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FTC says misleading online endorsements may result in fines

Federal Issues FTC Enforcement Penalty Offense Authority Agency Rule-Making & Guidance Endorsements

Federal Issues

On October 13, the FTC issued a warning to more than 700 companies, including top advertisers, leading retailers, top consumer product companies, and major advertising agencies. The warning stated that the companies may face fines over misleading online endorsements. Citing the “rise of social media,” which has “blurred the line between authentic content and advertising,” the FTC used its Penalty Offense Authority to place companies on notice that they could face significant civil penalties of up to $43,792 per violation should a company “engage[] in conduct that it knows has been found unlawful in a previous FTC administrative order, other than a consent order.” The notice outlines several practices determined by the FTC to be unfair or deceptive in previous administrative cases, such as: “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; and misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.” Additional FTC resources are available to help companies follow the law when advertising products and services.

As previously covered by InfoBytes, earlier this month the FTC sent a similar notice to for-profit higher education institutions under the Penalty Offense Authority, advising against making false promises about their graduates’ job and earnings prospects. 

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