed by BQA. The best beef is raised the right way … [and] ensures best practices." Similar claims were featured on YouTube and on social media: "Beef Quality Assurance (BQA) Certification helps them take the best care of their cattle by keeping up with the most up-to-date animal welfare practices."
The single well-defined issue before NAD was whether CAB's marketing made unsupported superiority claims about the BQA program. Animal Partisan argued that these are unsupported superiority claims because other animal welfare standards are more rigorous, while CAB countered that its ads were not misleading and that its standards are regarded as "best practices" across the beef industry.
NAD sided with CAB but differed in its reasoning. It concluded that CAB's references to "best practices" and "highest standards" in context did not convey a message that BQA represents the best level of care for cattle in the industry. Rather, reasonable consumers faced with a "best practices" claim would conclude that the standard represents not the best standard but a very high standard, or the "officially-sanctioned high standard."
NAD reasoned that CAB's advertising does not claim it has "the" set of best practices in the cattle industry but rather a high industry standard as well as aspirational language that ranchers following BQA "strive for perfection."
Now that NAD zeroed in on the message, was it supported? NAD found that it was. Eighty-five percent of the industry has adopted the BQA standard because it is a comprehensive animal welfare standard and is regularly updated based on peer-reviewed science. Testimonies from two experts CAB provided in support noted that other animal welfare programs are not guided by peer-reviewed science, cannot be applied to the whole beef industry, or would lower animal care.
This evidence substantiated the message that the BQA standard reflects practices that industry experts highly recommend, and NAD found the claims substantiated.
Key Takeaways
What does "best practices" mean to the reasonable consumer? The term "best practice" is defined as something that is "proposed as a standard suitable for widespread adoption," said NAD. Despite the presence of the word "best" in the term, it is not a claim of superiority but rather a term that denotes the standard others turn to as the ideal high standard.
NAD Turns Up the Heat on Hot Tub Claims
The advertising claims bubbled over at the National Advertising Division (NAD) as eponymous hot tub manufacturer Jacuzzi challenged competitor Bullfrog and its third-party dealer's unqualified comparative claims that its hot tubs offer a more personalized, more powerful and energy efficient, and more durable hot tub experience than "conventional" hot tubs.
Starting with the personalization claims, NAD dove into its analysis of claims made on the company's website, YouTube, and sales sheets that its product offered the most personalized hot tub experienced compared to conventional hot tubs, such as "No other spa brand features so many personalization options that enhance even the most subtle comfort features" and "Compared to all other brands, there is simply no comparison for a truly personalized hot tub experience."
NAD rejected Bullfrog's argument that these claims were mere puffery because the statements are difficult to quantify. Advertising a buffet of personalization options conveyed an objective comparison message.
Bullfrog submitted evidence demonstrating the ways its product offers personalization by giving consumers the option to configure multiple jet placements and types. While this evidence showed that Bullfrog may offer distinguishing personalization options vis-à-vis its competitors, this fell short of quantifying these personalization options versus those of competitors. This type of evidence is what would be required to substantiate the comparative claim that "no other spa brand features so many personalization options."
Jacuzzi also challenged Bullfrog claims that its spas are more powerful than conventional hot tubs, citing claims such as "Powerful up to 90% less plumbing vs. Ineffective more plumbing = less power" and "Unlike conventional spas, your Bullfrog spa features advanced engineering … this means that the water is delivered more directly and more efficiently … delivering more power to the jets …"
NAD found that these claims conveyed a market superiority message that Bullfrog products were more powerful than conventional hot tubs. Yet, save for an explanation of how fluid dynamics work to make spas more efficient, Bullfrog provided no other evidence to back up these claims. What was needed to justify these market superiority claims was at least real-world data on the power of Bullfrog versus competitor spas, such as flow rate data. Without it, there was no reliable evidence of the relative power of Bullfrog spas versus its competitors.
On the energy efficiency claims, Jacuzzi challenged claims that Bullfrog was more energy efficient than conventional hot tubs, such as "Because Bullfrog Spas are engineered to use much less conventional plumbing than other spas, less energy is wasted" and "Full foam insulation … further helps results stand out from the competition."
These claims conveyed a message of comparative superiority, NAD found—specifically because of their full foam insulation, Bullfrog products do not use as much energy to warm water as competitors.
To back up its claim, Bullfrog once again turned to basic insulation and heat radiation principles, arguing that full foam insulation "obviously has a positive impact on energy efficiency compared to spas without insulation." These arguments may explain why one hot tub may be more energy efficient than another, wrote NAD, but they did not provide sufficient evidence of real-world comparative energy usage.
For the claim "Efficient up to 34% less energy vs. Impractical less insulation = energy loss," Bullfrog explained that this data was published by the California Energy Commission (CEC) and that a disclosure limits consumer takeaway by providing the source of the data. It also noted that CEC always reports energy usage on standby mode because hot tubs are in standard mode most of the time.
However, NAD found that this evidence was not sufficient to support unqualified and unlimited energy superiority claims. The CEC test did not take into account all the ways that consumers might use a hot tub—not only in standby mode and often in very cold conditions. Nor did the disclosure adequately inform consumers of the basis for the comparison.
Finally, NAD also took on Bullfrog's claims that its spa base was more durable compared to competing models. To back up these claims, the company submitted evidence from a Wikipedia page that the material it used on its frame was highly durable as compared to other polymers.
NAD concluded that such evidence supporting material properties and anecdotal evidence of past repairs was "no substitute for evidence supporting challenged durability claims." These should be backed up by research and testing that demonstrates the difference between the competing product materials.
Key Takeaways
This competitor challenge is a master class in the need for concrete substantiation despite an advertiser's view that its claims are more general and commonsensical. It is a reminder to step back and look at claims and their competitive reach through independent eyes.
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