The FTC said it has sent formal warnings to about 700 companies for false advertising penalty offenses, notifying businesses that they could face penalties of up to $43,792 for each violation.
Federal regulators taking action against the companies in violation signals the agency’s commitment to issue penalties to enforce consumer protection laws. Samuel Levine, head of the agency’s consumer protection bureau, warned businesses against deceptive advertising.
“Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses,” Levine said. “Advertisers will pay a price if they engage in these deceptive practices.”
Included in the notices sent to companies were a number of practices the FTC has determined to be unfair or deceptive, including failing to disclose an unexpected material connection with an endorser and misrepresenting that the endorser’s experience is representative of a consumer’s typical experience.
The warnings and notices come as FTC chair Lina Khan ramps up the agency’s enforcement efforts under its existing authority.
For more reporting from the Associated Press, see below.
The FTC said it has warned hundreds of major corporations and smaller businesses that they could face fines if they use bogus endorsements to deceive consumers.
“The rise of social media has blurred the line between authentic content and advertising, leading to an explosion in deceptive endorsements across the marketplace,” the FTC said in a news release Wednesday.
The companies receiving the notices are a who’s who of Corporate America—including major corporations, big retailers and consumer product companies, as well as leading advertisers and ad agencies.
The FTC, however, stressed that a company having received a notice does not suggest that it has engaged in deceptive or unfair conduct.
The notice cites practices the agency found previously to be unfair or deceptive. They include falsely claiming a third-party endorsement, misrepresenting whether an endorser is an actual user, or using an endorsement to make deceptive performance claims.