Xlear Challenge to FTC Health Claims Substantiation Standard Dismissed

A Utah federal judge recently dismissed Xlear, Inc.’s lawsuit challenging the Federal Trade Commission’s (FTC) long-standing requirement that advertisers substantiate health-related claims, finding that Xlear’s challenge was not ripe for judicial review. Because Xlear could not identify a final agency action that had a concrete impact on Xlear’s advertising, the court concluded that Xlear’s dispute was hypothetical and based on “abstract disagreements.”

As previously discussed, Xlear argued that the FTC’s substantiation standard exceeds the plain language of Sections 5 and 12 of the FTC Act and that the Supreme Court’s decision in Loper Bright—scaling back court deference to agency interpretations of statutes—undermined prior decisions interpreting the FTC Act to impose the substantiation requirement. The court, however, refused to reach the merits of Xlear’s challenge and dismissed the case without prejudice for lack of subject-matter jurisdiction.

Although the decision leaves the FTC’s existing substantiation framework intact, it does not resolve the broader question of whether that framework exceeds the agency’s statutory authority. Xlear’s Loper Bright argument may ultimately prove more consequential in a future FTC enforcement action, as courts continue to grapple with the scope of the agency’s authority and the deference owed to its interpretation of the FTC Act.

Xlear Challenges FTC Advertising Substantiation Requirements

Xlear filed the lawsuit after the FTC voluntarily dismissed with prejudice the agency’s earlier enforcement action against the company in March 2025 for making unsubstantiated health claims about its sinus health product. In its suit challenging the government, Xlear sought a declaration that Sections 5 and 12 of the FTC Act do not impose an affirmative substantiation requirement and, alternatively, that the provisions do not require advertisers to possess randomized controlled trials (RCTs) as proof that a health claim is not deceptive.

Because the FTC Act prohibits deceptive or unfair practices—not unsubstantiated claims—Xlear contended that the FTC’s claim substantiation guidance created a de facto binding rule that went beyond the authority granted by Congress. Xlear alleged that the prospect of future FTC enforcement, together with the agency’s 2022 Health Products Compliance Guidance, chilled its ability to advertise the benefits of its products.

Court Finds Xlear’s FTC Challenge Premature

Judge David Barlow concluded that Xlear had not identified a final agency action that was currently reviewable. The court emphasized that the FTC’s 2022 guidance expressly states that it is intended as business guidance and does not have the force or effect of law. The court also found that the FTC’s 2020 warning letter did not impose legal consequences on Xlear and addressed claims Xlear had previously made, rather than the future claims at issue in the new lawsuit.

Because there was no pending FTC administrative proceeding or enforcement action against Xlear, the court found that deciding whether Xlear’s possible future advertising claims would violate the FTC Act would amount to a premature adjudication of an abstract dispute. The fact that Xlear may “feel constrained” by agency guidance “does not change the fact that the guidance is not an order compelling the regulated entity to do anything.”

Loper Bright Argument Remains Unresolved

The court also rejected Xlear’s reliance on Loper Bright at this stage, explaining that it was determining ripeness and addressing the standard for a facial challenge—not interpreting the FTC Act or deferring to the FTC’s interpretation of it.

It seems more likely that the Loper Bright argument that Xlear wanted to press will ultimately get made in the context of another company’s defense against an FTC Action, rather than through affirmative litigation against the FTC.

FTC Health Claims Guidance Remains Intact

The decision leaves the FTC’s existing substantiation framework undisturbed, but it does not resolve Xlear’s central argument that the framework exceeds the FTC’s authority under Sections 5 and 12 of the FTC Act. Given the Supreme Court’s ruling in the Slaughter case, the FTC’s role in the administrative state is under discussion, which will impact how much deference courts give the agency’s interpretation of the FTC Act. For now, advertisers should continue to account for the FTC’s existing substantiation guidance when making health-related claims.

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