Earlier this month, the Federal Trade Commission (FTC) announced that it is now using its Penalty Offense Authority to remind companies not to use fake online reviews or other deceptive endorsements and that stiff penalties (up to $43,792 per violation) will apply if they do.

The FTC sent a Notice of Penalty Offenses letter to a list of over 700 companies, which the FTC described as “an array of large companies, top advertisers, leading retailers, top consumer product companies, and major advertising agencies,” but also noted was not an indication that any company has engaged in unlawful conduct.  The Notice provides a reminder not to use a number of practices, such as:

  • Falsely claiming an endorsement by a third party.
  • Misrepresenting whether an endorser is an actual, current, or  recent user.
  • Using an endorsement to make deceptive performance claims.
  • Failing to disclose an unexpected material connection with an endorser.
  • Misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.

As a reminder, under Section 5 of the FTC Act, which prohibits deceptive advertising, the FTC conducts investigations and can bring cases involving endorsements.  The FTC also publishes Endorsement Guides to provide guidance to companies that use endorsements to advertise their products/services.