Saturday, May 29, 2010

Does Wall Street "Reform" Threaten DSHEA Products?

As most health freedom advocates know, the two most powerful "consumer protection" Federal agencies, the FDA and the FTC are not friendly toward natural products, including dietary supplements protected by the Dietary Supplement Health and Education Act of 1994 (DSHEA). Before that law, such products were under severe attack, so much so that FTC sought in 1975 to use its rule making power to effectively ban such products. By 1980 the public outcry caused Congress to restrict that power, and then in 1994 DSHEA was adopted, protecting our right to truthful information about nutrition.

Thus when a number of astute "old hands" in the industry said the new Wall Street "reform" * bill had language hidden in it that could threaten natural products with new general rule making power for the FTC to abuse we paid attention.

We've opposed this bill on that basis, with many thousands of messages to Congress demanding protection in the bill for DSHEA products.


Now along come some suggesting there is no problem here (somewhat the way some "old hands" thought John McCain's justly maligned and now happily defunct "Dietary Supplement Safety" bill, S.3002 was no threat). We're told there is no FTC empowerment language. We did our due diligence and researched the actual bill, S.3217. Go to and put in the bill number, open up the .pdf version and search for the name "Federal Trade Commission."

You'll find what I found:

I've reviewed the 1522 page .pdf file of the version of the bill considered by the US Senate. The terms "Federal Trade Commission" occurs on 26 pages. Five pages discuss FTC authority.

Page 1375 contains the smoking gun:

Notwithstanding subparagraphs (A) and (B), the Federal Trade Commission shall continue to have authority to enforce, and issue rules with respect to—
(i) the Credit Repair Organizations Act (15 U.S.C. 1679 et seq.);
(ii) section 5 of the Federal Trade Commission Act (15 U.S.C. 45) * and
(iii) the Telemarketing and Consumer Fraud and Abuse Prevention Act (155 U.S.C. 6101 et seq.)."

Section 45 of Title 15 states:

"Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful. "

Notice how carefully the new law is stated, "continue to have authority to enforce, and issue rules..." -- so it will "continue to have authority to enforce..." -- notice carefully how it is worded, "..., and issue rules..." Thus "continue" applies to enforcing existing rules, dating from the 1970s or issued under limited laws passed by Congress (as they have done with regard to, for example, direct marketing) while "issue rules" is a new power which relates, tucked in section (ii) to the agency's general Section 5 authority!

So FTC now has authority to enforce and issue rules with respect to "unfair or deceptive acts or practices in or affecting commerce..."

That is general authority to control all interstate commerce without further authorization from Congress!

I therefore conclude that the bill does threaten natural and DSHEA products.

One of my colleagues, Counsel Jim Turner of Swankin and Turner, Washington DC attorneys, puts it this way:

"My understanding is that the FTC was stripped of this authority in 1980 and this is an effort to restore that authority. It has broad implication for example if what I understand is true then this is the authority that FTC used in its effort to ban the words 'organic, natural and health food' from all commerce. It is not good if this is happening."

June 2, 2010 Update: this cogent comment from Gretchen DuBeau of Alliance for Natural Health,

"My initial thought is that issuing rules in itself isn't terrible as long as the Magnuson Moss Act** isn't rescinded, as happened in section 4901 of the companion house bill. With all of those safeguards in place, FTC has difficult hurdles that prevent them from issuing controversial rules, such as formalizing their internal procedures re dietary supplement advertising. However, if section 4901 makes it into the final bill, coupled with the provision you pointed out, we might have a recipe for disaster!"

* In this case "reform" means a multi-trillion anti-market bailout and a slap on the wrist...

** The Magnuson Moss Act, passed in 1975, is the federal statute that governs warranties on consumer products. According to the Act, ambiguous statements in a warranty are construed against the drafter of the warranty.

1 comment:

Combined Cycle Power Plant said...

I therefore conclude that the bill does threaten natural and DSHEA products.