Deceptive Marketing Of Dietary Supplements In Malaysia: The Legal Framework

Viral Marketing

In the wake of sophisticated and highly efficient digital communication, viral marketing has become much cheaper compared to the traditional ways. The adoption of social media such as Facebook and YouTube combined with an increased trust in other people's opinions makes viral marketing very efficient and widespread. In user-generated marketing, crowds of consumers help the business spread its commercial messages sometimes with the result that the marketing messages are spread in the form of audiovisual clips or links like a virus, while blogs, groups, discussion forums and other social media are used by private individuals to pass on commercial messages (Willis & Stafford, 2016). The development in the use of mobile devices will further enhance the rapid and cheap communication in digital social environments. (Trzaskowski, 2011).

The rise of viral marketing has impacted many industries including the dietary supplement industry which comes under the food industry (Willis & Stafford, 2016). According to Ernst (2008) there is a proliferation of food-based products following the diversified consumer demand and an expanding diversity in channels of distribution where advertisement has become a significant tool for a successful marketing of a food-based product. The rise of viral marketing as an advertisement mechanism supplemented this need. Linking to this development of viral marketing as a channel of advertisement, Ernest also cautioned the industry on the need to balance between the need to plan an effective advertising of food-based product and to avoid exaggeration of description/testimony of the food-based product. Although advertising is a constitutionally protected form of commercial speech, it is subject to extensive regulation (Pawar & Arundel, 2016). Food and food-based products in light of its health and safety issues are subject to more regulatory oversight than other consumer product.

In a study conducted by Salleh & Wook (2010), it was reported that many consumers felt so strongly about the potential health benefits of some of the dietary or health supplement products that they reported that they would continue to take them even if they were shown to be ineffective in scientifically conducted clinical studies. This is also one of the significant impacts of viral marketing for such product. The main issue is the widespread of exaggerated benefits of these products that were not certified through reliable clinical trials. This creates a potential threat to the consumer’s safety and may lower the quality of product. Dagerman (2012) shared the same concern on safety issue associated with dietary supplement product as this product has not been medically tested.

On deceptive advertisement, few authors (Hoogenraad & Duivenvoorde, 2015; Ippolito, 2003-2004; Sax, 2015; Mohd Nor, Sheau, Liew & Rajah, 2014; Handsley & Nehmy, 2014) discussed on the doubt that advertising provides much information useful to consumers or competition. Some fear that without strong and legal constraints, the selling intent behind advertising will lead to considerable deception and consumer harm and competitive forces will not fill in important missing information (Gibson and Taylor, 2005).

Control of Misleading Advertisement for Medical or Pharmaceutical Products

The Medicines (Advertisement and Sale) Act 1956 (Malaysia) is supplemented by a guideline i.e., the Guidelines on Medical Products and Appliances 2009 (Malaysia). The guideline prohibits the dissemination of any statement which may mislead consumers about any product. It is an offence under the guideline to advertise medical products with unreliable, inaccurate or non-truthful information. However, the unreliable, inaccurate and non-truthful information are limited to the information that guarantee medical ailments or information that declare the product as having medical functions (Hassali, Saleem, Aljadhey, & Khan, 2012). Marimuthu (2013) described both the Act and guidelines as comprehensive and detailed. However, there are loopholes in this Act and guidelines which permits the deceptive advertisement to still occur in the society. Among the loopholes are the limited regulatory controls during the pre-market approval of advertisements, the monitoring of non-compliance with advertising law as well as the enforcement activities.

Despite its negative connotations, advertising regardless plays an important role in promoting competition, efficiency, and education for consumer. As internet consumers have grown savvier, Internet advertisers have struggled to capture and keep consumers' attention (Suh, 2005). According to the Trade Descriptions Act 2011 (‘TDA’) and the Consumer Protection Act 1999 (‘CPA’), advertisement is meant to include every form of advertising (whether or not accompanied by or in association with spoken or written words or other writing or sounds and whether or not contained or issued in a publication) by the display of notices or by means of catalogues, price lists, circulars, labels, cards or other documents or materials or by the exhibition of films or of pictures or photographs, or by means of radio or television, or in any other way. The wording of both provisions is almost similar in verbatim (Salleh & Wook, 2010).

