The supplement industry has seen a lot of action so far in 2019 and a lot of it involves tightening the reins. In the last 10 years the supplement industry has experienced a lot of growth and a lot of that growth has gone unchecked.
As competition has increased many companies have searched desperately for any way to gain an edge on their competition and make more money. Not all of these strategies have been as honest and straightforward as others. In fact some supplement companies have implemented deceptive strategies in order to rake in their millions.
This year though it seems that the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) have decided enough is enough. They’re even cracking down on practices that are relatively common place.
3 Shady Supplement Practices Feeling the Heat
Paying for Reviews on Amazon
Fake reviews on Amazon and other ecommerce sites are nothing new. Not everyone is doing it but it can seem like it and it’s easy to adopt an “if you can’t beat them, join them,” mentality.
Reviews are an essential part to any ecommerce strategy but unfortunately it can feel like a no-win catch-22 situation. You can’t rank and get people to buy your supplements without reviews but in order to get reviews you need people to buy your supplement and that can be a problem when you’re not on at the top.
So as we all know, some supplement companies have taken to buying fake reviews in order to boost their results despite the fact that this goes against the policies of Amazon and other ecommerce sites.
In the past you only had to fear getting caught by the marketplace itself but now there’s an even bigger fish that just stepped into the wild west pond of ecommerce supplements: the FTC. Even though this has been going on for years the FTC hasn’t gotten involved… until now.
At the end of February, the FTC announced, “its first case challenging a marketer’s use of fake paid reviews on an independent retail website.” It’s difficult to know how many more of these cases the FTC will pursue but it’s safe to say that things have changed.
“People rely on reviews when they’re shopping online,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules.”
So what are the consequences?
Here are a few of the orders that Cure Encapsulations, Inc. will have to abide by.
- They’re prohibited from making, “weight-loss, appetite-suppression, fat-blocking, or disease-treatment claims for any dietary supplement, food, or drug unless they have competent and reliable scientific evidence in the form of human clinical testing supporting the claims.”
- They’re required to, “notify Amazon, Inc. that they purchased Amazon reviews of their Quality Encapsulations Garcinia Cambogia capsules and to identify to Amazon the purchased reviews.”
- Also, “the order imposes a judgment of $12.8 million, which will be suspended upon payment of $50,000 to the Commission and the payment of certain unpaid income tax obligations.”
Enrolling Customers in Auto-Ship Without Their Explicit Consent
One of the reasons that supplements are so lucrative is because of return purchases. When a customer runs out of a supplement they’ll need more and hopefully, if they had a good experience, they buy from you again.
Some people have very successfully built a subscription/auto-ship business model so that customers never run out of their supplements. Unfortunately, other companies have built business models that are straight up deceptive and predatory and the FTC has said no more!
The FTC recently announced, “another case in a series of recent actions targeting allegedly deceptive online “free-trial” offers that tricked consumers into enrolling in negative option plans.”
Specifically they’re going after deceptive “free-trial” offers that rope customers into auto-ship subscriptions without them knowing it. Customers are automatically enrolled in an auto-ship program with full-priced products and unwanted add-ons despite the fact that they can supposedly cancel the service.
The problem is that people don’t know what they’re getting into and the company at fault has made cancelling the service and getting a refund very difficult. They created many shell companies in order to get new merchant accounts approved as others got shut down to keep this scam going.
If you plan on setting up an auto-ship program or you already have one, take a minute to learn from these guys on what not to do!
Again it’s tough to know whether or not the FTC will continue to pursue more of these cases but the door is now open and it’s better to be safe than sorry especially if you’re goal is to build a quality supplement company that isn’t a scam. This case is ongoing so keep an eye out for the thrilling conclusion!
FDA Regulation Violations
Last but certainly not least, the FDA announced plans to modernize their dietary supplement regulations. According to FDA commissioner Scott Gottlieb, MD, they plan on implementing “one of the most significant modernizations of dietary supplement regulation and oversight in more than 25 years.”
That’s a huge deal! Over the last 25 years it’s really been up to the industry to regulate itself without much government oversight. While this has worked pretty well over the last few decades there have been some bad players as well that have given the industry a bad name at times.
The goals and top priorities of the FDA for the dietary supplement industry include, “ensuring safety; maintaining product integrity (confirming that supplements contain what the label claims and that products are manufactured according to quality standards); as well as ensuring that consumers and healthcare professionals are able to make informed decisions before recommending, purchasing, or using dietary supplements.”
In the end the goal really is to protect the public and punish the violators that aren’t playing by the rules and that are causing harm. Don’t be fooled by thinking this is just a lot of talk, “the agency sent 12 warning letters and five online advisory letters to companies whose products are being sold illegally as unapproved new drugs because they make unproven claims to prevent, treat, or cure Alzheimer’s disease or other diseases and conditions like diabetes and cancer.”
So be sure to review what claims you’re making and double check that they fall in line with FDA regulations so that you don’t wind up on the FDA’s mailing list too!
The Takeaway
The supplement industry has seen a lot of activity in 2019 and it’s only March! With so many changes and so much attention being focused on our industry now is a great time to evaluate your practices to make sure that they’re in the clear.
As far as ensuring safety and maintaining product integrity, Vox Nutrition is here to help! We’re a FDA registered, GMP, and FDA organic certified manufacturer. We also provide third-party product testing so that you know exactly what’s in the supplements you sell.
We’re a full service supplement manufacturer from private label supplements to custom manufacturing we do it all!
Contact Us Today to Learn More
