L’Oreal SA share price down, reaches an agreement with the Federal Trade Commission over U.S. division ad claims

LOreal SA revealed that its U.S. division managed to reach a proposed agreement with the Federal Trade Commission that would put an end to an inquiry regarding accusations about deceptive advertising for anti-ageing products.

The Director of the consumer protection bureau of the Federal Trade Commission – Jessica Rich – made an official statement yesterday, which was cited by Bloomberg: “It would be nice if cosmetics could alter our genes and turn back time. But L’Oreal couldn’t support these claims.”

The Federal Trade Commission revealed in its statement that the U.S. division of LOreal SA made “false and unsubstantiated claims” about the Lancome brands Genifique and the LOréal Paris brands Paris Youth Code skin-care products.

The FTC said that the proposed settlement puts an end to the claims that the France-based companys advertising campaigns of the aforementioned anti-ageing products provided benefits by targeting the genes of the products users.

LOreal SA made a separate e-mailed statement, which was cited by Bloomberg: “The claims at issue in this agreement have not been used for some time now, as the company constantly refreshes its advertising. The safety, quality and effectiveness of the company’s products were never in question.”

According to the terms of the agreement, the company is prohibited from claiming that any of the provided facial anti-ageing skin-care cosmetics aims to boost the users gene activity in order to make their skin look younger. The settlement between the U.S. division of the French company and the Federal Trade Commission is also subjected to a 30-day public comment period. It also needs to be approved by the Commission, but does not include any monetary penalties for the company.

The regulatory authorities in the U.S. previously warned the France-based company in September 2012 that it had overdone its advertising strategy of some expensive antiwrinkle products and criticized its approach.

LOreal SA lost 0.44% to trade at 125.30 euros per share at 7:46 GMT in Paris, marking a one year change of -2.26%. The company is valued at 76.40 billion euros. According to the Financial Times, the 27 analysts offering 12-month price targets for LOreal SA have a median target of 130.00 euros, with a high estimate of 168.00 euros and a low estimate of 106.60 euros. The median estimate represents a 3.26% increase from the last price of 125.90 euros.