Technology & eCommerce Regulation in the Spotlight

The Federal Trade Commission (“FTC“) has recently announced a widespread enforcement action against deceptive endorsement practices. The FTC has sent Notice of Penalty Offenses (“Notice“) to more than 700 companies, placing such companies on notice that they could incur civil penalties of up to $43,792 per violation, if they use endorsements in way that run counter to prior FTC administrative cases.

The Notice, which allows the agency to seek civil penalties against a company that engages in conduct that it knows has been found unlawful in a previous FTC administrative order, was sent to various large companies in the industry, including advertisers, retailers and advertising agencies. Notably, the FTC expressly stated that a company’s presence on the list does not suggest that it has engaged in any deceptive or unfair conduct. However, sending such notice enables the FTC to take action against those companies while also notifying the entire industry of its enforcement efforts.

The Notice sent to the companies outlines a number of practices that the FTC determined to be unfair or deceptive in prior administrative cases. These include, falsely claiming an endorsement by a third party; misrepresenting that an endorser is an actual user, a current user, or a recent user; continuing to use an endorsement without good reason to believe that the endorser continues to subscribe to the views presented; misrepresenting that an endorsement represents the experience, views, or opinions of users or purported users; 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.

Deceptive and unfair reviews and endorsements have been on the FTC’s radar for quite some time, but these recent Notices reflect its largest action to date, and serve as a warning to the entire industry of the FTC’s enforcement efforts in the visible futures.

Feel free to contact us if you have any questions regarding the implications of these enforcement actions on your business.

Feel free to contact us if you have any questions regarding the compliance of your aps with the Guidance.

Kind regards,

Ariel Yosefi, Partner
Head of Technology & eCommerce Regulation