You've been hired as the marketing manager for a company that sells weight loss products to the public. The Federal Trade Commission (FTC) recently brought an enforcement action against the company for violating the FTC Act's prohibition of "unfair and deceptive trade practices," based on some of the company's advertising. The company wants to challenge the FTC's ruling by appealing to the courts. The FTC's ruling was based on the company's ads for herbal teas ("blocks absorption of fat and will lead to substantial weight loss") and the company's ad for a popular supplement ("lose two pounds or more each week without dieting or exercising").
What is the basis of the FTC's power to regulate ads for diet products? What standards has the FTC established to determine if a diet product claim is "unfair and deceptive"? If the company tries to challenge the FTC's ruling by appealing to a court, what test will the appeals court use to determine if the FTC's ruling was justified? What do you think a court will decide here? If the company wants to comply with the FTC regulations on diet product claims, what language would need to change in the ads mentioned above?