An article in Adweek talks about focus the Federal Trade Commission has had in going after advertisers for deceptive advertisers. It’s a good read for those that either engage in marketing or hire outside parties or lead vendors to represent their services.
The big takeaway is that the FYC is not just concentrating on going after scammer, but also legitimate big brands that engage in deceptive advertising.
“Since that time, the [Bureau of Consumer Protection] has, in fact, built up an aggressive record of taking on top brands including Nestlé, Dannon, Reebok and Skechers for touting unproven health or fitness benefits.
“There’s no reason that advertisers with trusted brands that consumers rely on should get a pass,” Vladeck maintains, adding, “We haven’t slackened in our anti-fraud efforts. But we figured what’s sauce for the goose is sauce for the gander.”
The result has been impressive settlements with food and dietary supplement merchandisers creating stricter standards for all advertising. In the most recent cases, the FTC obtained full refunds for consumers, extracting historic settlements of $25 million from Reebok and $40 million from Skechers for ads for sneakers promising miraculous toning and weight-loss properties.”
In August of this year, the FTC settled with Ab Circle Pro for $15 million to $25 million to reimburse consumers who had purchased the $200 to $250 exercise product promoted as a weight-loss silver bullet. In its TV ads, pitchwoman Jennifer Nicole Lee boasted of losing 80 pounds using the stomach-crunching device, telling viewers: “You can either do 30 minutes of abs and cardio or just three minutes a day. The choice is yours.”
“We try to restore the consumer’s position before the deceptive ad,” says Vladeck. “We wanted to deprive companies of their profits. We don’t want them to profit from misleading the public.”
Requiring full refunds for consumers surprised national advertisers because it was a remedy usually reserved for extreme cases and outright fraud. In the past, the FTC simply required companies to stop making dubious claims but did not require full restitution. “[The FTC] is treating these companies like they were fraudulent. That’s a big step,” says Greenbaum. “It isn’t just going to slap companies on the wrist.”
No longer content with cease and desist agreements, the FTC is seeking deterrents with the pricey settlements. “They want to bring cases that will get more press,” says Mudge. “And they know they’ll get more press if they settle for millions of dollars.”
You can read the full article, here.
Companies Need to Watch Out for the FTC on Deceptive Ads by Steve Rhode
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