Consumer Law & Policy Blog

Omri Ben-Shahar on the Problem of the California Disclosure About the Possiblity that Coffee Causes Cancer

Here, in Forbes. Another consumer protection that probably doesn't protect consumers

Beyranevand Article: Regulating Inherently Subjective Food Labeling Claims

Laurie J. Beyranevand of Vermont has written Regulating Inherently Subjective Food Labeling Claims, 37 Environmental Law 543 (2017).  Here is the abstract:

For many consumers, the modern food label serves as the sole source of information regarding any individual food product. While it may be considered informative in some respects, it is often enigmatic in others. The present debate regarding the creation of a federal regulation to define use of the term “healthy” exemplifies the difficulties associated with seemingly subjective food labeling claims.The law requires manufacturers to include certain facts on food labels. However, they are permitted to include additional voluntary statements related to the healthfulness of the food product, the presence or absence of certain ingredients, and information related to production and growing methods, among other things. These claims have the potential to cause consumers a great deal of confusion, particularly with regard to their veracity. Many scholars have analyzed First Amendment limits on the Food and Drug Administration’s (FDA) ability to restrict specific types of claims, yet few have addressed the issue of whether the agency can and should restrict claims unable to be supported by significant scientific agreement due to the inherent subjectivity of the claim. This Essay proposes FDA adopt such an approach as a means of effectuating the Federal Food, Drug, and Cosmetic Act’s purpose of protecting consumers from false or misleading food product labels. As an alternative, if FDA is unwilling to restrict those claims altogether, this Essay suggests the agency could require curative disclaimers on labels, as they do for qualified health claims, that are not supported by significant scientific agreement.

Study Finds Consumers Think Fast Foods Have More Calories Than They Do; Calorie Disclosures May Make Such Foods Appear Healthier

Simon Hedlin has written Calorie Overestimation Bias and Fast Food Products: The Effects of Calorie Labels on Perceived Healthiness and Intent to Purchase.  Here's the abstract:

In 2014, the United States Food and Drug Administration announced that chain restaurants with 20 or more locations would be required to put calorie labels on the menu. The merits of the policy depend in large part on three empirical issues: 1) if calorie labels help correct calorie under- or overestimation biases; 2) if the labels lead to changes in consumer behavior, which may improve physical health; and 3) if they have an impact on psychological health. This paper presents data from an online experiment (N = 1,323) in which participants were randomly presented with pictures of food and drink items from major fast-food companies either with or without calorie labels.

The following findings are reported. First, there was calorie overestimation bias among participants, and the respondents thought, on average, that products contained more calories than was actually the case. Second, calorie labels both made participants perceive the products as healthier, and made them more likely to intend to purchase said items. Third, calorie labels did not have any discernible effects either on the expected utility from consuming the products, or on the participants’ experienced well-being.

Thus, while calorie labels did not appear to have any negative effects on psychological health, they did seem to correct a calorie overestimation bias, which may inadvertently improve the perceived healthiness of foods and beverages high in calories, and could also potentially lead consumers to buy more, rather than fewer, such products.

 

Times: How the Sugar Industry Shifted Blame to Fat

by Jeff Sovern

Here (behind paywall). Excerpt:

The sugar industry paid scientists in the 1960s to downplay the link between sugar and heart disease and promote saturated fat as the culprit instead, newly released historical documents show.

The internal sugar industry documents, recently discovered by a researcher at the University of California, San Francisco, and published Monday in JAMA Internal Medicine, suggest that five decades of research into the role of nutrition and heart disease — including many of today’s dietary recommendations — may have been largely shaped by the sugar industry.

* * *

The documents show that a trade group called the Sugar Research Foundation, known today as the Sugar Association, paid three Harvard scientists the equivalent of about $50,000 in today’s dollars to publish a 1967 review of sugar, fat and heart research. The studies used in the review were handpicked by the sugar group, and the article, which was published in the prestigious New England Journal of Medicine, minimized the link between sugar and heart health and cast aspersions on the role of saturated fat.

