Tuesday, March 23, 2010

Drug Store Chain, Supplement Maker Executives Settle FTC Deceptive Ad Claims

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Walgreen Company has agreed to pay nearly $6 million to settle FTC charges that the company deceptively advertised its “Wal-Born” line of dietary supplements, the agency announced today.

Cold Prevention Claims

In its complaint filed in the federal district court in Chicago, the FTC contended that the drug store chain improperly claimed that its supplements could prevent colds, fight germs, and boost the immune system.

Under the proposed settlement, Walgreens would be barred from claiming that its products prevent or treat cold or flu symptoms, or protect against cold and flu viruses by boosting the immune system, unless there is scientific evidence to back up the claims. The $5.97 million settlement with Walgreens includes $1.2 million that will be used to pay consumers as the result of a separate class action suit.

In addition to the proposed Walgreens settlement, the FTC announced that a federal district court in Cleveland had approved a settlement in a separate case with two principal officers of Improvita Health Products Inc., the manufacturer of Walgreens’ “Wal-Born” and other supplements.

Under that settlement, the individuals will be required to pay $565,000 and will be barred from making unsupported claims for their cold and flu treatments. In addition, they must (1) take steps to ensure that their employees comply with the settlement and (2) comply with standard FTC record-keeping and reporting requirements.

The FTC suit against the corporate defendant, Improvita Health Products, Inc., remains in litigation.

Prior Actions

The FTC’s agreements with Walgreens and the Improvita officers come after the agency settled similar cases last year involving two other pharmacy chains, CVS Pharmacy, Inc. (CCH Trade Regulation Reporter ¶16,359) and Rite Aid Corporation (CCH Trade Regulation Reporter ¶16,331).

The action is FTC v. Walgreen Co., FTC File No. 092 3134, and FTC v. Improvita Health Products Inc., FTC File No. 072 3189. A press release, the complaints, and the consent decrees appear here on the FTC website.

Further details will appear in CCH Trade Regulation Reporter.

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