The FTC Sticks Their Foot in the First Amendment

By: Kendall Smith, Vol. 21 Staff Writer

My Neck, My Back, and My Knee?

In May 2022, the U.S. Federal Trade Commission (FTC) filed a lawsuit against a California footwear company, Gravity Defyer Medical Technology Corporation, and its owner, Alexander Elnekaveh, for false and deceptive advertising. Gravity Defyer markets and sells “pain defying” footwear made with “hybrid VeroShock technology” that claims to relieve knee, back, ankle or foot pain associated with certain medical conditions. In response to the lawsuit, Gravity Defyer invoked their First Amendment right to free speech and criticized the government agency for having a history of overreaching.

Walk, Before you Run

            The Supreme Court in Central Hudson Gas & Electric Corp. v. Public Service Commission made it clear that commercial speech is a less-protected category of speech. The Court defined commercial speech as “expression related solely to the economic interest of the speaker and its audience.” While commercial speech is a less protected category, this does not mean it is not protected at all. Under the First Amendment commercial speech doctrine, the U.S. government may not prohibit advertising unless it is provably, and thus, inherently misleading. If speech is only potentially misleading, the remedy applied is more disclosure, not prohibition.

The FTC is an independent agency of the U.S. Government created by and tasked with enforcing the Fair Trade Commission Act. Congress passed the act to protect consumers against methods of deception in advertisement and compelling businesses to be upfront and truthful about items being sold online. The FTC alleges Gravity Defyer violated several sections of the Act which prohibit:

• Unfair or deceptive acts or practices in or affecting commerce;
• Misrepresentations or deceptive omissions of material facts that constitute deceptive acts or practices; and
• Dissemination of any false advertisement in or affecting commerce for the purpose of inducing, or which is likely to induce, the purchase of food, drugs, devices, services, or cosmetics.

Tied Up with the FTC

            This is not Alexander Elnekaveh’s first rodeo with the FTC. In 2001, Elnekaveh was an officer of Gadget Universe. Gadget Universe advertised, sold, and distributed Super FuelMax, a device installed on a vehicles fuel line to help the consumer save gas.  Elnekaveh claimed that this device was tested at a certified EPA laboratory and was determined to increase mileage and reduce harmful emissions or pollutants. The FTC discovered that the tests performed did not in fact prove these findings and, therefore, any advertisements about the test results were false or misleading. To avoid litigation, Elnekaveh settled with the FTC. This settlement included an order which barred Elnekaveh from using deceptive advertising that makes unsupported scientific claims and using misleading consumer testimonials to sell products. The order terminated on December, 17, 2021, meaning Elnekaveh is no longer bound by any restrictions set out in the order.

Gravity Defyer’s customers are primarily people aged 55 and older. Their annual footwear sales in 2016 were $3.9 million, $13.1 million in 2018, and for the first three quarters of 2019 approximately $11.2 million. Similar to Gadget Universe, Gravity Defyer basis its claims of pain relief on a UCLA study published in the Journal of American Podiatric Medical Association. Once again, the FTC found these results unsubstantiated.So, in a surprising twist, Gravity Defyer filed its own lawsuit against the FTC in April 2022, a month before the FTC’s lawsuit, claiming the FTC’s concerns as to the UCLA study are “baseless and amount to unscientific conjecture.” The FTC declared the study has substantial flaws and prohibited the footwear company from using these results in its advertising. In an attempt to come to a resolution, Gravity Defyer offered to amend its advertising to include any reasonable disclosures or qualifications that the FTC desired. Perhaps already annoyed with Elnekaveh’s antics, the FTC flatly rejected these changes.

Whose Report do you Believe?

            The FTC and Gravity Defyer Complaints were filed separately in the District Court for the District of Columbia, but they have since been consolidated and the case is pending trial. In reading Gravity Defyer’s rather animated complaint, it’s easy to see their point of view. They contend they have done everything above board, after all, the UCLA study was published in “the oldest and most frequently cited peer-reviewed journal in the profession of foot and ankle science.” They also argue that the FTC’s concerns regarding the study are extraordinary and illogical given the facts. On the other hand, there are alarmingly similar motifs in both Elnekaveh’s business ventures.

             Even if the similarity is more than a coincidence, the FTC’s authority does not give it free reign to infringe upon business’s First Amendment rights to free speech simply because the speech is commercial. Protection for commercial speech is dependent on the nature of the expression and the governmental interests served by its regulation. In FTC v. Agora Financial, the District Court for the District of Maryland stated that the limited question within the FTC’s consumer protection purview is –“whether the advertisements accurately represent the product such that consumers can make an informed decision about whether they want to purchase the item.” In the FTC’s Complaint against Elnekaveh, there are no inferences that the UCLA study is the only reason consumers purchased the footwear nor that the study even made it more likely that consumers purchased the footwear. Also, if the findings of the study were the sole (pun intended) issue with the footwear, shouldn’t the proposed amendments be enough? While the jury is still out, Gravity Defyer’s controversial ads are still in rotation, and no changes have been made.