FTC False & Deceptive Advertising Defense
We Defend Companies and Individuals Nationwide Against FTC Allegations of False and Deceptive Advertising
FTC False & Deceptive Advertising Defense Team Lead
Partner & Yale Graduate
FTC False & Deceptive Advertising Defense Team
Contact NickThe U.S. Federal Trade Commission (FTC) is committed to protecting consumers against false and deceptive advertising. It has adopted multiple general and industry-specific regulations intended to promote transparency in the marketplace, and it has published guidelines designed to help marketers establish and maintain compliance.
It also regularly targets companies and individuals in false and deceptive advertising investigations. The Federal Trade Commission Act (FTC Act) gives the FTC substantial investigative and enforcement authority. This includes the authority to issue civil investigative demands (CIDs) and subpoenas, as well as the authority to impose fines, injunctions, and other penalties. As a result, facing an FTC investigation is a serious matter, and avoiding unnecessary consequences requires a proactive and strategic defense.
Understanding What Constitutes “False” or “Deceptive” Advertising
When facing an FTC investigation involving allegations of false or deceptive advertising, it is imperative to quickly assess the FTC’s ability to substantiate these allegations. This begins with understanding what constitutes “false” or “deceptive” advertising under the FTC Act and the FTC’s guidelines and regulations.
So, what constitutes “false” or “deceptive” advertising according to the FTC?
As the FTC makes clear, “false” and “deceptive” do not mean the same thing. As a result, an advertisement can either be false, deceptive, or both. While understanding the differences between false and deceptive advertising is important for formulating a targeted defense strategy, it is equally important to understand that false and deceptive advertising present equal risks and carry the same penalties.
1. False Advertising According to the FTC
The FTC will consider an advertisement to be “false” in two primary scenarios. An advertisement can be deemed false if either: (i) it can be disproven, or (ii) it cannot be proven to be true.
Advertising Claims that Can Be Disproven
An advertisement can lead to FTC enforcement action if it can be disproven—that is, if it is patently and objectively untrue. For written advertisements, language that misrepresents a product’s quality or capabilities can be false, and so can language regarding a product’s durability, components, ingredients, reliability, or effectiveness.
For example, product manufacturers can face FTC scrutiny for falsely claiming that their products do things they don’t. Pharmaceutical companies and other drug manufacturers can face scrutiny for claiming that their drugs treat or provide relief from certain conditions. Service providers can face scrutiny if they claim to have achieved results that they haven’t actually achieved—and this is just the start of a virtually endless list of potential allegations.
Images and videos can also constitute false advertising. For example, if an image or video shows a product doing something that the product is not actually capable of doing, this constitutes a false advertisement even if the advertisement does not include any written claims.
The FTC’s Division of Advertising Practices routinely pursues enforcement actions against companies accused of making false marketing claims. To avoid unnecessary penalties in these cases, advertisers must either be able to prove that the FTC’s allegations are false, or else they must execute an FTC defense strategy focused on settlement.
Advertising Claims that Cannot Be Proven to Be True
Companies and individuals can also face FTC investigations focused on advertising claims that cannot be proven to be true. This can either involve self-aggrandizing claims (i.e., ABC Corp. is the best contractor in the state) or claims that lack substantiation.
Lack of substantiation is a common issue in FTC false advertising cases. In these cases, the issue isn’t that the advertiser knows its representations are false, but rather that the advertiser doesn’t know whether its claims are true. For example, if a company claims that its product is “Consumers’ preferred choice,” but hasn’t conducted a scientific survey, then the claim is considered false for FTC enforcement purposes.
This is just one of numerous possible examples. When making substantive claims, advertisers must be certain that they have the documentation they need to support these claims if necessary. Even if a claim ultimately turns out to be true, if the advertiser cannot prove that it is true during an FTC investigation, the advertiser can still face enforcement action and penalties.
2. Deceptive Advertising According to the FTC
Advertisements can be deceptive because they are false. However, they can also be deceptive because they exclude information that is material to consumers’ purchasing decisions. When advertisers are aware of both favorable and unfavorable information about their products or services, they must be extremely careful when selectively choosing information to publish in print, in traditional media, or online.
When can an advertisement be considered “deceptive” even though it is not objectively “false”? Here are three examples that often trigger FTC scrutiny:
- Only Publishing Favorable Reviews or Testimonials – While companies do not need to publicize bad reviews that are unjustified, companies must be careful to present a balanced representation of their customers’ opinions when using reviews and testimonials for advertising purposes. Only publishing a company’s five-star reviews or promoting testimonials while attempting to bury legitimate complaints can constitute deceptive advertising according to the FTC.
