By Jonathan W. Emord
Emord Blog @ Emord.com
Type II errors underlie FTC’s deceptive advertising law. Those same errors cause the FTC to violate the First Amendment in the ordinary course. Getting the FTC to conform to the requirements of the First Amendment requires significant judicial or legislative action. Until the FTC changes, parties not proven to have propounded falsehoods in the market will continue to be treated as if they had. They will continue to be stigmatized with the label of deceptive advertiser and forced to suffer costly disgorgement or consumer redress.
A dietary supplement company advertising the health benefits of its products in the market employs health benefit claims in the form of structure/function claims allowable by the FDA (i.e., claims concerning classic nutrient deficiency diseases or, more commonly, claims concerning the effect of a nutrient on a body structure or function without reference to disease). Commonly, the dietary supplement company’s advertising will be supported by at least some evidence concerning the propositions advertised. In almost every case, if the FTC questions the ad, the FTC will find the ad deceptive; that is because FTC commits Type II errors in the ordinary course. Advertisers are often surprised to learn that this error underlies FTC’s deceptive advertising law.
Most Americans, dietary supplement company executives included, believe that a claim backed by at least some evidence is supported sufficiently to permit its use in advertising. In the typical case, a dietary supplement is formulated based on preliminary scientific evidence and opinion concerning the potential of the supplement’s ingredients to improve the functioning of organs or organ systems in the body. It is almost never the case that the evidence concerning the health benefit is accepted by all or even a substantial majority of those in the scientific community who study the relationship. Indeed, if there is something more common among scientists than it is other professions, that would be debate. Contrary to the old misconception of a monolithic scientific community, scientists are a discordant bunch, constantly harping at each other’s theories, endlessly debating whether evidence has proven a particular proposition. As a practical matter, modern consumers are on to this.
The FTC operates on the premise that a dietary supplement ad is deceptive unless it is backed by “competent and reliable scientific evidence.” Pfizer Inc., 81 F.T.C. 23, 86 (1972); Policy Statement Regarding Advertising Substantiation Program, appended to Thompson Med. Co., 104 F.T.C. 648, 839-840 (1984), aff’d 791 F.2d 189 (D.C. Cir. 1985). That vague standard, rendered more obscure by the agency’s historic definition (“tests, analyses, research, studies, or other evidence based upon the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted to yield accurate and reliable results,” Novartis Corp., 127 F.T.C. 580, 725 (1999)), invites FTC staff to exercise virtually unbridled discretion over whether the commercial speech is actionable deception. The discomfort felt by the staff in relying entirely on subjectivity or bias led to the notion that the burden of proof could effectively be shifted to the regulated class, making it incumbent upon the advertiser to possess, in advance of advertising, documentary evidence proving claims true, or they would be deemed false.
The lack of documentary evidence proving claim content true the FTC equates with falsity and deception. Indeed, it is the FTC’s essential position that health benefit advertising for which there is (what it subjectively deems) inadequate documentary support is by that fact alone deceptive. Therein lies a classic Type II error (i.e., a false negative). Lack of evidence for a claim is not the same as affirmative proof against a claim. A claim lacking supportive evidence could be, for all we know, true. A claim for which there is no supportive evidence and affirmative proof of falsity is one that may rightfully be adjudicated deceptive, depending on the strength and applicability of the proof of falsity; but a claim for which there is no supportive evidence and little or no proof of falsity cannot be said to be provably false. Indeed, it remains open to proof and could be, for all we know, true.
In nutrition science, most evidence falls into a realm of probability, not conclusiveness. Evidence reveals a claim to be either more probably true than not or more probably false than not, but rarely is conclusive evidence of truth or falsity present. In such circumstances, where debate continues to rage, it is appropriate for consumers to be privy to, and participants in, the evolution of that debate. A government that denies them that opportunity operates on an offensive paternalism, antithetical to the First Amendment, that the public ought not be privy to complicated matters of science unless and until the state determines definitively which, among competing theories, ought to be an official orthodoxy (deemed proven true by those in government with power to decide). In the case of foods and food elements, consumers, of course, must, as a matter of survival, exercise choice in the market and will have to make an informed choice based on whatever evidence is then available. The right to exercise that choice is one the First Amendment gives us, over the state, and the consequences of wrongly deciding are ones that we must accept along with the freedom to decide.
Consequently, if we were to achieve perfect enforcement under the present FTC regime, the market would be a barren wasteland, devoid of all information concerning the potential health benefit of products except that information which the FTC deemed true or that scientists preferred by FTC thought supported by near conclusive proof. Such widespread censorship of health information deprives consumers of a sovereign power to exercise informed choice (in doing so, some will bet in favor of the health benefit, while others will wish to await more evidence, while still others will bet against the health benefit).
In addition, such widespread censorship runs afoul of a bedrock principle of First Amendment law often ignored in this debate. The principle arose in Bates v. State Bar of Arizona, 433 U.S. 350 (1977), and remains good law. It stands for the proposition that the state may not censor a claim possessed of some truthful information on the theory that the information is incomplete and thus capable of being defined as deceptive. To quote Bates, at 375:
But it seems peculiar to deny the consumer, on the ground that the information is incomplete, at least some of the relevant information needed to reach an informed decision. The alternative — the prohibition of advertising — serves only to restrict the information that flows to consumers. Moreover, the argument assumes that the public is not sophisticated enough to realize the limitations of advertising, and that the public is better kept in ignorance than trusted with correct but incomplete information. We suspect the argument rests on an underestimation of the public. In any event, we view as dubious any justification that is based on the benefits of public ignorance. See Virginia Pharmacy Board v. Virginia Consumer Council, 425 U.S. at 769-770.
In short, the First Amendment is not limited to a non-existent world of perfect information (in which there are either truths or falsehoods and nothing in between). Rather, the First Amendment applies in our real world of imperfect information (in which there are probable truths and probable falsehoods along a continuum having on either end conclusive truths and conclusive falsehoods, which ends are rarely, if ever, attainable). In that real world, the First Amendment (a ban on state action to abridge free speech) is cast in favor of protecting from government all those who communicate in the realm of scientific uncertainty, leaving to the authorities for proscription only those who the state can prove communicate falsely. The principle was stated best in Virginia Pharmacy Board v. Virginia Consumer Council, 425 U.S. 748, 770 (1976): “The choice between the dangers of suppressing information and the dangers arising from its free flow was seen as precisely the choice ‘that the First Amendment makes for us.’”
At root, then, FTC’s current deceptive advertising regime violates the First Amendment. It does so because it operates on a Type II (false negative) premise. It presumes false that which the state has not proven to be false, solely because affirmative proof of truth is lacking. It equates proof of falsity with the absence of affirmative proof of truth, when under the First Amendment it is a condition precedent to state action that government possess proof that the statements challenged are in fact false before it restricts them. Until FTC reforms to eliminate this Type II error and recedes to a position of prosecuting only proven falsehood, it will continue to suppress statements which, for all we know, are true, harming the very consumers it paternalistically presumes it is helping.