FTC bureau chief to seek monetary penalties from advertisers that deceive consumers through false marketing

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FTC false marketing penalties overview:

• Who: The head of the Federal Trade Commission’s consumer protection bureau told advertisers he won’t hesitate to seek monetary penalties from those deceiving consumers.
• Why: Samuel Levine made the announcement to signal a change in strategy from his predecessor.
• Where: The comments were made in a speech at the National Advertising Division’s annual conference in Washington.

The head of the Federal Trade Commission (FTC)’s consumer protection bureau warned advertisers he will seek to punish those that deceive consumers with false marketing claims by hitting them with financial penalties.

Bureau of Consumer Protection Director Samuel Levine leveled the warning in a speech delivered Sept. 19 in Washington at the National Advertising Division’s (NAD) annual conference, Law360 reports. 

When Thomas Pahl, who served as acting director of the consumer protection bureau, spoke to the NAD five years ago, he told the audience the FTC was moving away from seeking monetary relief in cases against national advertisers, Levine says.

“I want to be upfront that I do not share these views,” Levine reportedly said at the conference. 

FTC starts seeking financial penalties against deceptive marketers

Levine took over as the head of the bureau in September 2021 and detailed the new approach the FTC would be taking with some recent examples.

“I believe that the remedies we seek should be based on the violations we allege, not the size of the company that committed them,” he says. “That is why… the commission is consistently seeking monetary relief in our cases against national advertisers. Allowing advertisers to reap the rewards of deceptive claims not only leaves consumers in the lurch but also undercuts honest businesses who play by the rules.”

Levine pointed to a number of recent cases in which the FTC has aggressively cracked down on unsubstantiated claims and deceptive advertising. 

In one, the FTC secured a $100,000 penalty against lithium ion battery maker Lithionics under the Made in the USA Rule in which marketers and manufacturers that promote their products as Made in USA must meet the “all or virtually all” standard. 

In another, the FTC recovered $5.5 million in civil penalties against Kohl’s and Walmart for allegedly falsely marketing textile products as being made with eco-friendly bamboo when they were actually made with toxic chemicals.

“Notably, we [sought] monetary relief in all of these actions,” Levine says. “I hope marketers are getting the message that they will pay a price for making false and unsubstantiated claims, especially around people’s health, and regardless of whether they’re a national advertiser.”

For example, in August, Anheuser-Busch agreed to an undisclosed settlement to resolve claims its Ritas products don’t actually contain tequila or wine.

Also in August, after securing a $30 million refund settlement with Next-Gen, the FTC sent out a total of $25 million to those who lost money in a sweepstakes scam.

What do you think of the FTC false marketing penalties strategy? Let us know your thoughts in the comments! 

Read About More Class Action Lawsuits & Class Action Settlements:

• FTC issuing refunds to consumers affected by fraud
• FTC issues refund checks to victims of fraud, other scams
• Next-Gen sweepstakes scam $30M FTC settlement
• FTC cracks down on medical, location data privacy