FTC Announces New Enforcement Actions for COVID-19
Posted in Legal Bites
FTC Announces New Enforcement Actions for COVID-19

In April 2021, the Federal Trade Commission (“FTC”) emphasized its commitment to protecting consumers from unsubstantiated claims of products advertised to prevent, treat or cure COVID-19. On April 29, 2021, the FTC announced an additional set of warning letters related to these types of claims. The FTC has now sent nearly 400 warning letters in ten sets to companies and individuals. According to the agency, “In the letters, the FTC states that one or more of the efficacy claims made by the marketers are unsubstantiated because they are not supported by scientific evidence, and therefore violate the FTC Act. The letters advise the recipients to immediately stop making all claims that their products can prevent or treat COVID-19, and to notify the Commission within 48 hours about the specific actions they have taken to address the agency’s concerns. Letters issued this year warn the recipients of the FTC’s new authority to seek civil penalties under the COVID-19 Consumer Protection Act. Violators who make deceptive claims related to the treatment, cure or prevention of COVID-19 are subject to penalties of up to $43,792 per violation.”

On April 19, 2021, the FTC issued a report on Protecting Consumers During the COVID-19 Pandemic: A Year in Review. The report identifies the following actions taken in 2020 to protect consumers from COVID-19 issues:

  • Filed 13 enforcement actions against companies that, among other things, failed to deliver personal protective equipment or made deceptive health or earnings claims, including its first action under the new COVID-19 Consumer Protection Act.
  • Directed more than 350 companies to remove deceptive claims related to COVID-19 treatments, potential earnings, financial relief for small businesses and students, and warned companies that it is illegal to assist and facilitate deceptive COVID-19 calls. 
  • Prioritized privacy enforcement actions addressing the types of conduct that have been exacerbated in the transformation to digital work and schooling, including videoconferencing, ed-tech and health-tech.
  • Collected and tracked more than 436,000 reports associated with COVID-19 between January 2020 and April 7, 2021, in which consumers reported $399 million in fraud losses.
  • Issued more than 100 consumer and business alerts on COVID-related topics.

On April 15, 2021, the FTC partnered with the DOJ to file the first action under the COVID-19 Consumer Protection Act, which was passed in December 2020. The new law makes it unlawful under Section 5 of the FTC Act to engage in a deceptive act or practice that is associated with “the treatment, cure, prevention, mitigation, or diagnosis of COVID-19” or “a government benefit related to COVID-19.” Congress mandated that a violation of the law “shall be treated as a violation of a rule defining an unfair or deceptive act or practice prescribed under section 18(a)(1)(B) of the Federal Trade Commission Act,” which means that violations can result in financial penalties. The enforcement action was filed against a St. Louis-based company promoting vitamin D and zinc products under the Wellness Warrior brand. The complaint alleges that defendants used marketing emails and social media claims that Wellness Warrior products containing vitamin D would treat or prevent COVID-19, and claimed that those representations are scientifically proven. The FTC voted 3-1 to refer the civil penalty complaint to the DOJ and the DOJ then filed the complaint in the U.S. District Court for the Eastern District of Missouri, Eastern Division.

Tags: COVID-19, FTC
  • Pooja S. Nair
    Partner

    Pooja S. Nair is a business litigator and problem solver with a focus on the food and beverage sector. She advises food and beverage clients, startups and other businesses on a comprehensive range of issues, including employment ...

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