Employing every available means to protect consumers from deceptive and misleading practices, the FTC recently announced the revitalized use of its statutory Penalty Offense Authority. More than 700 businesses – top consumer products companies, leading retailers and retail platforms, major ad agencies, and other names you know – are recipients of the latest Notice of Penalty Offenses aimed at curbing illegal practices in the use of endorsements and testimonials.
Blog Posts Tagged with Endorsements, Influencers, and Reviews
No one can top Waylon Jennings’ invitation to Luckenbach, Texas, where people can get “Back to the Basics of Love.” But we can offer the next best thing for business executives, advertising professionals, and attorneys: a virtual invitation to Dallas, Texas, on June 24, 2021, to get back to the basics of law.
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.
To meet the needs of consumers who are injured or face a medical emergency while traveling, Scottsdale-based SkyMed International sells air evacuation plans and other services. The FTC’s action against SkyMed also involves consumer injury, but not of the fractured-femur-in-France variety. According to the FTC, SkyMed put consumers’ sensitive information at risk of compromise by failing to employ a robust data security program.
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.
For consumers struggling with severe or chronic pain, ads for a product called Willow Curve appeared to offer light at the end of the tunnel. But the FTC alleges the marketers made false and unsubstantiated claims for the product, a device that applied low-level light and mild heat to the site of pain – and set people back between $599 and $799 in the process. The proposed settlement also sheds light on the FTC’s ongoing concern with deceptive native advertising.
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.
For decades the FTC has been warning people about online ports, portals, and pop-ups that can be conduits for questionable claims. But companies shouldn’t think we’ve taken our eye off another potential doorway for deception: direct mail. According to an FTC lawsuit, a group of seven U.S.
“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.”
The “what” of the FTC’s settlement with Teami, LLC, shouldn’t come as a surprise. The complaint alleges the defendants took in more than $15 million by deceptively claiming their array of teas could cause rapid and substantial weight loss, “fight against cancerous cells,” decrease migraines, unclog arteries, and prevent colds and flu. What’s different is the “how.” The defendants advertised primarily through a massive social media campaign.
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.
Does your company use endorsements in your advertising? Or perhaps you endorse other companies’ products. Then you’ll want to follow the FTC’s just-announced regulatory review of its Endorsement Guides.
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?
California-based mortgage broker Mortgage Solutions FCS also does business under the name Mount Diablo Lending. And according to the FTC, the company gave consumers a devil of a time if they posted negative reviews on Yelp. Is your business pondering how to address unfavorable consumer comments?
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.
The sellers of Synovia claimed their dietary supplement “paves the pot holes” in joints damaged by arthritis. But an FTC lawsuit alleges the primary pot holes were in the company’s purported proof, which left consumers streamrollered by false and deceptive advertising claims.
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.
Aloe and cranberry: a useful plant and a nutritious fruit. But are they clinically proven alone or in combination to treat diabetes, ulcerative colitis, high cholesterol, and a list of other serious medical conditions that afflict Boomer Consumers? According to the FTC, those are just some of the deceptive claims that Florida-based NatureCity, LLC, made for TrueAloe capsules and AloeCran powdered drink mix.