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2015 Lessons Learned, 2016 Practical Tips

FTC - Regulatory and State >> FTC Remains Focused on Substantiation and Enforcement

April 19, 2016

While 2015 saw the Federal Trade Commission (FTC) increase its focus on social media campaigns, native advertising, and data security and privacy, marketers should remember that the FTC continues to police traditional advertising issues of claims and substantiation.

This past year, the FTC settled with two companies over allegations that they could not substantiate claims touting the efficacy of their dietary supplements. In one case, a marketer of a supplement aimed at increasing cognitive ability settled with the FTC for allegedly making multiple false claims, including that a scientific study validated its claim that its product would reverse cognitive decline and memory loss. Similarly, a marketer of a green coffee bean extract settled with the FTC over claims that it had falsely stated that its supplement could generate rapid and significant weight loss without diet or exercise.

In addition, a Texas company settled with the FTC over allegedly unsupported claims that its computer game permanently improved children’s focus, memory, attention, and behavior. The FTC asserted that the company’s claims lacked scientific support or other substantiation. These actions illustrate that the FTC remains steadfastly focused on ensuring that all claims made by marketers are supported by competent and reliable evidence.

The FTC also reminded marketers in 2015 that it is serious about enforcement when it settled with LifeLock for $100 million over charges that LifeLock had violated the terms of a 2010 FTC-State coordinated settlement prohibiting the company from engaging in deceptive advertising. The FTC alleged that, after the 2010 action and settlement, LifeLock had continued to falsely advertise that it protected consumers’ sensitive data with high-level safeguards and that it sent alerts “as soon as” it received any indication that a consumer was a victim of identity theft. This settlement represents one of the largest monetary awards obtained by the FTC in an order enforcement action.

Looking Ahead

  • Marketers should not take the FTC’s increased focus on new media as a sign that it is no longer monitoring and policing traditional advertising issues of claims and substantiation.
  • Advertisements making specific scientific claims or relying upon studies will likely face increased regulatory scrutiny.
  • Companies that settle claims with the FTC must comply with all settlement stipulations.