On April 13, the Federal Trade Commission (“FTC”) sent a Notice of Penalty Offenses to approximately 670 companies detailing conduct that the FTC claims violates the prohibition on unfair or deceptive trade practices set forth in Section 5 of the FTC Act. The noticed offenses include failure to adequately substantiate claims made in marketing and advertising about products, particularly health benefit claims and claims of efficacy. All product claims must be supported by competent and reliable evidence as of the time of the claim. Claims of health or safety benefits, or that the product is effective in the cure, mitigation, or treatment of serious disease, must satisfy much higher evidentiary standards.
Product manufacturers and marketers, and particularly those receiving the notices, should pay particularly close attention to them and audit their advertising practices immediately to ensure they are in compliance with the FTC’s regulations. Receiving a notice establishes the “actual knowledge” that the subject practice violates the FTC Act and allows the FTC to seek penalties of more than $50,000 for each future violation. The FTC has issued many such notices in the past, but this notice is arguably the most far-reaching as it pertains to any claims made about products marketed by advertisers.