FTC settles with supplement startup over COVID claims

By Asia Sherman

- Last updated on GMT

© LD / Getty Images
© LD / Getty Images

Related tags Federal trade commission COVID-19 claims startup

A multi-year case involving dietary supplement startup PPO Lab, the Federal Trade Commission (FTC) and COVID-19-related health claims has come to a close, culminating in a truce that removes fines and lightens administrative burdens on the defendants.

“FTC backed off its maximalist demands and agreed to a reasonable settlement of this matter, which never should have been brought against a small startup business that approached the FTC for guidance in advance, as our clients did,” said John Vecchione, senior litigation counsel at the New Civil Liberties Alliance (NCLA), which represented PPO Lab. 

The FTC first filed its request for a permanent injunction​ against PPO Lab and its CEO Margrett Priest Lewis in November 2022, alleging that the defendants made deceptive claims on their website and social media pages for the PPO COVID Resist and subsequently VIRUS Resist renamed product. The complaint included a request for an extensive period of compliance monitoring, monetary penalties and any additional relief determined to be just and proper.

The terms of the truce

In the order filed Feb. 15 in Federal Trade Commission v. Precision Patient Outcomes, Inc. and Margrett Priest Lewis​, the California court ruled that the defendants and their associates are permanently restrained from making any claims or representations that products prevent or reduce the likelihood of SARS-CoV-2 infection or transmission, or otherwise cure, mitigate or treat COVID unless specifically approved by the U.S. Food and Drug Administration.

It also reads that the defendants must notify all clients who purchased COVID Resist and VIRUS Resist on or after May 21, 2021 (as well as all retailers and resellers of the covered products) that its COVID-related claims are not substantiated by competent and reliable scientific evidence. In addition, the order establishes specific compliance reporting, recordkeeping and monitoring requirements for the next five years.

“It is a reminder to the marketplace that competent and reliable scientific evidence is compulsory when advertising health-related claims,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said of the decision.

In its statement following the order, the NCLA stressed that as a startup, Lewis wrote to FTC at the pre-market stage, requesting guidance on her advertising before selling any product. While Lewis received a response from FTC, the alliance said that she did not receive a warning letter contrary to FTC’s usual practice.

“FTC is at long last backing down from a lawsuit that it had no business bringing in the first place,” added Casey Norman, litigation counsel at NCLA. “The agreement our clients have reached marks a major victory for all small businesses that wish to operate free from the Commission’s bullying and imposing of unconstitutional executive authority. Let’s hope that FTC picks its battles more wisely in the future.”

The NCLA has also countered​ that PPO never sold the product as COVID Resist (noting correction of the inaccurate charge in the amended complaint) and that it ceased selling any product called VIRUS Resist before FTC filed suit. The formula, which contains vitamin C, vitamin D3, vitamin K2, zinc and quercetin dihydrate, is now sold as Immune-fx in support of proper cell function (fx​) and immune resilience.

Commenting on the case, Lewis told NutraIngredients-USA that, "PPO Lab strives to be recognized as best in class with ridiculously good ingredients and to remain highly compliant.”

Poking the bear

Asa Waldstein, principal of online marketing risk analysis firm Supplement Advisory Group, confirmed that there is no instance in which COVID-related claims may be used in the marketing of dietary supplements.

“If substantiated, making ‘immune support’ claims may be allowed, but as with all marketing, context matters,” he told NutraIngredients-USA.

In addition, he questioned the defendants’ approach to engaging with FTC and evoked the old ‘don’t poke the bear’ adage.

“In May 2021, the defendants informed FTC they were ‘planning to launch COVID Resist’ and invited FTC to look at their website and that they were ‘clearly in compliance with the FTC, [the Dietary Supplement Health and Education Act of 1994] and [the Food and Drug Administration’s] regulations’,” he noted. “The defendants also concluded that if they did not receive a response, they would ‘trust that [they] are in compliance’.”

Soon after, however, the FTC did respond that it does not preapprove products or marketing claims and provided links to over 400 related warning letters​ and its advertising guide for dietary supplements​. It also notified the defendants that making unsubstantiated claims could lead to civil penalties of up to $43,792 per violation. 

Waldstein observed that while the defendants may have changed the name of the product to VIRUS Resist after the FTC response, they continued to make COVID claims about their ingredients.

“The lesson here is that promoting the benefits of ingredients for serious diseases is the same as making a product claim,” he added.

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