While FDA’s Proposed e-Cigarette Rule is Pending, FTC Mulls Enforcement Action

Ahead of finalizing FDA’s tobacco products “deeming” rule, the FTC considers taking enforcement action against e-cigarette firms for violative advertising, marketing, and sales practices.

Background

It has been nearly a year since the US Food and Drug Administration (FDA or the Agency) published a proposed rule establishing, for the first time, federal regulatory authority over electronic cigarettes (e-cigarettes), cigars, pipe tobacco, dissolvable tobacco products, and nicotine gels (deemed tobacco products).[1]

As discussed in our previous LawFlash on the subject,[2] the “deeming” rule would ban the sale of e-cigarettes, cigars, pipe tobacco, and other products to those under age 18; require warning statements on product packages and in advertisements; and require manufacturers to register and list products with the Agency and to submit new products for premarket review.

Regardless of the status of FDA’s rule, manufacturers and retailers should be aware of federal advertising, marketing, and sales requirements enforced by the Federal Trade Commission (FTC or the Commission).

Key Takeaways from Recent FTC Investigation

The FTC recently conducted an investigation into whether a firm violated sections 5 and 12 of the Federal Trade Commission Act (15 U.S.C. §§ 45, 52) in connection with the company’s advertising, marketing, and sale of its e-cigarette products.[3] The Commission’s inquiry focused, in part, on whether the firm had adequate substantiation for its representations that its e-cigarettes do not contain toxic chemicals and will not damage a user’s lungs.

In relevant part, sections 5 and 12 of the Federal Trade Commission Act require that

• health claims in advertising be supported by competent and reliable scientific evidence and
• before disseminating an advertisement, an advertiser possess evidence that substantiates all material claims—both express and implied—that the ad conveys to reasonable consumers.

The Commission considers “competent and reliable scientific evidence” to be

Although the Commission ultimately decided not to pursue enforcement action for the firm’s claims that its e-cigarettes do not contain toxic chemicals and will not damage a user’s lungs, the FTC made clear that its decision was based on the fact that the company was no longer conducting business or advertising, marketing, or selling e-cigarette products. As the Commission noted in its closing letter, “Our decision not to pursue enforcement action at this time should not be construed as a determination that a violation did not occur . . . The Commission reserves the right to take further action as the public interest may warrant.”

As noted above, firms that sell, advertise, and/or market e-cigarettes must be aware of all regulatory requirements applicable to their activities, which are not solely limited to the deeming regulations proposed by FDA. Given the scrutiny that the e-cigarette industry faces and the multiplatform advertising it uses, firms should be mindful of the FTC’s ability to move enforcement forward swiftly and the hefty fines that often accompany FTC enforcement—followed by plaintiffs’ suits.