Introduction
The Federal Trade Commission recently sent Notices of Penalty Offenses letters to 670 companies regarding deceptive and unfair conduct related to endorsements and testimonials in their marketing campaigns. The letters warned their recipients that the FTC “will not hesitate to use its authority to target violators with large civil penalties,” for violations of certain FTC laws.According to Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, “the 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 of Penalty Offenses specify a range of unlawful acts and practices, including the following:
- Failure to present competent and reliable evidence to support objective product claims;
- Failure to present competent and reliable scientific evidence to support health or safety claims; and
- Failure to conduct at least one well-controlled human clinical trial to support claims that a product is effective in curing, mitigating, or treating a serious disease.
As the nation’s main consumer protection agency, the FTC has a broad mandate to protect consumers from fraud and deception in the marketplace, and for the past several months it has repeatedly demonstrated its firm commitment this part of its mission.
Compliance to avoid Notices of Penalty Offenses
To avoid the legal exposure that comes from being under the government’s microscope, companies must ensure that they can present evidence that any objective claim made about an advertised product or service is true. Such evidence is called substantiation. Failure to substantiate an objective advertising claim violates the Federal Trade Commission Act, the goal of which is to ensure that businesses do not mislead consumers.
Nearly every state has enacted consumer protection laws that mirror the FTC Act in most respects and regulate a wide variety of in-state marketing practices. Businesses that market their own products and services through online ads, print ads, TV commercials, telemarketing, and website landing pages, must be aware of these laws and how to comply with them.
Conclusion
Before initiating any new marketing campaign that operates across state lines (including Internet search campaigns), businesses must understand the importance of complying with applicable state and federal laws. Fortunately, the Blacklist Academy offers a range of courses that do exactly that, including An Overview of Marketing Regulations, The Telemarketing Sales Rule, and Fundamentals of Internet Advertising Law, along with other legal resources that help Alliance members navigate the treacherous waters of 21st century marketing.
