Posted May 12th, 2020 in Top Stories, Legal Insights with Tags COVID-19, COVID-19 Products
Avoiding False Advertising Claims During COVID-19
With the unprecedented steps being taken to slow down the spread of COVID-19, it is important that those companies whose products effectively kill or contain the spread of Coronavirus be able to market their products’ efficacy to consumers. It is equally important that unscrupulous companies not be allowed to capitalize on the current crisis by misleading desperate consumers into believing that their products are more effective at killing or containing the spread of the Coronavirus than they actually are. To catch fraudsters and put a stop to misleading advertisements, regulators, plaintiff’s attorneys, and competitors are carefully scrutinizing COVID-19 related marketing claims. Here, we provide a summary of these efforts and—more importantly—how you can avoid liability by unwittingly making a misleading marketing claim.
Government regulators were the first group to respond to efforts by some companies to give false hope to consumers by suggesting their products were effective at fighting COVID-19. From the beginning of 2020 through early May, the Federal Trade Commission (FTC) has received more than 36,000 COVID-19 related consumer fraud complaints, which involved losses of more than $24 million. In response, the FTC has sent out numerous letters to companies demanding that they stop falsely claiming that their products can treat or somehow prevent COVID-19. The FTC has also vowed to seek relief in Federal Court against any companies that don’t comply. Similarly, the Food and Drug Administration (FDA) is also taking steps to prevent companies from selling unapproved COVID-19 treatment drugs. The FDA is concerned that such drugs can actually hurt consumers and also cause them not to seek medical treatment. Finally, even the Environmental Protection Agency (EPA) has gotten into the act by threatening online retailers if they sell unregistered cleaning products that falsely claim the products are effective against COVID-19.
Plaintiff’s consumer class-action lawyers soon jumped into the fray, sometimes overzealously, by bringing class-action lawsuits against several makers of hand sanitizers, claiming that advertisements suggesting that these products were effective against Coronavirus, or could kill virtually all germs, were false and misleading. These lawsuits are a continuation of the rampant expansion of consumer class actions based on alleged false advertising in a variety of areas, including prominently “all-natural” and “eco-friendly” marketing claims.
Companies also have the ability to challenge false or misleading advertisements made by competitors. Where a company makes false claims about its own product or wrongly claims that its product is superior to a competitor’s product, the competitor can sue under the Federal Lanham Act or similar statutes in many states that prevent these types of false advertisements. One key potential remedy under the Lanham Act is the issuance of an injunction to prevent the company from either continuing to make false statements or selling the falsely advertised products. Thus, if a company tries to boost its sales by falsely claiming that its product can stop or prevent the Coronavirus, it is ripe for a Lanham Act claim by a competitor negatively impacted by its tactics.
How to Avoid Liability
For those companies looking to market their products’ efficacy against COVID-19 while avoiding claims, the best approach is to ensure that there is reliable support for every verifiable statement made. If a claim can be tested and proven to be true or false, it should be tested before it becomes part of an advertising pitch. Moreover, when looking at whether a statement is misleading, regulators and courts will view the statement through the lens of how a consumer might reasonably interpret it. To avoid liability, it is therefore important to avoid ambiguous statements that could be interpreted in multiple ways, some of which are substantiated and some of which are not. So, for instance, a product that kills 80% of germs should not be advertised as killing “a high percentage of germs” because a consumer might reasonably interpret the “high percentage” claim to mean something greater than 80%. Explicitly stating that the product “kills 80% of germs” is less ambiguous and reduces the risk of consumer confusion.
It is also essential to qualify marketing statements to avoid consumer confusion. Take again the hypothetical product that kills 80% of germs. If the product kills something less than 80% of illness-causing germs, the “kills 80% of germs” claim could be deemed misleading without further qualification because a consumer might reasonably interpret the claim to relate only to germs that cause sickness. Specifying the percentage of illness-causing germs killed, or alternatively qualifying the statement by explaining that the 80% includes both illness and non-illness causing germs, further eliminates ambiguity and potential liability.
As we work to eliminate the spread of COVID-19, it is vital that companies be able to advertise the efficacy of their products against the spread of the Coronavirus. It is equally important that the public not be misled, either intentionally or innocently, that a product is more effective than it actually is. At times, there is a fine line separating a truthful marketing statement from a misleading one, and the closer a statement is to that line, the greater the liability exposure to the advertiser. Companies should carefully review their marketing claims to ensure that all reasonable interpretations of the claims are truthful and are adequately supported by reliable data.