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Federal Enforcement against Marketers Making Allegedly Deceptive Coronavirus-Related Health Claims

As we have previously reported, like other regulators, the FTC has been quick to take action against companies that it believes are seeking to take advantage of the coronavirus pandemic. The FTC has sent warning letters to approximately 300 companies that it has alleged were making unsubstantiated or potentially misleading claims about products related to the coronavirus. Recently, the FTC has taken decisive action against a company to which it has previously sent a warning letter, alleging that such company has continued to make deceptive and misleading advertising claims in spite of the FTC’s warning.

The FTC filed a complaint against Golden Sunrise Nutraceutical, Inc., and Golden Sunrise Pharmaceutical, Inc. in the Eastern District of California. The complaint also named the companies’ President and Chief Executive, Huu Tieu, and the Medical Director of Golden Sunrise Nutraceutical, Inc., Stephen Meis. In its complaint, the FTC alleges that the companies have promoted and sold a variety of products labeled as “dietary supplements” since at least 2016. The defendants market their products both individually and through a variety of “plans of care.” According to the FTC, the defendants market their products “as providing consumers safe, effective treatment for serious diseases” in the absence of the requisite reliable scientific evidence to support such claims.

The defendants market products to treat a variety of serious diseases, and in March 2020 started marketing their “Emergency D-Virus treatment plan” as a coronavirus cure. The FTC alleges that until approximately May 11, 2020, the defendants “expressly claimed in the product description document that their Emergency D-Virus treatment plan could effectively treat COVID19.” On April 29, 2020, the FTC sent a warning letter to Golden Sunrise Pharmaceutical, Inc. cautioning against making unsubstantiated health claims and demanding that it “remove all unsubstantiated claims that their product could prevent, treat, or cure COVID-19.” According to the FTC’s complaint, in response to this warning letter, the defendants simply replaced “COVID-19 virus” with more generic, nondescript terms, like “the virus,” “viral,” or “the viral pandemic.” The FTC alleges that the defendants have continued to deceptively market this product as a cure to coronavirus.

The defendants have also marketed and sold dietary supplements that they claim can be used to treat a variety of serious health conditions and diseases, including Parkinson’s disease and cancer. According to the FTC’s complaint, some of the treatment plans can cost between $170,000 to $200,000 when the ingredients contained in the products are largely common herbs and spices. The FTC alleges that these health claims are also unsubstantiated.

Takeaway: Through the hundreds of warning letters that the FTC has issued on the subject, companies have been warned that U.S. regulators are keenly observing and critiquing advertising claims related to coronavirus and potential health benefits. This enforcement action further demonstrates that the FTC is willing to pursue such action if deemed necessary.

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