The Federal Trade Commission's Ongoing Efforts to Ensure Truth in Advertising

JurisdictionUnited States,Federal
Pages30
CitationVol. 36 No. 6 Pg. 30
Publication year2023
The Federal Trade Commission's Ongoing Efforts to Ensure Truth in Advertising
Vol. 36 No. 6 Pg. 30
Utah Bar Journal
December 2023

November 2023

by Chris W. Hogue

With the ubiquitous nature of social media in today's world, most of us have seen at least one story about a celebrity influencer promoting a product to millions of social media followers while failing to mention they were actually being paid to promote that product. At the very least, this undermines the authenticity of the product endorsement, or worse, misleads the follower into purchasing that product. The Federal Trade Commission (FTC) serves a critical role in regulating advertising to protect consumers from false, misleading, or deceptive claims. Under its consumer protection mandate, the FTC combats untruthful advertising through enforcement actions, regulatory guidance, and consumer education. This article provides an overview of the FTC's multifaceted approach to ensuring truth in advertising and summarizes recent updates to its guidance on endorsements and testimonials.

FTC Authority Over Advertising

The FTC's oversight of advertising is derived primarily from its authority under Section 5 of the FTC Act to prevent "unfair or deceptive acts or practices." 15 U.S.C. § 45. False or misleading advertising falls under the umbrella of deceptive practices the FTC can prohibit. The FTC's deception enforcement policy specifies several factors in analyzing whether an act or practice is deceptive:

There must be a representation, omission, or practice that is likely to mislead consumers. The FTC examines the overall net impression made by the ad, not just isolated words or phrases. Fed. Trade Comm'n, FTC Policy Statement on Deception (1983), as appended to In re Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 (1984).

The act or practice is examined from the perspective of a reasonable consumer. The test is whether it is likely to mislead reasonable consumers. If the representation or practice impacts or is directed primarily to a particular group, the FTC examines reasonableness from the perspective of that group. Id.

The representation, omission, or practice must be material. Essentially, it must be important to consumers' decisions or conduct regarding the product. Id. at 182.

The representation, omission, or practice is likely to mislead consumers acting reasonably under the circumstances. This analysis considers the facts surrounding the transaction. Id. at 175-76.

The FTC need not show actual deceit or even that any consumers were actually misled. Rather, it must simply show that the conduct in question has a tendency or capacity to deceive consumers acting reasonably. See FTC v. Algoma Lumber Co., 291 U.S. 67, 81 (1934).

Over the years, the FTC has brought numerous enforcement actions against companies for making false, unsubstantiated, or misleading claims in advertising. Recently, for example, the FTC sued a seller of supposed COVID-19 treatments for claiming its nasal spray could prevent or treat COVID-19. The complaint alleged that the spray seller lacked competent and reliable scientific evidence to support these claims. Complaint, FTC v. Marc Ching, No. 2:20-cv-03331 (C.D. Cal. Apr. 14, 2020), 2020 WL 1991284.

CHRIS W. HOGUE has practiced in technology law and digital content since 2014. Over the past decade he has held several in-house counsel roles in early and mid-stage global technology companies as well as practiced through his own firm, HogueLaw PLLC.

In another recent case, the FTC took action against the operators of websites that purported to provide independent reviews of products and services. The FTC alleged the defendants posted fake positive reviews to increase sales and false negative reviews to harm competitors. Complaint, FTC v. 427K, Inc., No. 4:22-cv-01069-JSW (N.D. Cal. Feb. 28, 2022). This illustrates how...

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