FTC and CBD: Latest case challenges unproven health claims

It’s not like the FTC to dive in to a major law enforcement initiative, make a splash, and then leave the pool. If industry members thought December’s Operation CBDeceit was the end of the agency’s interest in deceptive health-related representations for CBD products, they were mistaken. Today’s proposed settlement with Kushly, a company alleged to have made serious – and seriously false and unsubstantiated – health claims for CBD products demonstrates the FTC’s ongoing commitment to challenging misrepresentations that a product is effective for preventing or treating serious conditions.

Announced in December 2020, Operation CBDeceit involved six settlements with companies making unproven claims that products containing CBD could treat Parkinson’s disease, dementia, ALS, cancer, arthritis, and other serious medical conditions. The FTC’s action against Arizona-based Kushly and owner Cody Alt challenges similarly misleading representations.

Kushly sells a wide variety of CBD products – everything from gummies and tinctures to skin creams and CBD-soaked toothpicks. The company advertises on its own website and on platforms like Facebook, Instagram, Snapchat, TikTok, and Twitter. You’ll want to read the complaint for the laundry list of medical conditions Kushly said its products can treat, but here are just a few examples of claims the company made in its ads:

• “[T]he active compound, cannabidiol or CBD is getting all the spotlight with its healing potential in treating conditions like eczema, arthritis, some forms of cancers, muscle and joint pains and even Alzheimer’s disease . . . .”
• CBD “can treat neurological disorders such as . . . multiple sclerosis.”
• “Aside from helping to alleviate the side-effects of some cancer treatments, CBD oil is also showing potential in preventing the development of cancer itself and the spread of tumors.”
• “ . . . CBD also helps prevent nerve-related illnesses including neuropathy and Alzheimer’s disease.”
• “. . . CBD has also been hailed as a valuable substance for treating endometriosis with some experts suggesting applying CBD topicals directly to the pain site to help soothe discomforts and aches.”

According to the FTC, Kushly failed to have appropriate substantiation to back up representations that its products would effectively treat cancer, hypertension, Parkinson’s disease, Alzheimer’s disease, multiple sclerosis, depression, and a host of other serious health conditions. What’s more, the complaint alleges that the company falsely claimed that studies or scientific research prove that its CBD products were effective for treating those diseases and many others. Among other things, the proposed settlement requires Kushly and Cody Alt to support future prevention, treatment, or cure claims for serious health conditions with competent and reliable scientific evidence in the form of adequately controlled human clinical testing. In addition, they’ll have to notify consumers, wholesalers, affiliates, and distributors about the FTC’s complaint. Once the settlement is published in the Federal Register, you’ll have 30 days to file a public comment.

The specific terms of FTC orders apply just to those companies and individuals, but Operation CBDeceit and the proposed Kushly settlement send two important messages to others in the industry.

Marketers making health-related representations for CBD products are subject to long-standing consumer protection standards. Some entrepreneurs new to a marketplace may be operating under the misapprehension that they’re writing on a blank slate. Not so. Health claims for CBD products are subject to the same established truth-in-advertising requirements that apply to other products. And challenging claims and conduct that violate the FTC Act’s prohibition on unfair and deceptive practices remains the central tenet of the agency’s mission.

Serious health claims require the highest level of scientific substantiation. It’s FTC 101 that advertisers must have competent and reliable evidence to support all objective product claims they convey to consumers through traditional marketing channels and in social media. But once a company represents expressly or by implication that a product can prevent, treat, or cure cancer, arthritis, MS, Alzheimer’s disease, depression, or similar conditions, it’s upped the ante on the kind of evidence it needs to support those statements. Before a company makes claims of that nature, it you make claims of that nature, you must have what the FTC calls competent and reliable scientific evidence – which may mean adequately controlled clinical testing.