This blog post is written by Arthur Che and Samuel Tokheim, and refers to this article from PC World (published September 8, 2011).
Overview
Earlier this month, the FTC proposed a settlement with the sellers of two smartphone applications, Acne Pwner and AcneApp, that prohibits them from making performance claims about acne treament based on scientific evidence.
Both apps claim that they effectively treat acne by emitting alternating blue and red lights. The makers instruct users to hold the light up to acne-affected skin every day. AcneApp is supported by dermatologist Dr. Gregory Pearson, who claims that the app is an effective form of acne treatment. Pictures of the app can be seen in this New York Times article, while this Fox news report shows the app being used in real-time.
How do the FTC policy statements apply to the acne smartphone apps?
The complaint filed against Koby Brown, the developer of the AcneApp mobile software application, alleges that the practices of the respondent constituted unfair or deceptive acts. In order to constitute ‘deception’, a company’s ‘representation, omission or practice’ must mislead a reasonably acting consumer in a way that affects their decision to purchase a product. Exhibit A of the FTC complaint noted that the pre-download advertisement included the following text:
This app was developed by a dermatologist.
A study published by the British Journal of Dermatology showed blue and red light treatments eliminated p-acne bacteria (a major cause of acne) and reduces skin blemishes by 76%. Studies showed that light treatments were almost twice as effective as benzoyl peroxide, the main ingredient in Proactiv and other common over-the-counter blemish treatments.
The FTC has found that this claimed scientific evidence is unsubstantiated. In particular, the levels of light emitted by smartphones are far lower than the amount of light used in the light therapy of the British Journal of Dermatology study. Therefore, the FTC alleges that the advertising materials for the apps misrepresent the scientific studies and deceive consumers.
How does this case relate to the Google and Sears settlements?
In the Google settlement, we see a case where Google has laid out explicit intentions to consumers (that they would use consumer information from Gmail solely for the purpose of providing web-based email service), and then gone on to do something else (use that information for another service). It is shown how misrepresentations of user control lead to deceptive acts and practices.
In the Sears settlement, we see a case where details about what an application does are hidden from the consumer. The deception is based around how the respondent failed to clearly disclose important information about a product.
With the acne apps, we see a case that is more rooted in the classic “false advertising” example. The makers are taking advantage of users who have acne problems by using extrinsic evidence that reasonable consumers would trust. Here, the problem is that the advertising lacks a reasonable basis.
All three settlements present clear examples of deceptive business practices that can cause injury to consumers. However, each one explores versions of deception that are different in subtle ways. Together, they demonstrate the flexibility and comprehensiveness of the FTC policies. They also illustrate how the FTC’s rules on unfairness and deception can be applied across new platforms and technologies.
Mobile Apps and Consumer Protection vis-a-vis Medical Devices
This case highlights an issue that has emerged from the nascent market for mobile applications built by individuals rather than large, established companies. The PC World article describes “Acne Pwner” developer Andrew Finkel as a “a “young, struggling software developer with plenty of school loans.” The FTC’s rules on unfairness are not just about mega-corporations with overpowering resources. It is important that they apply to individuals and small businesses as well.
This article also raises questions about what kinds of medical claims can legitimately be made about iPhone apps and the level of medical substantiation that must be included in app advertisements. Does the smartphone context introduce a need to refine the FTC’s determination of a “reasonable” basis? Broadly speaking, how does the growing amount of information available to consumers affect the concept of materiality? Are the current FTC definitions enough to enforce our increasingly digital world?