Antitrust Law Daily FTC obtains injunction against advertising for diabetes guide, investment publication
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Tuesday, March 3, 2020

FTC obtains injunction against advertising for diabetes guide, investment publication

By Nicole D. Prysby, J.D.

Preliminary injunction halts misleading advertising of a diabetes guide and a financial publication, where advertisements did not accurately portray the contents of the publications.

The FTC was entitled to a preliminary injunction against misleading advertising of a diabetes guide and a financial publication, but only based on the disconnect between the advertisements and the publications themselves. A federal district court in Maryland found that the FTC demonstrated misleading representations, to the extent that the advertising did not accurately convey the content of the publications to consumers. For example, advertisements for diabetes guide claimed that the protocol required no dietary changes when it did in fact contain dietary restrictions. The court rejected the FTC’s position that it should consider the health-related claims made in the diabetes guide, as those statements were not commercial speech. With respect to the financial publication, the advertisements did not explain to the consumer that the book was an investment guide recommending the purchase of shares in 13 private companies. The defendants were required to send a copy of the Order to each customer who purchased the diabetes guide or financial publication (FTC v. Agora Financial, LLC, March 2, 2020, Gallagher, S.).

The FTC sought injunctive relief against advertisements for a health-related online publication ("The Doctor’s Secret to REVERSING Diabetes in 28 Days") and a book ("Congress’ Secret $1.17 Trillion Giveaway").

Injunction granted in limited form. The court found that the FTC demonstrated that the defendants made representations in the advertising for the Guide. For example, in promoting The Doctor’s Guide, the defendants claimed that a "shocking study shows 100% cure rate" for diabetes. A more complicated issue was whether the claims were likely to mislead consumers. A "health-related efficacy claim," which states that the product yields the benefit promised, likely will mislead a reasonable consumer if the claim is false or if the advertiser lacks competent and reliable scientific evidence to substantiate the claim. But the defendants were advertising a publication, not a medical device or supplement, and the content of The Doctor’s Guide was non-commercial speech subject to broad constitutional protections. The relevant question within the FTC’s consumer protection purview was whether the defendants’ advertising misrepresented their product. It was not appropriate to impose any specific standards of medical testing on the publication or on the advertisements summarizing the contents of the publication, because the FTC is charged with protecting consumers from false or misleading advertising of products being sold, not from being exposed to novel or unproven medical ideas contained in health-related publications. Focusing on that standard, the court found two potential material misrepresentations. First, the advertisement stating that the protocol "has nothing to do with changing your diet" when in reality, The Doctor’s Guide contains dietary changes. Second, the claims that the protocol has been "scientifically proven" to reverse diabetes in 28 days, when the studies relied on use a much longer time frame. These representations were material in that they would induce a reasonable consumer who does not want to abide by a medically restricted diet, to purchase the publication.

With respect to advertising for the Congress’ Secret book, the court found a number of misrepresentations that were likely to mislead a consumer. For example, claims "Consumers can collect money from Congressional Checks or Republican Checks just by adding their name to ‘the list of check payees.’" The FTC also alleges a material omission in the failure to tell consumers that the book, when purchased, would tell them they were required to invest tens of thousands to hundreds of thousands of dollars in order to collect the promised amounts. The court found that the advertisements did not accurately portray the content of the book they sell: the statements did not explain to the consumer that the book is an investment guide recommending the purchase of shares in 13 private companies. The book made clear what the advertisement did not—that "Congressional Checks" were actually dividend payments consumers obtained by investing in a variety of private companies, because the returns would be tax-advantaged as a result of a law passed by Congress. Consumers were led to think that Congress’ Secret would instruct them as to how they could put their name on a list to receive checks, without needing to have significant resources to invest. Those representations were both misleading and material.

For both publications, the balance of equities weighs in favor of protecting the public from deceptive advertising. And the case was not moot merely because the defendants were not actively promoting the publications. The defendants voluntarily ceased the promotions and nothing short of injunctive relief would prevent them from resuming the sales.

Injunction scope. As to the scope of the injunction, the appropriate relief is to enjoin the disconnect between the defendants’ advertising and their publications’ content not to require the defendants to support all health-related claims with evidence of independent clinical trials. In other words, the injunction would ensure that the defendants’ advertisements accurately represent the content of the publications, to allow consumers to make an educated decision about whether they wish to purchase that content. However, the injunction would constitute only a narrow prior restraint on the defendants’ commercial speech, banning only speech that lacks constitutional protection due to its deceptive nature. The injunction issued would require the defendants to send a copy of the Order to each customer who purchased The Doctor’s Guide or Congress’ Secret. However, while a list of the customers receiving the Order had to be maintained by the defendants, it did not need to be provided to the FTC.

The case is No. 1:19-cv-03100-SAG.

Attorneys: Dillon Lappe for the FTC. Ari Nicholas Rothman (Venable LLP) and Megan Jeannette McGinnis (Miles & Stockbridge PC) for Agora Financial, LLC, NewMarket Health, LLC and Newmarket Health Publishing, LLC.

Companies: Agora Financial, LLC; NewMarket Health, LLC; Newmarket Health Publishing, LLC

MainStory: TopStory Advertising ConsumerProtection FederalTradeCommissionNews MarylandNews

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