FTC Update: The View From NACS

It’s common knowledge that the Federal Trade Commission recently went after POM for making what the agency deemed to be fraudulent health claims. The FTC felt POM’s assertions that it could prevent or treat heart disease, prostate cancer, and erectile dysfunction – among other things – were fraudulent and misleading. At NACS 2010, in the wake of this action, two functional beverage companies seemed to be mostly unconcerned about the marketing of their products and didn’t tout any recent changes to their practices.

The functional water company Activate saw such regulatory action coming a long way off, according to President Dan Holland. “We knew the government was going to be getting more involved [in regulating products],” he said. As such, Holland explained how Activate tested its products with the University of Wisconsin to ensure it was making valid claims that could be supported by science – something POM failed to do, he said. Most of Activate’s beverages feature a twist cap in which vitamins and minerals are stored until the consumer is ready to mix the blend with the liquid and drink the beverage. While the company says some of the ingredients offer health benefits, it doesn’t make any sweeping claims. For instance, the Energy flavor contains B vitamins. The accompanying copy reads “studies show” that the supplement can “help provide energy to the body as well as improve concentration and wellness.”
It seems that the statements might have been written under legal counsel, for Holland further explained how Activate took responsibility for its claims and ensured they fell under FDA guidelines by “working with FDA attorneys” on the material.

On the other hand, companies like iChill skirt FTC or FDA ire by registering their product as a dietary supplement, rather than a food or beverage, according to co-founder David Figueroa. “We don’t get into health claims,” he said, noting that unlike some competitors, notably drank, the company “took the mature route” in its marketing.

“If we were making crazy claims,” he added,” I might have more concerns [but] no one has cautioned us so far.”

The supplement contains a blend of Melatonin, Valerian Root, Rose Hips and B Vitamins which are said to help “calm the body and mind at the end of a stressful day,” according to the company web site. Figueroa said the product has been approved by the FDA and seemed to be unconcerned with the potential for legal action against the product. “I don’t think it’s going to be an issue,” he concluded. Whether this will hold true going forward is anyone’s guess, but at least two companies are taking government regulations seriously. In such a competitive industry, such action may eventually help thin the crowds – across all categories.