Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • FTC says misleading online endorsements may result in fines

    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. 

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

    Share page with AddThis
  • FTC resurrects authority to penalize for-profit education institutions

    Federal Issues

    On October 6, the FTC unanimously resurrected the Penalty Offense Authority under Section 5 of the FTC Act to deter for-profit higher education institutions from engaging in certain unlawful practices. The Commission sent notices to 70 of the nation’s largest for-profit institutions to inform them that the FTC is “cracking down on any false promises they make about their graduates’ job and earnings prospects and other outcomes and will hit violators with significant financial penalties.” The notice outlines several practices previously found to be unfair or deceptive that could lead to civil penalties of up to $43,792 per violation and puts institutions on alert that they could incur significant sanctions should they engage in certain unlawful practices. Commissioner Rohit Chopra, who was recently confirmed as Director of the CFPB, issued a statement commending the initiative, noting that “[u]nder the FTC’s Penalty Offense Authority, the Commission and the Attorney General can seek substantial civil penalties against companies that engage in practices where they had knowledge that the practices were previously determined by a prior Commission order to be illegal.” This is a particularly important tool, Chopra stressed, given the U.S. Supreme Court’s decision in AMG Capital Management, LLC v. FTC, which unanimously held that Section 13(b) of the FTC Act “does not authorize the Commission to seek, or a court to award, equitable monetary relief such as restitution or disgorgement” (covered by InfoBytes here).

    Federal Issues FTC FCPA Enforcement FTC Act For-Profit College Agency Rule-Making & Guidance Penalty Offense Authority

    Share page with AddThis