The hemp business is competitive and companies looking to succeed may be tempted to make high-risk marketing claims. This is a fool’s game and is the wrong approach for long-term and sustainable growth.
What is a Claim?
It can be confusing to know what a claim is. Here are a few general rules.
- Anything ending in “itis” such as arthritis.
- Anything a drug is indicated for such as Xanax is indicated for anxiety.
- The name of any disease or syndrome is a very high risk such as Alzheimer’s or Depression.
- Discussion of symptoms or preventing something from happening is a claim. Remember the FDA disclaimer states, “Not intended to treat, diagnose, prevent, or cure any disease”.
Can I Get In Trouble For Making Claims?
There are serious repercussions for making claims. These include Federal Trade Commission administrative complaints. Read about the FTC’s Operation CBDeceit here. Plaintiff attorneys are on the lookout for “low hanging fruit” class action lawsuits. These are not always public, but you can more about them at TruthInAdvertising.org. These lawsuits commonly involve Made in the USA, All Natural, and Prop 65 violations.
The most common repercussion is with a warning letter. The FDA/FTC looks at the 30,000-foot view of a company’s online persona. One claim on a website may not attract a warning letter, but when combined with other violations such as a noncompliant hashtag, a claim on a video, and an uncompliant product review this elevates risk. The authorities then piece them all together for one big picture on non-compliance. This is one reason why compliance cannot be done in a vacuum and why stepping back to review the context of marketing is important. The FDA/FTC cannot cite every company making claims, but they like to make examples out of companies not following the rules in areas they want to focus on. This has recently been involving COVID claims, and social media-oriented claims to name a few.
Here are some reasons to avoid warning letters.
- Required legal and company resources.
- Public record, it is embarrassing!
- Can lead to more serious action such as an injunction.
- Scares away investors!
- Alerts class action attorneys that may use the warning letter as a basis of wrongdoing in their lawsuit.
Are Claims Worth The Risk?
In my consulting business, I often ask my clients if making a claim is worth the risk. Putting aside the very important ethical and legal considerations will the marketing produce enough revenue to make this risky claim “worth it”? The answer when calculating the return on the risky investment is rarely yes.
I suggest not falling into the trap of thinking that making risky claims is needed to succeed. It is tantamount to driving 100 miles per hour. It may help get to where someone is going a little quicker but if they consistently drive too quickly a hefty traffic ticket or even worse things can happen. Visit my website to set up a free consultation to discuss how to advertise without making high-risk claims. I love this aspect of compliance so much I started a company to focus on this!