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The Jig Is Up

Be sure you're not hoodwinking your customers--or you might risk a nasty run-in with the FTC.

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This story appears in the May 2004 issue of Entrepreneur. Subscribe »

On January 22, 2004, the FTC announced a settlement with Chicago-area entrepreneur Robert Barefoot and two of his companies, Deonna Enterprises Inc. and Karbo Enterprises Inc. The defendants were ordered to stop touting the health benefits of Coral Calcium Supreme, a dietary supplement Barefoot developed and advertised through TV infomercials. The companies may no longer claim that coral calcium can cure cancer, multiple sclerosis, heart disease and high blood pressure. They also can't say the supplement is absorbed by the body better than other calcium supplements, or that a serving of Coral Calcium Supreme has as much calcium as two gallons of milk.

Why not? Because there isn't enough scientific evidence for any of these claims. Under federal law, you can't make medical claims in your ads without solid medical evidence to back them. The Lanham Act and the laws of all 50 states prohibit advertisements that might mislead people into buying products or services they wouldn't buy if they knew the truth. It's the job of the FTC and its counterpart in each state to enforce these laws by following up on complaints from consumers or competitors, or by monitoring particular industries for violations.

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