* * *

“It was a very smart thing the sugar industry did because review papers, especially if you get them published in a very prominent journal, tend to shape the overall scientific discussion,” [Stanton Glantz, a professor of medicine at U.C.S.F. and an author of the new JAMA paper] said.

I wonder how many people, while avoiding the wrong foods, died or become ill so the sugar industry could make a profit.

Paper on Food and Beverage Marketing to Youth

Andrew Cheyne, Pamela Mejia, Laura Nixon, and Lori Dorfman, all of the Berkeley Media Studies Group, have written Food and Beverage Marketing to Youth, Current Obesity Reports, September 2014. Here's the abstract:

After nearly a decade of concern over the role of food and beverage marketing to youth in the childhood obesity epidemic, American children and adolescents — especially those from communities of color — are still immersed in advertising and marketing environments that primarily pro- mote unhealthy foods and beverages. Despite some positive steps, the evidence shows that the food and beverage industry self-regulation alone is not likely to significantly reduce marketing of unhealthy foods and beverages to youth. A variety of research is needed to monitor industry marketing of unhealthy products to young people, and identify the most promising approaches to improve children’s food marketing environments. The continued presence of unhealthy marketing toward children despite years of industry self-regulation suggests it is time for stronger action by policymakers to protect young people from harmful marketing practices.

Satirist John Oliver on Dr. Oz's Endorsement of Magic Weight Loss Pills

Here.  A TV comic excursion into the law of supplements (HT: Charles Shafer).

Snake oil, the placebo effect, and status quo bias: Should evidence of "satisfied customers" defeat a consumer fraud class action?

by Deepak Gupta

Should a defendant in a consumer fraud class action be able to defeat certification through evidence that its customers say they are "satisfied," even when the the allegation is that the product is snake oil?  Or would that transform the placebo effect into a defense to fraud? That's the question the Ninth Circuit will be asked to answer in Cabral v. Supple, an appeal in which I just filed the opening brief for the plaintiffs.

About 50 million Americans, many of them elderly, suffer from arthritis and joint disease. Joint pain can be very painful, and it has no known cure. Enter dietary supplement manufacturers, who claim that their largely unregulated products can succeed where standard medicine fails. Supple is one such company. Supple tells consumers—through websites, television infomercials, and telemarketing—that spending $114.90 per shipment of the company’s special fruit juice will “completely reverse[] and halt[] the disease process” for joint disease, including arthritis. 

Supple is facing a consumer class in California alleging that its claims are false and that the supplement has no real efficacy. A district court certified the class and Supple appealed to the Ninth Circuit, which agreed to hear its interlocutory appeal. The company's main argument is that the district court was wrong to ignore evidence that Supple's customers are "satisfied." That evidence takes two forms: customer testimonials and evidence that customers made repeat purchases by failing to cancel automatic subscriptions.

Our brief points out that this evidence, even if admissible, wouldn’t prove that Supple’s customers experienced anything beyond the placebo effect. In fact, testimonials may actually demonstrate that a fraud is succeeding -- that consumers are fooled by false advertising. And consumers' failure to cancel their automatically renewing subscriptions is just evidence of what behaviorial economists call "status quo bias" (or what we might call laziness or inertia). As Richard Thaler and Cass Sunstein point out in their book, Nudge, "[i]f renewal is automatic, many people will subscribe, for a long time, to magazines they don’t read.” They go on: 

Those who are in charge of circulation know that when renewal is automatic, and when people have to make a phone call to cancel, the likelihood of renewal is much higher than it is when people have to indicate that they actually want to continue to receive the [product.] 

That's why default choices are so powerful. Evidence of non-cancellation tells us nothing about whether a product works, especially when that product is what economists call a "credence good" -- a product (like a dietary supplement or pill) whose qualities are difficult or impossible for consumers to properly evaluate on their own. In any event, a product’s efficacy is a question for the merits, not class certification. On the merits, the veracity of the company's claims will be determined on the basis of common proof -- scientific evidence of its efficacy, or lack thereof. Because the veracity of the company's advertising is an objective question, answered from the perspective of a reasonable consumer rather than subjective testimonials, class treatment is particularly appropriate. It will be interesting to see what the Ninth Circuit says. 

