The Federal Trade Commission (“FTC”) recently put almost 700 companies on notice that their marketing campaigns must come into compliance with FTC law or else face stiff penalties. The FTC is the nation’s leading consumer protection agency, with a “broad mandate to protect consumers from fraud and deception in the marketplace.” As exhibited by its recent efforts, the FTC takes its charge as American’s consumer protection watchdog very seriously. This means that marketers must avoid deceiving consumers with advertisements that make product claims that cannot be substantiated or face the FTC’s wrath. No company wants to be on the receiving end of such FTC law violation notices. To avoid exposure and bad press, the safest course of action is to work with experienced marketing attorneys to ensure that your marketing content is more than compliant.
False Advertising Under FTC Laws
False advertising occurs when businesses make misleading, deceptive, or plainly false claims about particular products or services. There are currently a host of state and federal laws aimed at addressing false advertising, the most prominent of which is the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b). The goal of the FTC Act is to ensure that businesses do not mislead consumers. For a claim to be misleading, it can either imply something that is untrue or leave out relevant information. Likewise, states have enacted their own individual laws that may vary in detail from applicable FTC laws. Consider for example, California’s multiple consumer protection laws that cover a wide variety of marketing practices. Companies must be aware of all of these laws, how they interact and, most importantly, how to be compliant. The key is to work with experienced industry professionals to ensure that all consumer marketing materials adhere to applicable regulations. Such materials include online ads, television commercials, telemarketing scripts, landing pages, and website purchase flows.
Notice of Penalties Based on Potential FTC Law Violations
The FTC sent notices to approximately 670 companies, warning specifically that, “it will not hesitate to use its authority to target violators with large civil penalties,” for violations of certain FTC laws. According to Sam Levine, Director of the FTC’s Bureau of Consumer Protection, “[t]he requirement for advertisers to have adequate support for their advertising claims at the time they’re made is a bedrock principle of FTC law.” According to the FTC press release, a company’s “inclusion on the list does not in any way suggest that it has engaged in deceptive or unfair conduct.” Further, the statement indicates that these notices are not limited to health claims and apply to any marketer making claims about the efficacy or performance of its products.
The notices outline specific unlawful acts and practices, including failing to have:
1) a reasonable basis consisting of competent and reliable evidence for objective product claims;
2) competent and reliable scientific evidence to support health or safety claims; and
3) at least one well-controlled human clinical trial to support claims that a product is effective in curing, mitigating, or treating a serious disease.
How to Avoid Violating any FTC Laws
Before initiating any new marketing campaigns, companies must understand the significance of complying with applicable state and federal laws. Businesses that operate across state lines (and this includes Internet marketers), must abide by FTC laws and regulations. The attorneys at Klein Moynihan Turco have worked in the industry for more than 25 years, with extensive knowledge of the regulations that are triggered by various marketing campaigns.
If you need assistance with reviewing your marketing practices and procedures to ensure compliance with state and FTC law, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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