Penalty Offense Authority

FTC Settles with Company Over Failure to Post Negative ReviewsCompanies often ask us whether they can highlight positive reviews without mentioning negative ones. The good news is that there are ways to do that, but when the conversation veers from highlighting positive reviews to suppressing negative ones, things get trickier. This afternoon, the FTC announced its first case involving a company’s failure to post

In its third recent Penalty Offense Authority notice, the FTC today notified more than 1,100 companies offering “money-making opportunities” that it intends to pursue civil penalties of up to $43,792 per violation for misrepresentations related to potential earnings and related characteristics about the opportunity.  Recipients of the notice include virtually every major direct selling company and others in the gig economy such as Amazon, DoorDash, Lyft, and Uber.

That makes more than 1,800 companies that have been put on notice of penalty offenses in the past month.  It also crosses another alleged deceptive practice off the list laid out in the October 2020 paper authored by current Bureau Director Sam Levine and former FTC Commissioner Rohit Chopra, entitled The Case for Resurrecting the FTC Act’s Penalty Offense Authority.  Next up?  Well, if the Chopra/Levine paper points the way (and it appears to), we should expect future notices that focus on allegedly unfair and deceptive data harvesting and targeted marketing.

In addition to the eight categories of misrepresentations in today’s notice ranging from the amount of earnings possible to the amount of training provided, the sample cover letter published online also includes a section on endorsements and testimonials.  This means that each company receiving today’s notice also will receive the notice published last week on endorsements and testimonials, which over 700 companies also received (with some minimal overlap in that list).
Continue Reading Next Up – Earnings Claims:  Notice of Penalty Offenses Sent to 1,100 Direct Selling Companies and Others in the Gig Economy

Flexing the Agency’s Muscles: What FTC Notice of Penalty Offenses Really Means for AdvertisersOver the last ten days, 700 companies and 70 for-profit colleges received notice of the FTC’s intent to pursue civil penalties under Section 5(m)(1)(b), if these companies and colleges engage in certain conduct deemed by the FTC to be unfair or deceptive.  The notices sought to achieve two important Agency objectives: first, force addressees to consider their marketing messages and compliance programs; and second, reintroduce (or reinforce) the threat of significant monetary penalties for those who need discipline.  The warnings will undoubtedly alter the dynamic of new investigations as parties consider the costs and benefits of negotiating consent orders that include payment of consumer redress.

But what if parties resist and the Commission were forced to litigate?  There, a third objective – to convince a court that the FTC’s Penalty Offense Authority entitles it to civil penalties based on these notices – is much less likely to be realized.
Continue Reading Flexing the Agency’s Muscles: What FTC Notice of Penalty Offenses Really Means for Advertisers

FTC Blankets Companies With Warning Letters Over Endorsements and ReviewsAs we have noted in earlier posts, in the wake of the Supreme Court’s holding that Section 13(b) of the FTC Act does not allow for monetary restitution, the Federal Trade Commission has been attempting to creatively utilize other provisions of the Act in order to obtain money from the companies and individuals it

Making good on promises to creatively explore all of its options for enforcement, the FTC yesterday notified 70 for-profit higher educational institutions that it intends to use its long dormant Penalty Offense Authority to obtain civil penalties when institutions make misrepresentations about their programs and job and earnings prospects.  The move closely follows recommendations proposed

As they often have done in the past, the FTC and the FDA issued joint cease and desist letters last week to 10 companies suspected of making unproven health claims – in this instance, claims that dietary supplements treat or cure diabetes. The FTC and the FDA join forces on such letters in order to

TINA.org continues to aggressively beat the enforcement drum.  Today, its leaders sent a letter to Acting Director of the Bureau of Consumer Protection Samuel Levine encouraging the FTC “to implement a penalty offense program targeting the direct selling industry and its market-wide practice of utilizing deceptive earnings representations and false health claims.”

As we discussed

Late last week (Oct. 29), FTC Commissioner Rohit Chopra (D) and his Attorney Advisor Samuel Levine released a paper entitled “The Case for Resurrecting the FTC Act’s Penalty Offense Authority.”  In it, Commissioner Chopra and Mr. Levine argue that the Commission should “resurrect one of the key authorities it abandoned in the 1980s: