Blog Posts Tagged with Endorsements, Influencers, and Reviews

For people who were looking to run their own businesses, the lesson of the FTC’s proposed $2.1 million proposed settlement with Las Vegas-based Seed Consulting, LLC, is that neither their future nor their fortune was in the cards – credit cards, that is. The defendants’ modus operandi was to file falsified credit card applications in consumers’ names – a service for which they charged a hefty fee – so that consumers could use those lines of credit to pay for “business seminars” offered by third-party outfits with whom Seed Consulting was in cahoots.

In a lawsuit filed earlier this year, the FTC alleged that Online Trading Academy made unsubstantiated mega-bucks promises about their purported investment training programs. According to the complaint – and the defendants’ own data – for most OTA customers, the only time they saw big money was as it flew out of their hands and into the defendants’ pockets.

In the face of COVID-19, many small businesses are looking for help from the CARES Act’s Paycheck Protection Program. They may apply for PPP loans through Small Business Administration-authorized lenders and others the SBA has determined to be eligible. But there are concerns that some companies have falsely claimed an affiliation with the SBA or approved PPP lenders, or have represented untruthfully that people can get PPP or other SBA loans by applying on their sites.

“Oh, my achin’ . . . .” It’s a common refrain for many older Americans and others who experience chronic pain. Some businesses respond with ads heavy on puffed-up promises, but light on the scientific evidence necessary to support serious health claims. That’s the FTC’s allegation against a company that sold a pill called Isoprex. The complaint also challenges the undisclosed use of compensated friends and family as purported consumer endorsers.

It’s a disturbing trend. Companies are targeting older consumers, claiming to have easy answers for serious diseases for which there may not be a proven cure. That’s one allegation in the FTC’s action against Nevada-based telemarketer Health Center, Inc.  Another count challenges what we call “own-dorsements.”

Ads for health products often target Boomer Consumers, but those aren’t the only claims pitched to people looking toward retirement. An FTC action alleges a company called Online Trading Academy has taken in more than $370 million by gearing its deceptive representations to that demographic. In addition, the complaint alleges violations of the Consumer Review Fairness Act.

Top picks, star ratings, in-depth reviews. Many consumers don’t buy anything without consulting third-party review sites or checking out the opinions of other customers. But how often are those ratings the product of buying and selling between the “independent” site and companies willing to pay for better play? And are those reviews really from satisfied customers or are they from employees acting on instructions to stuff the ballot box with five-star ratings?

They say hindsight is 20/20, but what about foresight? We’re not ones to prognosticate, but a look at notable FTC cases and initiatives from the past year suggests some topics likely to be top of mind in months to come. Here is a non-exhaustive list of issues in our 2019 rearview mirror and likely visible through the 2020 windshield.

Are you an influencer who works with brands to recommend or endorse products or services in social media? Or perhaps you’re an advertiser that uses influencers in your marketing. The FTC just issued a publication you need to know about: Disclosures 101 for Social Media Influencers. And that’s not all.