“This letter is to advise you that FTC staff reviewed your website, social media websites, and print advertisements.” If you have received a letter that starts like this, then you probably understand the FTC complaint process. If you haven’t, good job (or consider yourself lucky if you know your company’s advertisements may be deceptive, unfair, or unsubstantiated). If you have not received a letter from the FTC, then read on so you know how your choices in case your company is investigated.
Any consumer or company may file a complaint with the FTC if they believe an ad is deceptive, unfair, or unsubstantiated by visiting ftc.gov. Once a complaint is received, the FTC investigates. This can consist of reviewing a company’s website and social media profiles, subpoenaing documents, and other actions. The FTC does not make any of its investigation’s public, but if a company publicly announces it is the subject of an investigation, then the FTC can confirm the announcement.
If the FTC has reason to believe that a violation has taken place, the alleged violator has two options. First, the company may elect to settle the charges. To do so, the company would enter a consent order. A consent order does not have the company admit to the violation but does have the company agree to stop all deceptive practices that were subject to the investigation.
The second option is to dispute the FTC’s findings that a violation took place. Since the FTC is a regulatory agency, the challenge will not take place in a traditional court of law. Instead, a formal adjudication in front of an administrative law judge will take place. (A formal adjudication is a hearing on the record where the parties’ arguments are made.) If a company is found in violation of the FTC Act, then the FTC will apply appropriate remedial measures (discussed below). If the company does not agree with the findings of the administrative law judge, then the company may appeal the findings to the full FTC. If the FTC affirms the administrative law judge’s finding and the company still does not agree, then it may appeal to the United States Court of Appeals, and then the United States Supreme Court.
If a company is found to have violated the FTC Act after all appeals are exhausted, they may face these remedies:
- Cease and desist orders. These orders are legally binding and may consist of:
- Orders to provide substantiation for claims in future advertisements;
- Orders that the company must periodically report substantiation of claims to FTC staff; and
- Fines of up to $43,280 PER DAY PER AD if the company violates the law in the future.
- Corrective advertising.
- Take out new advertisements to correct the misinformation conveyed in the original advertisement;
- Include specific disclosures in future advertisements; or
- Provide other information to consumers.
- Civil penalties, refunds, or other monetary relief.
Hopefully, now you and your company have a general understanding regarding the FTC’s complaint process and potential penalties your company may face if it is found in violation of the FTC Act.