An Ugly Truth About Cosmetics

By Pallavi Gogoi

November 30, 2004

BusinessWeek Online

Beauty-seekers beware: Largely unregulated ads for skin creams and wrinkle removers often have dubious claims backed by spurious science

"Better than Botox?" This StriVectin-SD ad splashed across magazines and newspapers all over the nation has attracted women in droves. Aching to erase the telltale signs of age, they're flocking to high-end department stores like Bloomingdale's to grab 6-oz. tubes of StriVectin at $135 a pop, making it one of hottest launches ever of a wrinkle cream. According to market-research firm NPD Beauty, StriVectin rang in $30 million in the first five months of this year, a feat that even the most successful new skin-care products have needed 12 months to match. StriVectin sales are expected to top $100 million by yearend.

Little do these buyers know that the government is investigating StriVectin's maker, Klein-Becker, and exclusive distributor, Basic Research, for making "false claims" on other products it sells. The U.S. Federal Trade Commission (FTC) has charged them with making unsubstantiated claims in infomercials and ads in magazines such as Cosmopolitan, Redbook, and Muscle and Fitness, and on several products, including Pedialean, a weight-loss supplement for children.

The investigation raises questions about StriVectin's boasts of an anti-wrinkle breakthrough. In an e-mail to BusinessWeek Online, Basic Research says its claims are backed by clinical trials that document a significant reduction in wrinkles.

CONJURING NAMES.  StriVectin certainly isn't alone in using high-tech claims to attract customers. In fact, more and more ads for skin care are highlighting the "science" and "technologies" behind products. Take Bo-Hylurox in Avon's (AVP ) Anew Clinical Deep Crease Concentrate, or the Mela-NO complex and dermo-smoothing complex D-Contraxol in Lancome's anti-age serums, or the Triplesphere Refinishing system in Estee Lauder's (EL ) "micro-dermabrasion scrub."

Most of these names don't really exist in cosmetic science. "It's an incredible statement to the consumer that you don't need to get injected when there's all this science to rid you of wrinkles," says Paula Begoun, author of Don't Go To the Cosmetics Counter Without Me. Most of these terms were conjured up in company labs by zealous chemists or marketers, points out Begoun. When asked about the claims and the technologies, none of these companies commented by deadline.

Problem is, it's also hard to challenge the claims for these products, since they've been tested only internally, and cosmetic creams don't need to go through any regulatory clearance before being launched. "Wrinkle-reducing creams are expensive, but to litigate against companies is even more expensive, and at the end of the day the harm to people is mostly economic," says Scott Bass, a partner in charge of international food and drug practice at law firm Sidley Austin Brown & Wood.

BORDER LINES.  Since the cosmetic industry is largely left to monitor itself and the Food & Drug Administration gets involved only when products have adverse reactions or change the structure of the body, consumers are left to their own devices to monitor such claims. "A lot of this might be worded to sound scientific, but people need to realize that wrinkles don't just disappear as claimed," says Allen Halper, senior compliance officer in the Office of Cosmetics & Colors at the FDA.

The FTC, which monitors advertising for unfair or deceptive claims, isn't that aggressive on the cosmetics industry either. "Our priority is to ensure that if a product is claiming a health benefit that there are enough trials to back that. If there are general appearance-enhancement claims, those are not high in our prosecution list," says Heather Hippsley, assistant director for the FTC's advertising-practices division.

However, the inclusion of certain drug-like ingredients and chemicals in the creams places them in an area termed "cosmeceuticals," a category that straddles the cosmetic and medical sectors. Cosmeceuticals are one of the personal-care industry's fastest growing segments, but they aren't regulated by the FDA either. According to consumer research publisher Packaged Facts, U.S. retail sales of cosmeceutical skin care are estimated to climb 7.3%, to $6.4 billion, from 2003 to 2004. That would be up 22% from 2000. "Aging baby boomers looking for ways to stay young and cosmeceutical manufacturers capitalizing on their concerns [are] fueling the growth," says Timothy Dowd, senior writer and analyst at Packaged Facts.

DOCTOR WHO?  Adding to the allure is the fact that most of these cosmeceuticals are endorsed by physicians, though sometimes their qualifications are dubious. For instance StriVectin-SD is endorsed in ads by a Dr. Daniel B. Mowrey, director of scientific affairs at manufacturer Klein-Becker, and Dr. Nathalie Chevreau, director of women's health at Basic Research. But neither Mowrey or Chevreau is a medical doctor, and the government is challenging Mowrey's credentials.

In the e-mail to BusinessWeek Online, Basic Research said: "Dr. Nathalie Chevreau holds a PhD in inorganic chemistry as well as an RD [registered dietician] license. Dr. Mowrey holds a PhD in experimental psychology." The company says its ads don't claim or imply that Dr. Mowrey is anything more or less than a research scientist and that in other advertisements he's referred to as Dr. Mowery, Phd. But the Web site that markets StriVectin didn't say he's a Phd as of the story deadline.

Meanwhile, FTC counsel Laureen Kapin says the commission is now waiting for answers from the companies in connection with the investigation. If they're found guilty at trial, that wouldn't preclude the government from looking at the companies' other products. "If we prevail, Basic Research could receive a broad order [legally referred to as "fencing-in"] barring the firm from making false and deceptive claims and selling any of its products," says Kapin.

BRING IN THE FEDS.  The future of StriVectin, a cream originally marketed as a stretch-mark-reducing emulsion containing an ingredient called oligo-peptide, might be tied to the FTC's investigation. But millions of consumers continue to be hoodwinked by the cosmetics industry's ingenious marketing. The FDA and the FTC might not consider this a priority, since cosmetics makers figure low in the agencies' ranking of companies to go after. However, if people are being deceived, regulators ought to take a closer look.

The creams may not be taking people's lives or inflicting blindness, but the FDA needs to assure that people aren't duped by false claims. The Office of Cosmetics & Colors needs to regulate cosmeceuticals and check out the various supplements and ingredients that go into changing people's appearances.

"If a product's claims have reached a point where they're no longer puffery and are deep-penetrating treatments, where the cosmetics are almost thinly disguised drugs, they have to comply with drug provisions," says Halper from the FDA's Office of Cosmetics & Color. But he adds that the agency prioritizes issues on health and safety, and it doesn't have the resources to examine all the claims out there. So it mostly relies on the cosmetics industry to monitor claims appropriate for the marketplace.

BIG CLAIMS.  The FTC says it tries to discern between readily ascertainable claims vs. others. For instance, in 2000 it filed suit against Rexall Sundown for marketing a product that claimed to eliminate cellulite. For topical creams, the FTC's Hippsley says most reputable companies honor their satisfaction guarantees no matter how inflated their marketing claims. "Consumers can see for themselves if the creams work or not, and if they aren't satisfied, they can either return the product or not buy the brand again," she says.

Given this cavalier attitude, cosmetics companies certainly seem to have almost free rein when it comes to claims. Avon says "Look stunning, Not stunned," in one of its ads for a product that contains its "exclusive multipatent-pending Bo-Hylurox technology." Avon didn't comment on the genesis of the name, but Begoun says it might be a concoction of Botox and hyaluronic acid, the main ingredient in Restylane -- a gel that's injected into the skin to fill in creases and is approved by the FDA.

Avon claims that its product smooths creases with an ingredient called portulaca, which relaxes the skin, whereas hyaluronic acid has a filling effect.

Obviously, when examined closely, what looks like a harmless cream might actually be a drug or medical product that's readily available to the masses. With aggressive marketing, such products can also become very popular, as in the case of StriVectin. Cosmetics companies shouldn't be left to their own devices just because they're playing with people's vanity.