- Selectively Publishing Test or Survey Results – While companies can use tests and surveys to substantiate their advertising claims, selectively publishing test or survey results can lead to allegations of deceptive advertising. For example, if a customer survey reveals that most customers find a product effective but a significant number of customers also report that the product is unreliable, then simply stating that the product is “effective” or that customers are “satisfied” could be considered deceptive.
- Omitting Necessary Disclosures – To avoid deceptive advertising, companies and individuals must make affirmative disclosures in many circumstances. For example, if a company utilizes brand ambassadors or affiliate marketers, then both the company and the ambassador or affiliate must ensure that they are complying with the disclosure rules in the FTC’s Endorsement Guidelines. Omitting information from advertisements that is material (or that could be material) to consumers’ purchasing decisions is also considered deceptive advertising under the FTC Act.
Along with omitting necessary disclosures, omitting other material information can also make an advertisement deceptive. For example, if an advertiser claims to have “spoken at Harvard” when the advertiserpaid to record a commercial on school grounds, this claim would likely be considered deceptive because of the information it leaves out. Deceptive advertising can take many other forms as well; and, again, when defending against FTC scrutiny, it is imperative that companies and individuals have a clear understanding of the specific allegations they need to defend against.
Put our highly experienced team on your side
Dr. Nick Oberheiden
Founder
Attorney-at-Law
Lynette S. Byrd
Former DOJ Trial Attorney
Partner
Brian J. Kuester
Former U.S. Attorney
Hon. Kevin McCarthy
55th Speaker, U.S. House of Representatives (ret.)
Government Consultant
Mike Pompeo
Of Counsel
Former U.S. Secretary of State
John W. Sellers
Former Senior DOJ Trial Attorney
Linda Julin McNamara
Federal Appeals Attorney
Nicholas B. Johnson
Former Prosecutor
Roger Bach
Former Special Agent (DOJ)
Chris J. Quick
Former Special Agent (FBI & IRS-CI)
Michael S. Koslow
Former Supervisory Special Agent (DOD-OIG)
Ray Yuen
Former Supervisory Special Agent (FBI)
FAQs: Defending Against FTC Allegations of False or Deceptive Advertising
What are the Risks of Facing an FTC Investigation Focused on False or Deceptive Advertising?
The risks of facing an FTC investigation focused on false or deceptive advertising can be significant. The FTC has substantial investigative authority, and it can impose penalties including fines and injunctions. Additionally, if the FTC uncovers evidence of intentional fraud (or what agents believe to be evidence of intentional fraud) during an investigation, it can refer the matter to the U.S. Department of Justice (DOJ) for criminal prosecution.
How Does the FTC Investigate False and Deceptive Advertising?
The FTC uses a variety of investigative tools and strategies to uncover false and deceptive advertising. For example, the FTC has the authority to issue civil investigative demands (CIDs) and administrative subpoenas in many cases. Both of these are judicially enforceable, which means that non-compliance can lead to enforcement action regardless of the veracity of the underlying allegations of false or deceptive advertising. The FTC conducts market surveillance, conducts interviews with employees and business partners, and works with whistleblowers as well.
How Does the FTC Decide if an Advertisement is False or Deceptive?
The methods that the FTC uses to decide whether an advertisement is false or deceptive vary depending on the nature of the advertisement in question. With that said, many false and deceptive advertising cases hinge on the issue of substantiation. If an advertiser can substantiate its claims, then it can avoid liability. If it cannot provide adequate substantiation, then it can face civil enforcement action and the possibility of a criminal referral.
How Can I Defend Against FTC Allegations of False or Deceptive Advertising?
If the FTC is targeting you or your company for false or deceptive advertising, executing a successful defense starts with engaging experienced defense counsel. At Oberheiden P.C., we have extensive experience in FTC investigations, and we have a proven track record of securing favorable results for our clients.
Should I Engage Outside Counsel for an FTC Advertising Investigation?
Yes, if the FTC is targeting your company for false or deceptive advertising, you should engage experienced outside counsel promptly. These investigations can progress quickly, and they can present substantial risk exposure. To avoid unnecessary consequences, your company will need to present a coordinated and strategic defense, and you will need to be careful to appropriately comply with any CIDs and subpoenas while still preserving your company’s defenses and attorney-client privilege.
Contact the FTC Compliance and Defense Lawyers at Oberheiden P.C.
If you need to know more about how to defend against an FTC false or deceptive advertising investigation, we encourage you to get in touch. To speak with a senior lawyer at Oberheiden P.C. in confidence, call 888-680-1745 or tell us how we can help online now.