Offences and Remedies under the Trade Description Act 2011(TDA)

In relation to a false description of dietary supplement product, the TDA creates two major criminal offences of strict liability. The first is applying false trade descriptions to goods in the course of a trade or business. Examples of ‘applying description’ include descriptions in writing, descriptions in verbal statements or descriptions by conduct. The Trade Description Act 2011(TDA) being the pertinent statute governing false description made through deceptive marketing on the dietary supplement products.

The second offence is supplying or offering to supply in the course of a trade or business any goods to which a false trade description is applied. Thus a person exposing goods for supply, for instance in a shop, or having them in his possession for supply, such as in a storeroom, is deemed to offer to supply them for the purpose of the Act.

Consumer Protection Act 1999(CPA)

Part II of the CPA (s.9 & 10, CPA) provides for the offence relating to misleading and deceptive conduct and false representation and Part IV provides for the penalty. Section 9 of Part II of the CPA provides that any conduct that is misleading or deceptive or would be likely to mislead or deceive on the manufacturing process, characteristic, suitability for its purpose is an offence punishable under section 25(1). Section 10 of TDA 2011 further provides for false and misleading representation. Both sections, may be used to charge any person who deceivingly described the untrue functions of a dietary supplement product or any statement or conduct that may mislead the consumer to believe that the product are able to function in certain ways which is not true. On this note, it can be said that this provision is overlapping with the provision under the Trade Description Act 2011. As the CPA is supplemental in nature (Rajadurai, 2014; Amin & Aziz, 2015) the issue of applicability of this part of the provision in solving the deceiving marketing of the dietary supplement product may not be relevant.

Control of Safety and Quality for Drug-Based Product

Currently, the laws addressing the principles of safety, quality and efficacy of pharmaceutical products are provided under the Dangerous Drugs Act 1952 (DDA), Poisons Act 1952, the Sales of Drugs Act 1952(SODA), the Control of Drugs and Cosmetic Regulations 1984 (revised 2009) (CDCR) including circulars, directives and guidelines. DDA aims at controlling and monitoring the abuse in drug usage covering the import and export activities, formulation, selling and personal usage. PA monitors the usage of poison in the formulation of pharmaceutical products that aims at protecting the safety of the consumer. It combats drug trafficking activities in Malaysia while Monitoring and control of raw materials are under the jurisdiction of PA and SODA where the control includes the declaration of information on composition process and ingredients, safety and the quality aspects. On the other hand, CDCR, DDA and SODA monitor and control of the finished product in terms of marketing, selling, labelling and advertisement.

The operations of these main statutes are supported with the current circulars, directive and guidelines issued by NPCB. The National Pharmaceutical Regulatory Agency (NPRA) is named as a regulatory agency and the Drug Control Authority (DCA) has the task of monitoring the quality assurance and regulatory affairs of pharmaceuticals. These regulations help to monitor and control the production, distribution, usage of medicine and cosmetic in Malaysia. If the dietary supplement products fall as a subject of medicine, then the products are governed by these regulations.

All pharmaceutical products need to be registered with NPRA prior to the application for halal certification and the requirements of safety, efficacy and quality are subsets to halal requirements. All applications for registration must be submitted online through DCA’s website. Generally the control mechanism used by NPRA in safeguarding the safety, quality and efficacy the halal pharmaceutical products can be divided into two stages i.e., the pre-marketing and post-marketing stage. Pre-marketing control aims at preventing harmful and substandard pharmaceutical from getting into the market.

• Registration of products/ Licensing of pharmaceutical company or owner

Control of Cosmetic and Drugs Regulation 1984(revised 2009) (CDCR) (regulation 7(1) (a)) requires all pharmaceuticals and drugs to be registered before they can be manufactured, sold, supplied, imported, (Part II, CDCR) possessed or administered in Malaysia. Prior to registration approval, NPCB will inspect the raw materials that include the inspection on the Active Pharmaceutical Ingredients (API) and the excipient. However, there is no inspection done on empty capsules as they are not a category of drugs or medicine. The inspection carried out for pharmaceutical products are comprehensive as they that include physical and performance test, quality test and safety test.

