October 29, 2021-
FTC Warning and Stricter Enforcement of §5 of the FTC Act Regarding Deceptive Online Endorsements
According to Proskauer, a new warning from the Federal Trade Commission has been sent to more than 700 companies and shows a move toward stricter enforcement of §5 of the FTC Act. Recipients of the FTC’s Notice of Penalty Offenses Warning were told to cease the use of deceptive endorsements in online advertising, conduct previously determined by the FTC to be unfair and unlawful or deceptive.
Companies in breach face civil liability penalties of up to $43,792 per violation.
Among the 700+ companies to receive the warning were major retailers and advertising agencies. Recipients were told to forward the warning to subsidiary companies engaged in the sale or marketing of products or services to US consumers. Though none of the companies to receive notice warnings are alleged to have engaged in any wrongdoing, the FTC has made clear that it is focused on cracking down on deceptive endorsements in online marketing and will vigorously pursue advertisers who violate the terms of §5.
The Notice provided a non-exhaustive list of previously determined unlawful practices, including:
- Falsely claiming an endorsement by a third party;
- Misrepresenting whether an endorser is an actual, current, or recent user;
- Using an endorsement to make deceptive performance claims;
- Failing to disclose an unexpected material connection with an endorser;
- Misrepresenting that an endorsement represents the experience, views, or opinions of users or purported users;
- Misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience; and
- Continuing to use an endorsement without good reason to believe that the endorser continues to subscribe to the views presented.
Avoiding the practices outlined above, in addition to reviewing the FTC’s guidelines concerning the use of endorsements and testimonials in advertising will mitigate the risk of facing an FTC liability.
To read the full article from Proskauer, written by Lawrence Weinstein, Jeffrey Warshafsky, and Jessica Griffith, click here [1].
To read the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, click here [2].
To read how CASTAYBERT PLLC can help you with Advertising and Marketing Law, click here [3].