The FTC has announced a $22 million settlement with the marketers of a “low-level light therapy device” called Willow Curve. The marketers, Physicians Technology and Willow Labs,  and their individual owners, were alleged to have made deceptive and unsubstantiated claims that their device treats chronic, severe pain and associated inflammation.  Defendants marketed the $799 device heavily through tv ads, email, a website, telemarketing and more.

The defendants' deceptive acts as alleged in complaint include the following:

• Claiming, without substantiation, that the product was “clinically proven” to provide pain relief;
• Claiming, falsely, that their device was FDA approved;
• Using deceptive native advertising techniques; and
• Falsely touting a money-back risk free guarantee on their product.

There’s nothing too surprising about this enforcement action, but I was particularly intrigued by the allegations regarding the defendants’ native advertising techniques. The complaint details them as ads purporting to be independent news stories written by impartial journalists discussing the health benefits of the device.  These “articles,” however were written by a marketing company hired by the defendants, “whose purpose was to promote the health benefits of Willow Curve and position Dr. Shapiro as an expert on pain relief.”  The marketing company facilitated the  articles’ publication in various magazines and newspapers and, when published, the articles “closely resemble[d] the non-advertising content surrounding them, and [were] not identifiable as commercial advertising.”  In addition,  the articles were not identifiable as advertising when consumers posted or shared them on social media or email.

The allegations regarding defendants’ “risk free” claim are also illuminating.  The complaint states that shipping and handling costs were not refundable and that, in many instances, the company also required that consumers pay other fees and costs, and "undertake burdensome tasks," to obtain a refund. Further, these conditions for a return were “hidden” behind links on the website and at the bottom of a purchase invoices.  And, not surprisingly, the complaint alleges that dissatisfied consumers had to really fight to actually get their money back.

In addition to prohibiting defendants’ alleged deceptive health claims, the proposed settlement order bars their alleged deceptive refund and native advertising practices and imposes a $22 million judgment.

Take-aways (beyond the obvious that claims, particularly health claims, must be truthful and well-supported): native advertising techniques are still popular and still on the FTC’s radar.  If using such techniques, marketers must clearly and conspicuously identify such content as advertising, particularly if the content is in the form of a shareable asset on social or via email.  And if marketers claim that they are providing a money-back guarantee so that purchase of their product is “risk free,” the conditions for getting money back should be clearly and conspicuously stated prior to purchase and the return process itself should not so onerous as to make the guarantee a fiction.