December 6, 2021

Volume XI, Number 340


December 03, 2021

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FTC Warns Massive List of US Companies Not to Deceive Consumers With False Endorsements and Reviews

On October 13, the Federal Trade Commission (FTC) put more than 700 US companies on notice not to deceive consumers by, among other things, falsely claiming an endorsement by a third party, misrepresenting that an endorser is an actual user of its products or services, and/or failing to disclose a material connection between the company and an endorser. The FTC's "Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct around Endorsements and Testimonials" appears to lay a foundation for the Commission's issuance of fines against the recipient companies should they, in the future, engage in any of the identified conduct.

The recipients of the FTC's Notice include top advertisers, leading retailers, top consumer product companies and major advertising agencies. The list of recipients also includes technology companies, telecommunications companies and many mid-sized and smaller businesses.

According to the cover letter that accompanied each notice, companies use endorsements and testimonials in many forms to advertise and market their products and services, both in traditional and social media, as well as in the form of online reviews. In the FTC's view, some companies use these advertising tools in a manner that deceives consumers. The FTC has identified eight specific tactics that it considers to be unfair or deceptive trade practices, including the following:

  • representing, whether expressly or by implication, that a third party has endorsed a product or its performance when that third party has not, in fact, done so;

  • misrepresenting that an endorsement represents the experience, views or opinions of actual users of the product;

  • misrepresenting that an endorser is an actual user, a current user, or a recent user of the product or service;

  • using testimonials to make unsubstantiated or otherwise deceptive performance claims – ­e­ven if such testimonials are genuine;

  • failing to disclose a connection between an endorser and the seller of a product or service if that connection might materially affect the weight or credibility of the endorsement and if the connection would not be reasonably expected by consumers; and

  • misrepresenting, through the use of testimonials, that the experience of endorsers represents the typical or ordinary experience of users of the product or service.

The Notice and its cover letter make clear that the recipient companies have not been singled out. The fact that they received the Notice is not meant to suggest that the companies have already engaged in deceptive or unfair conduct. Nevertheless, the Notice and its wide distribution constitutes a warning shot that the FTC is watching marketers carefully and intends to pursue substantial fines if and when appropriate.

At present, the recipients are not required to take any specific actions in response to the Notice. However, Katten strongly recommends that recipients and any other businesses that rely upon endorsements and testimonials by third parties — especially social media influencers — review their current advertising and promotion practices to ensure that they do not engage in any of the acts that the FTC considers unfair or deceptive.

©2021 Katten Muchin Rosenman LLPNational Law Review, Volume XI, Number 288

About this Author

Kristin J. Achterhof, Intellectual Property Attorney, Katten, counseling

Kristin J. Achterhof concentrates her practice in the area of intellectual property litigation and counseling. She is a first-chair trial attorney in matters pending in federal and state courts across the country and before the US Patent and Trademark Office Trademark Trial and Appeal Board. Kristin counsels clients on a wide variety of complex intellectual property litigation, including the prosecution and defense of claims involving copyright, trademark, trade dress and patent infringement, trade secret misappropriation, right of...

David Halberstadt entertainment industry Lawyer Katten Muchin Law Firm

David Halberstadter serves as deputy general counsel for the firm's four California offices. He is an established and well-respected presence in the entertainment industry, widely known for his clear, thoughtful advice and strategic litigation judgment in intellectual property and other entertainment matters. David represents traditional, institutional entertainment industry clients as well as new media companies, that come to him for his extensive experience, his practical, business-savvy approach, and his ability to aggressively prosecute and defend litigation relating to all aspects of...

Michael R. Justus, Katten Muchin Law Firm, Intellectual Property Attorney

Michael R. Justus is a trademark and advertising attorney. He helps clients create, protect and promote global brands.

He maintains a comprehensive trademark practice, including US and international clearance, counseling, prosecution, enforcement and litigation. Mike also handles advertising counseling and disputes, including proceedings before the National Advertising Division of the Better Business Bureau.

In his trademark prosecution and counseling practice, Mike guides clients through the entire registration process...

Jessica M. Garrett, Katten Muchin, Intellectual Property Litigation Lawyer, Dispute Resolution Attorney

Jessica Garrett concentrates her practice in intellectual property and litigation and dispute resolution matters. She focuses primarily on intellectual property, advertising, marketing and entertainment transactions, including trademark, copyright, licensing and technology matters.

Jessica regularly counsels clients on trademarks and copyrights, as well as integrated marketing campaigns, including joint promotions, brand and product integrations, talent endorsements, sponsorships, contests and sweepstakes. In addition, she provides advice on...