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Lawsuit challenges FTC authority over 'unsubstantiated' advertising claims
June 18 (Reuters) - Hygiene products maker Xlear sued the U.S. Federal Trade Commission on Wednesday, accusing the agency of overstepping its authority to regulate false and deceptive advertising by requiring advertisers to "substantiate" claims about their products.
Xlear, whose products are sold in major U.S. retailers and pharmacy chains, filed the lawsuit, opens new tab in federal court in Utah after the agency in March dropped a four-year-old lawsuit that had accused Xlear of falsely claiming its saline nasal spray could prevent and treat the COVID-19 virus.
The complaint seeks a court declaration that companies do not violate FTC rules by making statements that are allegedly unsubstantiated.
'This lawsuit argues that the FTC is grossly overreaching in its interpretation of the law,' said Rob Housman, an attorney for Xlear. 'The FTC Act doesn't say anything about requiring companies to have 'substantiation.''
The Federal Trade Commission declined to comment.
Xlear in its lawsuit cited a U.S. Supreme Court ruling in 2024, Loper Bright Enterprises v. Raimondo, that overturned a key 1984 precedent requiring judges to give deference to agencies in their interpretation of the laws they administer.
Housman said that under the justices' ruling an agency 'can't just invent new rules not found in the law.'
The FTC's lawsuit in 2021 alleged Xlear had no scientific or factual basis to make its COVID claims, and said the company's alleged deceptive advertising and misinformation 'to sell their product to concerned consumers during a pandemic poses a risk to public health and safety.'
In seeking dismissal of that case, Xlear denied making any deceptive statements.
Xlear said it spent upwards of $3 million defending itself against the FTC in what the company called "vexatious litigation."
The FTC did not provide a reason for dropping the case earlier this year.
The case is Xlear Inc v. Federal Trade Commission, U.S. District Court, District of Utah, No. 2:25-cv-00484.
For plaintiff: Robert Housman of Book Hill Partners, Evan Strassberg of Michael Best & Friedrich and Ronald Price of Price Parkinson & Kerr
For defendant: No appearance yet
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