Burritos with a Conscience

Chipotle is causing a stir with an evocative new video: A silent scarecrow working in a foodlike-substance factory grows dismayed by the treatment of animals while Fiona Apple croons a haunting reinterpretion of "Pure Imagination" from Charlie and the Chocolate Factory. Soon, the scarecrow has an epiphany. He strikes out on his own and opens a food stand that serves locally-sourced (and presumably sustainable and humane) food, which happens to look a bit like Chipotle's fare.

It's an understatement to call this video striking, coming from a fast-food company. It's really well done, even captivating.

It left me wondering what advocates for the values it promotes think about Chipotle's practices. The chain is trying to do things differently, but how is it doing? My sense is that there are serious questions whether local, sustainable, and humane agriculture can be practiced on a scale large enough to serve a major fast-food chain. Not to mention the pricing issues. Is Chipotle making breakthroughs?

Now let's assume the best about Chipotle's representations. It's rare to see a large company go after its competitors on the moral or social desirability of practices, as opposed to the quality of products. If that starts happening more often, it could have interesting implications for consumer protection and regulatory policy more generally. In theory, the market can solve some social problems without the need for government responses. If consumers have good key information and real choices, then they can bring about change by voting with their dollars. In practice, it's often difficult for consumers to get the information they need to make choices that align with their ethics. This is true even for consumers who care a great deal and put real effort into their choices. The model of change based on consumer choice looks more promising when large companies affirmatively compete on social values by exposing bad practices and promoting good ones. They have the information and the marketing budgets to make a difference -- and they can reach not only consumers who try to make ethical choices, but ones who aren't paying much attention.

One last twist: The video technically isn't an ad for Chipotle, but for a free video game. (Maybe one that promotes Chipotle, in another fast-food marketing innovation? I don't know.)

Hat tip to Matt Yglesias.

 

Grossman Paper: FDA and the Rise of the Empowered Consumer

Lewis A. Grossman of American has written FDA and the Rise of the Empowered Consumer. Here's the abstract:

This paper traces the historical evolution of a view of consumers as informed, rational, and rights-bearing decision makers, and the corresponding diminution of FDA’s role as a paternalistic gatekeeper acting in conjunction with medical and scientific experts to prevent products and information from reaching the public. 

The relationship between consumers and FDA-regulated products has changed dramatically since the mid-1960s.  A half century ago, FDA treated consumers as passive and ignorant. Accordingly, the agency gave them relatively little latitude to make their own choices among products and denied them much of the information they could have used to inform such choices.  By comparison, today’s consumers of food and drugs are much more empowered to make their own, unmediated choices among a wider variety of products, guided by a deluge of labeling and advertising information.

The paper examines this phenomenon against a background of three societal and cultural trends during the past half century: Americans’ declining trust in major institutions, the “rights revolution,” and the dramatic expansion of health care information accessible to consumers.  It then examines a variety of specific regulatory developments during this period of change.  In a section on food, the paper considers reforms in standards of identity and nutrition labeling, the rise of health claims as facilitated by the First Amendment, and various popular movements for freedom of choice with respect to food ingredients and dietary supplements.  The paper then turns to drug regulation, examining the rise of patient labeling and direct-to-consumer advertising of prescription drugs, the tidal wave of “switches” from prescription to over-the-counter status, and the birth of social movements seeking to influence FDA drug approval policy.  The paper concludes by speculating on whether this new model of consumer is a permanent one.

Simplified Food Labels

by Jeff Sovern

Mark Bittman has an interesting column in today's Times, My Dream Food Label, describing how his ideal food label would use traffic lights--green, yellow, or red-- to signal qualities such as the healthfulness of the food.  Though Bittman doesn't mention the health department restaurant grading system, which uses letter grades, it's a similar system. If Bittman's system were to go into effect and enough consumers were to pay attention to the grades, food manufacturers would probably want to attract their business and so could be expected to take steps to earn green lights, which should improve the heatlthfulness of food.  Thus, all would benefit, even those who don't pay attention to the grades.