Snake-oil salesmen are back, but these days they don't have to rely on brightly painted horse-drawn carts to attract interested crowds of people. Who needs a soap box when outrageous claims made over the Internet can reach thousands of gullible buyers? But just like the sheriffs who used to run flimflammers out of town, the Federal Trade Commission (FTC) is watching. In addition, attorneys general in all 50 states keep tabs on advertising and take action against businesses that violate state regulations.
The same technology that makes it easier to hoodwink people also makes it easier to track down those who mislead consumers. On two Health Claim Surf Days in 1997 and 1998, FTC employees, working with their counterparts in 24 other countries, searched the Internet and found more than 800 Web sites and news-groups making questionable claims about products that could supposedly cure a host of illnesses. The Arthritis Pain Care Center of Arlington, Texas, offered a fatty acid derived from beef tallow, purported to cure arthritis by modifying the immune system. Body Systems Technology Inc. of Casselberry, Florida, claimed its shark cartilage capsules were scientifically proven to be effective in treating cancer, arthritis and HIV/AIDS--claims that turned out to be completely unfounded.
When FTC staff sent e-mail messages warning perpetrators that false advertising is against the law, more than one hundred sites quickly shut down or modified the claims in question. Others faced legal action. Last September, for instance, after an official investigation and complaint, the FTC ordered Body Systems Technology to stop claiming its products were effective in preventing or treating disease and to stop making fallacious claims about scientific research. The company was ordered to send a copy of the FTC notice to all its distributors, monitor its advertising, terminate any distributors who engaged in false advertising, and provide refunds to every customer who requested one.
Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.