Straightforward deference to FTC substantiation rules dooms gray hair treatment

Federal Trade Commission v. COORGA Nutraceuticals Corp., —
F.Supp.3d —- , 2016 WL 4472994, No. 15-CV-0072 (D. Wyo. Aug. 15, 2016)
The FTC sued COORGA over its claims that its Grey Defence product
reversed/prevented gray hair and that there was scientific proof of this.  Defendant Coore, COORGA’s principal, is a
soi-disant “applied scientist” with degrees in economics and no post-secondary
chemistry or biology courses.  He developed
the Grey Defence formula over a 9-month period by conducting “comparative
scientific research” of various journal articles, studies related to Vitiligo
(a disease that causes the loss of skin color), and various “therapeutic
compounds.”  He also spoke with
scientists about their laboratory work unrelated to Grey Defence specifically
and tested the product on himself (“seeing re-pigmentation of some of my own
hair follicles after 3 months in the range of around 3%”).
From 2011 to June 10, 2016, COORGA had $433,848.93 in gross
sales to U.S. consumers, of which it refunded $29,608.26.  Coore intends to sell a new product, Grey
Defence Xtreme 3.0, as soon as this case concludes, and defendants have
developed other products, including brain JOLT! (to “boost working memory”),
TumorDefence (to cure cancer), FatBLOKKER! (now known as mealBUDDYZ!), Endura,
and Sodhalose-C (to fight neurogenerative diseases). These products have
likewise been developed through Coore’s own “research and review of journal
articles and discussions with ingredient suppliers without consulting any medical
professionals or scientists.”
Um, no.  Anyway, the
case provides a straightforward review of the standards for substantiating
efficacy and establishment claims; where the products are health-based, any
efficacy claim may functionally be an establishment claim.  Substantiation requires a “reasonable basis,”
and reasonability is assessed considering “the type of product,” “the type of
claim,” “the benefit of a truthful claim,” “the ease of developing
substantiation for the claim,” “the consequences of a false claim,” and “the
amount of substantiation experts in the field would consider reasonable.” If an
establishment claim “states a specific type of substantiation,” however, the
“advertiser must possess the specific substantiation claimed.” And if an ad
conveys a non-specific establishment claim—e.g., “medically proven”—the
advertiser “must possess evidence sufficient to satisfy the relevant scientific
community of the claim’s truth.”
“For both efficacy and non-specific establishment claims,
then, like those at issue in this case, it is appropriate to consider the
amount of substantiation required by the relevant scientific community in
determining whether the advertiser’s claim is false, misleading, or
unsubstantiated.”  The FTC submitted the
testimony of Dr. George Cotsarelis, a Doctor of Medicine and Professor of
Dermatology at the University of Pennsylvania School of Medicine and Director
of the Hair and Scalp Clinic at the University of Pennsylvania Health System.  He opined that substantiation for claims about
reversing or preventing the formation of gray hair would require at least one
well-designed, randomized, placebo-controlled, and double-blinded human
clinical trial. Coore’s testimony to the contrary was inadmissible because he
wasn’t and couldn’t be qualified as an expert. “Simply reading articles over a
nine-month period does not impart the knowledge, skills, experience, training,
or education one needs to competently interpret and evaluate scientific journal
articles, opine on what constitutes scientific proof, and weigh the evidence
related to the cause or prevention of gray hair.”
So, the efficacy and establishment claims were
unsubstantiated.  Coore’s research could
be “potentially useful in generating hypotheses for future studies,” but they
weren’t enough for these claims, nor was feedback from 20 Grey Defence users
out of 100 contacted.  Defendants argued
that they only claimed to rely on their own “observational study,” so they did
possess the level of substantiation they claimed.  But defendants actually went beyond that:
they claimed that their product was “based upon a foundation of scientific
evidence,” using phrases such as “scientifically shown.”
The court found injunctive relief proper, both for consumer
redress (in an amount to be determined) and to prevent future violations of the
law.  Given Coore’s further marketing
plans, there was a cognizable danger of recurring violations.  The court noted that injunctive relief under
the FTCA can “fence in” offenders by enjoining more than the specific misconduct
previously engaged in, as long as there is “a reasonable relation to the unlawful
practices found to exist,” but sought further input from the parties on the
scope of the injunction.
Coore was also personally liable for consumer redress.  He actually knew about the material
misrepresentations, or was at a minimum recklessly indifferent to the truth or
falsity of the misrepresentations:

Coore was intimately involved with
Grey Defence’s development and advertising, yet chose not to consult any
medical professional to evaluate his purported substantiation or conduct any
well-designed clinical trial to investigate Grey Defence’s efficacy. Instead,
he arrogantly relied on his own internet research, knowledge from high school
biology and chemistry classes, a test on himself, and conversations with
researchers who did not actually evaluate Grey Defence’s efficacy. This type of
evidence constitutes reckless indifference. 

from Blogger

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