Brands, media buyers and broadcasters are among the hundreds of companies that the Federal Trade Commission has put on notice that they could face steep fines if they use endorsement ads to deceive consumers. The FTC says the blurring of the lines between authentic content and advertising has led to an explosion in deceptive endorsements across the marketplace.
The agency has sent a letter to more than 700 companies warning they could incur significant civil penalties—up to $43,792 per violation—if they use endorsements in ways that run counter to prior FTC administrative cases. None of the companies are being accuse of any wrongdoing, however. “FTC staff is not singling out your company or suggesting that you have engaged in deceptive or unfair conduct,” writes Associate Director for Advertising Practices Serena Viswanathan in the letter. “We are widely distributing similar letters and the notice to large companies, top advertisers, leading retailers, top consumer product companies, and major advertising agencies,” she explains.
The notice outlines a number of practices that the FTC determined to be unfair or deceptive in prior administrative cases. They include falsely claiming an endorsement by a third party; misrepresenting whether an endorser is an actual, current, or recent user; using an endorsement to make deceptive performance claims; and misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.
The FTC’s list of recipients includes a who’s who of American business including radio companies such as iHeartMedia and SiriusXM; podcaster Stitcher; media buying agencies including Carat and Horizon Media; as well as big marketers like T-Mobile, General Motors, and McDonald’s. It also went to big online companies such as Amazon, Google and Facebook.
“Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Advertisers will pay a price if they engage in these deceptive practices,” he said in a statement.
To help businesses navigate the rules, the FTC has created multiple resources for business to ensure that they are following the law when using endorsements to advertise their products and services.
Read the FTC’s The FTC’s Endorsement Guides HERE.