• Labelling requirement/ Consumer Medication Information Leaflets

In June 2014 NPRA revised the DRGD and inserted an amendment that requires the declaration of source of ingredients that derived from animal origin (active and excipient) including starting materials, gelatine and the source of capsule shell on immediate container and outer carton labelling of all registered products through the Drug Registration Guidance Document. It is interesting to note that besides labelling, NPCB has also introduced the Consumer Medication Information Leaflets. The leaflets are available for prescription and non-prescription medicines registered for use in Malaysia. These leaflets are targeted for the consumer as it contains information on how the drug works, methods of us, the precautionary action, use of the drug in pregnancy, what to do if you miss a dose, and possible side effects or interactions. Other than the two requirement discussed above NPRA conduct product bans, batch marking and product certification prior to the marketing of any pharmaceutical product. In controlling the safety aspect, the NPCB requires that all pharmaceutical production to comply with the guideline on Good Manufacturing Practice (GMP) and other safety related regulations whereby products will receive appropriate certification to certify certain steps have been fulfilled. Meanwhile product bans is a mechanism that involves immediate action of the authority to ban and prohibit the marketing and selling of a pharmaceutical product. This is usually associated with pharmaceutical products that are reported to cause adverse effect to the consumer. Batch marking is a classification of product labels that becomes the measurement method for the producer to know the risk of the product that they have registered. Although this is done during the pre-marketing period, yet it functions as an aid in monitoring post-marketing activities and control.

• Product recall/product withdrawal

One of the effective post-marketing controls of the pharmaceutical product is product recall or product withdrawal. Pruit and Peterson (1986) explained that product recall is a mechanism when the products are identified to be potentially harmful to the consumer or having substandard quality. Product recall is where the authority collects the pharmaceutical products from the consumer and product withdrawal prohibits the supplier or seller from supplying and engaging in any future transaction of the pharmaceutical products. Product recall functions as an alarm and sets as an exemplary precedent to other pharmaceutical industries. In United States of America, the Food Drug Authority (FDA) can remove any dietary supplement product for misidentification, mislabelling or false claims (Brown, 2017). Similar to product bans, product recall is significant due to the sensitivity of halal related industry to the Malaysian society. The act of product recall may tarnish the reputation of the manufacturing company and cause great monetary loss. Thus complying strictly with the halal pharmaceutical requirements will not be compromised in the future. The post-marketing control provides for continuous monitoring on the pharmaceutical to avoid any illegal variations to the registered product or to react instantaneously to any report of adverse drugs reaction.

European Union

European marketing law has gradually grown to an expansive regulation of commercial practices. The two main Directives on this matter are the Unfair Commercial Practices Directive (2005/29/EC) and the Misleading and Comparative Advertising Directive (2006/114/EC — codified version). The Directives deal with the protection of traders and consumers, respectively (Dickens, 2015; Ernst, 2008). The Commercial Practices Directive, which provides full harmonisation of unfair business-to-consumer commercial practices, will be the main subject for this analysis, as the users will in most circumstances act as consumers. In addition to the general Directives, businesses engaging in user-generated marketing should also consider more regulation concerning particular media, product, and particular commercial practices.

Products may be pure single entities of known or unknown chemical constituents, mixtures of which all or some of the components are known, or mixtures of unknown chemical components. Note that ingredients not traditionally recognized as having nutritional characteristics such as botanicals and hormones are included.

Hong Kong

Various studies conducted by the Hong Kong Consumer Council reported that in the past decade, there are major problems for consumers in relation to misleading or deceptive sales and marketing practices of businesses in Hong Kong (Lo, 2008). The existing legal remedies for consumers to seek redress for losses which they may suffer as a result of misleading marketing practices are, in most industry sectors, limited to the common law. This is in contrast to legal regimes elsewhere such as Australia and the European Community (Fontanarosa, Rennie, & DeAngelis, 2003) where broad statutory prohibitions on misleading marketing practices exist. The limitations in the existing law in Hong Kong in this area reflect the wider problem for consumers in Hong Kong resulting from the lack of a comprehensive and cohesive system of consumer protection regulation. There is a strong case to be made for general reform of the consumer protection regulatory scheme in Hong Kong to provide better protection for consumers; however, this paper focuses on the particular area of misleading marketing practices with such practices constituting a significant proportion of the problems arising in Hong Kong. The Hong Kong Consumer Council has recently put forward proposals recommending a general statutory prohibition on unfair marketing practices, including misleading or deceptive acts or omissions, giving consumers the right to seek remedies for losses suffered therefrom. The concept of 'misleading or deceptive conduct' adopted under the Australian Trade Practices Act 1974, s. 52 and in Hong Kong under the existing prohibition in the Telecommunications Ordinance, s. 7M.