Candace

Talmadge

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August 15, 2008

David Takes Aim at FTC Goliath

David just took aim at the Goliath that is the Federal Trade Commission in a lawsuit that could have repercussions for how the feds approach their role as civil law enforcers. The FTC is the federal agency that regulates advertising content.

Truth in advertising is important. For that very reason, I will state up front that I believe in the healing properties of herbs, and often take them to alleviate allergies and other chronic conditions. They have worked well and cost-effectively for me.

It all started last spring when the FTC mailed a letter to the owners of a New Mexico herb store that threatened to file a civil lawsuit against them in U.S. District Court if they didn’t sign an enclosed consent agreement, cough up the entire earnings of Native Essence Herb Company over its 15 years in business, and open their financial statements to regulators to help calculate the “damages” they owed.

Damages? What damages? The FTC cited no consumer complaints against Native Essence. Nor did it document any evidence that anyone had contacted the FTC with claims of being defrauded or misled by Native Essence.

Apparently, the FTC’s problem was the company’s web site because it reprinted articles about government-sponsored studies of the medicinal properties of certain herbs. These studies came from federal government web sites like the National Center for Complementary Medicine, the National Institutes of Health and the National Academy of Sciences.

The FTC apparently takes the position that it is misleading for a company to provide information about clinical studies that have not been approved by the Food and Drug Administration or have not been reported in mainstream U.S. medical journals.

We all know about the unassailable accuracy the FDA’s OK. There’s Vioxx, later found to kill via heart attacks, FenPhen, the late 1980s diet combo also shown to promote heart failure, and hormone replacement therapy, revealed to elevate the risk of certain cancers and heart attacks. The FDA nod is obviously the gold standard for accurate drug claims.

Instead of signing away their business, Mark and Marianne Hershiser filed a lawsuit against the FTC, seeking a preliminary injunction against the federal agency on grounds that its advertising content guideline is unconstitutional, and asking the courts to prohibit the FTC from using this guideline against Native Essence or any other herb seller. The lawsuit also wants the court to declare that Native Essence and all herb sellers are entitled to use any information about herbs contained in any federal government web site so long as the information is truthful, complete and not misleading.

The FTC has filed a motion to dismiss the lawsuit, arguing that it never really intended to sue the Hershisers and that they are not entitled to sue in federal court because the issue is not “live,” so they must use the FTC’s administrative proceedings.

“This conduct is outrageous,” Houston attorney Richard Jaffe, representing the Hershisers, says of the FTC. “It’s a deceptive enforcement practice to threaten a lawsuit unless the defendants sign an injunction, and then to say they didn’t really mean it.” He points out that this is a civil issue, not a criminal case for which prosecutors have a lot more leeway in their conduct.

Jaffe says that by threatening a federal lawsuit in its initial letter to the Native Essence owners, the FTC has made the issue of its own enforcement tactics very much alive, along with the ongoing issue of First Amendment speech rights.

Over the past decade, Jaffe says, the U.S. Supreme Court has evolved its rulings on commercial free speech to use the least restrictive standard possible. “Speech with disclaimers is the first choice unless it is inherently misleading,” he says.

Do we really need to be safeguarded from herb sellers wanting to quote the federal government’s own information? Where was this same zeal to protect when unscrupulous lenders were offering deceptive/unrealistic loans to would-be homeowners whose eyes were far bigger than their pocketbooks?

Let’s hope the courts finally put a leash on federal regulators who seem to be acting not out of any concern for the public good, but to throw their weight around just because no one has ever challenged them before.

© 2008 North Star Writers Group. May not be republished without permission.

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