Key Takeaways From FTC “Warning” to ~670 Companies

Most of us have heard about the recent FTC notice of penalty offense sent to ~670 companies. To those not on the list, mazel tov. This FTC action puts these companies on notice that claims must be substantiated, and endorsement guidelines must be followed, or the companies can face fines of $50,120 per violation.

Here is FTC’s press release, which includes links to the list of companies that received the warning and the letter to the recipients. This is worth reading, but I share some key points below.

So why did “these” companies get cited? My Magic 8 ball did not tell me the answer, but I am guessing that search terms like “proven safety,” “scientifically proven,” and “clinically proven” were trigger words. Most of the companies on the list have exquisite compliance, and I verified this using my Apex Compliance program, but there are a few that certainly need a lot of regulatory help to be compliant.

I wonder if these blanket “you haven’t done anything wrong, but you are warned” statements are fair. FTC could have found egregious violators with a quick Google search.

The action warns companies about two sections of advertising basics: Substantiation & Endorsements

Substantiation: We all know that claims should be substantiated, but here are the notable items from FTC’s Substantiation Notice.

• Product safety: FDA’s supplement regulations require products to be safe, and FTC reminds us that companies should have data to back to this. Discussing “proven safety” likely elevates the risk of FTC scrutiny. Supplements have parameters to ensure these are used safely. They have warnings about potential risks such as “not for use in pregnancy,” “may elevate blood pressure when used long term,” or “may interfere with medications,” and they also have serving suggestions to ensure they are used within safe constraints. I ask, “Is there any reason to claim safe supplements?”

• Health benefits: This is a broad statement. So, what is a “health benefit?” I think of structure-function statements such as “joint support” or “helps with sleep” as health benefit statements. FTC says all health benefits need to be substantiated, which is common knowledge, but I don’t think FTC will start asking companies for their structure-function dossiers anytime soon. I see this more as a gentle reminder about the basics of advertising and substantiation. However, implying there is clinical proof to support a structure-function claim will attract attention.

• Mitigates or treats disease: This is obvious, and I expect this to be where much of the FTC’s substantiation enforcement will be. This is even more reason to ensure marketing does not have disease claims. Apex Compliance, my patent pending SaaS compliance program, scan websites, YouTube, and uploaded content for compliance concerns like disease words. Learn more here.

• Clinically proven statements: This is also where FTC will likely focus its enforcement action. Stating that ingredients have “proven efficacy” or that products are “clinically proven” or “scientifically proven” is a high substantiation standard that will certainly attract FTC and plaintiff attorney scrutiny. Apex Compliance can scan for any phrase, such as “clinically proven.” Set up some time to learn about it here.

The Substantiation Notice is not all about health claims. It also applies to claims about efficacy statements such as “phospholipids added for increased absorption” or “helps with weight loss” and performance claims like “fast-acting.” I don’t expect FTC action solely for these lower-risk statements, but the mantra is that everything should have substantiation.

 From FTC press release: “the notice is not limited to health claims and applies to any marketer making claims about the efficacy or performance of its products.”

Endorsements: The other part of the FTC “warning” concerns endorsements. Here are some key points, but most are obvious. Our purchasing behavior is affected by influencers and product reviews, so steps to keep this part of marketing ethical are a good thing. Thanks, FTC!

• Falsely claiming a 3rd party endorsement of a product when they don’t, such as stating, “Tom Hanks loves my product.”

• Misrepresenting that an endorsement represents the experience or opinions of product users. Of course, someone shouldn’t say I take this product every day when they’ve never tried it. This FTC lawsuit against Google and iHeartMedia is a great example.

• Using an endorsement to make deceptive claims (like disease claims). If you can’t say it on a product label, an endorsement shouldn’t either. I write about how a customer social media post becomes an endorsed testimonial here. 

• Failing to disclose material connection: This is so basic, but many influencers skip over this, especially on TikTok. Here are some tips for disclosing material connection.

• Fake reviews: Right on FTC! Yes, fake reviews are bad. How about withholding unfavorable reviews; this led to this 4.2 million dollar fine. 

Disclaimer: The educational information provided here is for informational purposes only. Contact an attorney for specific legal advice. Rule #1 in compliance is to ensure marketing is truthful and not misleading.