Late last week, the Federal Trade Commission (FTC) announced that it had sent a “Notice of Penalty Offenses” on claim substantiation to around 670 companies. While this notice tactic is not a new tool, it has been reinvigorated following the 2021 Supreme Court decision in AMG Cap. Mgmt., which led to the FTC losing its ability to obtain monetary redress directly in federal court in non-civil penalty cases. Since then, through both Democratic and Republican administrations, the FTC has directed enforcement initiatives away from rather clearcut instances of deception, sometimes attacking scientific evidence even in the face of reputable experts on the other side supporting the evidence.
In her last vote before leaving the FTC, Commissioner Christine Wilson dissented, identifying concerns about the use of Section 13b in cases beyond clearcut fraud, suggesting that the Commission will have difficulty demonstrating that the conduct of individual defendants are sufficiently similar to cited cases to result in civil penalties. However, she also recommended “that marketers review this Notice and the cases it cites, and tailor their claims accordingly.”
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