FTC Issues Preemptive Notices of Penalty Offenses to Advertisers

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On October 13 the US Federal Trade Commission (FTC) sent “Notice of Penalty Offenses” to more than 700 large retailers, advertisers and consumer product companies describing endorsement practices that the FTC has found deceptive in past decisions.

The recipients of the notices were targeted based on size and prominence within the sector rather than any past practices, and the intent was to place these businesses, and others, on notice that if they engage in deceptive practices they could face penalties of up to $43,792 per violation.  The notice applies not only to a company’s advertisements but to its use of influencers, fake reviews and reviews by customers with connections to the company.

What kind of advertising does the FTC view as deceptive? The FTC provides these examples:

  • misrepresentation that an endorser is an actual current or recent user of a product

  • misrepresentation that the endorser’s experience represents a typical customer experience

  • use of an endorsement without good reason to believe that the endorsement continues to represent the endorser’s view of the product

  • use of an endorsement to misrepresent how a product performs

  • failure to disclose an unexpected relationship, such as a family or business relationship, between the endorser and the advertiser

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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