By Nilda Isidro, Carla Karp and Ali Siedor

Law360 (March 26, 2020, 3:21 PM EDT) --

Nilda Isidro

Carla Karp

Ali Siedor

It has become clear that the COVID-19 pandemic is not like other public health crises we have faced in the last few decades. But there is at least one thing that it will have in common with other pathogen-related public health crises: It will undoubtedly bring increased scrutiny and attention — in the regulatory, class action and business contexts — to products bearing claims of disinfectant, antiseptic, immune-boosting and similar properties.

This increased scrutiny can range from ensuring accuracy of product claims, to ensuring that such products are priced fairly. We are already starting to see this with COVID-19, but as with some of the other repercussions of this pandemic, we can expect this increased scrutiny to be with us not only for the next few months, but even for the next few years.

Background

When a public health crisis hits — especially one in which treatment and/or prevention options are limited — the public is unsurprisingly anxious to find a silver bullet, or at least something that will give them even a small amount of control over the situation. This can make consumers particularly vulnerable to labeling claims and advertising that signal prevention, mitigation or treatment of the feared illness.

When these claims are true and substantiated, they can help consumers find the products that will be most helpful to them in these difficult times. But when these claims are false, unsubstantiated or otherwise misleading, they can not only cause a consumer to spend money on a product that may not do anything for them, but also potentially prevent that consumer from instead choosing a product that actually will be helpful, and may even cause an overly-confident consumer to take fewer precautions than they otherwise would have.

Predatory pricing practices can also cause consumers to spend more than they should have to, or worst of all, prevent vulnerable consumers from having access to essential products. All of this brings regulatory scrutiny of relevant products to intensify during a public health crisis, and even in the years following that crisis, when its effects are still relatively fresh in the minds of consumers.

Cracking Down on COVID-19 Claims: FDA and FTC Not the Only Ones Taking Action

The first wave of action has focused on claims that expressly invoke COVID-19. On March 9, the U.S. Food and Drug Administration and the Federal Trade Commission announced that they had issued warning letters to seven companies (with products including teas, tinctures, essential oils and colloidal silver) for selling products "that may violate federal law by making deceptive or scientifically unsupported claims about their ability to treat coronavirus (COVID-19)."[1]

This recent FDA and FTC activity mirrors the increased enforcement during past public health emergencies, such as H1N1[2] and SARS.[3] But interestingly, the FDA and the FTC have not been the only ones cracking down. Even before the FDA and FTC warning letters, Amazon.com Inc. announced that it had pulled more than a million products from its site for inaccurately claiming to cure, or defend against, COVID-19.[4] 

As these more express COVID-19 claims are addressed, we can expect to see regulators' (and industry's) focus broaden to more indirect claims, such as general claims of antiseptic, disinfectant or immune-boosting properties.

Industry and Retailers Protecting Consumers by Standing Up to Predatory Pricing

Retailers and industry groups have also been working to stop predatory pricing. Amazon, for example, announced at the end of February that it had pulled tens of thousands of "deals" from merchants that Amazon said attempted to price gouge customers.[5]

Then, on March 9, the Consumer Brands Association wrote to U.S. Attorney General William Barr, asking that the U.S. Department of Justice act to put an end to price gouging of products like hand sanitizer, face masks and tissue during the pandemic.[6] The very same day, the DOJ issued a warning against price fixing during the pandemic.[7] On March 11, The Clorox Co. also announced that it was working with Amazon to address price gouging of Clorox products by third parties.

Litigation Already Starting — and It's Just the Beginning

On March 5, a putative class action was filed against the maker of hand sanitizer product Germ-X, alleging that the product was misleadingly marketed as effective against coronavirus.[8] On March 10, and despite its efforts to put an end to price gouging on its website, a putative class action was filed against Amazon, alleging that it had engaged in price gouging of essential products such as hand sanitizer, toilet paper and disinfectant wipes during the COVID-19 pandemic.[9]

And it's not just civil class actions. Also on March 10, the Missouri Attorney General's Office announced Tuesday that it is suing televangelist Jim Bakker for suggesting on his show that colloidal silver could cure COVID-19, and that this action was part of a larger effort to crack down on fake treatments for COVID-19.[10]

Protecting Your Product During — and After — the Pandemic

In the face of all this activity (which is only expected to increase), companies can do the following to prepare for increased scrutiny and protect their products and brand:

• If you are planning to make a COVID-19 claim on your product, make sure you have done adequate testing to substantiate those claims.[11]

• If your product is labeled or advertised as having disinfectant, antiseptic or immune-boosting properties, now is the time to review your substantiation file to make sure that it is thorough enough to withstand increased scrutiny.

• Similarly, for any product that is labeled or advertised as having disinfectant, antiseptic or immune-boosting properties, review any new advertising and marketing materials (and review existing ones again), to make sure they are up to date with the latest FDA, FTC and U.S. Environmental Protection Agency requirements (as applicable).

• Monitor social media and online marketplaces to ensure that your products are not being sold by unapproved sellers at marked-up prices, or with unsubstantiated claims — and work with retailers and marketplaces to remove any unapproved sellers.

• Remember that industry enforcement by reputable businesses can be a powerful method of eradicating improper conduct by bad apples in the industry. By banding together against improper conduct and requesting industry oversight of bad actors, companies can prevent their products from being tarnished by those bad actors, and can help to strengthen consumer loyalty.

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Nilda Isidro is a partner, Carla Karp is counsel and Ali Siedor is an associate at Goodwin Procter LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] https://www.ftc.gov/news-events/press-releases/2020/03/ftc-fda-send-warning-letters-seven-companies-about-unsupported. See also https://www.ftc.gov/news-events/press-releases/2020/03/ftc-fda-send-warning-letters-seven-companies-about-unsupported. See also https://www.fda.gov/news-events/press-announcements/coronavirus-update-fda-and-ftc-warn-seven-companies-selling-fraudulent-products-claim-treat-or.

[2] https://www.ftc.gov/news-events/press-releases/2009/05/fda-ftc-warn-public-fraudulent-2009-h1n1-influenza-products.

[3] https://www.ftc.gov/news-events/press-releases/2003/05/ftc-and-fda-crack-down-internet-marketers-bogus-sars-prevention.

[4] https://www.businessinsider.com/amazon-bars-one-million-products-for-false-coronavirus-claims-2020-2.

[5] https://www.businessinsider.com/amazon-bars-one-million-products-for-false-coronavirus-claims-2020-2.

[6] https://thehill.com/homenews/administration/486614-doj-warns-companies-against-price-fixing-during-coronavirus.

[7] Id.

[8] https://www.courthousenews.com/wp-content/uploads/2020/03/FullText-2020-03-05T191915.508.pdf.

[9] https://www.courthousenews.com/wp-content/uploads/2020/03/Price-Gouging.pdf.

[10] https://www.washingtonpost.com/nation/2020/03/11/jim-bakker-coronavirus-cure/.

[11] https://www.reuters.com/article/us-health-coronavirus-consumer-products/cleaning-product-makers-race-to-labs-to-bolster-coronavirus-claims-idUSKBN2101W1.

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