On October 13, 2021, the Federal Trade Commission (“FTC”) circulated a Notice of Penalty Offenses (“Notice”) to over 700 companies. These companies included as recipients of the Notice are large companies, advertising agencies and consumer product companies. 

The Notice places the companies on notice that they could incur civil penalties of up to $43,792 per violation if they use endorsements in ways that are precluded by the FTC’s prior administrative cases.

The FTC’s vote to authorize the Notice and its wide distribution was unanimous.

The Notice states that businesses may be held liable by the FTC for a variety of practices related to the use of endorsements, testimonials and reviews including:

• Falsely claiming an endorsement by a third party; misrepresenting that an endorser is an actual user, a current user or a recent user;
• Continuing to use an endorsement without good reason to believe that the endorser continues to subscribe to the views presented;
• Misrepresenting that an endorsement represents the experience, views, or opinions of users or purported users; using an endorsement to make deceptive performance claims; failing to disclose an unexpected material connection with an endorser; and
• Misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.

The Notice also states that positive consumer reviews are a type of endorsement, so such reviews can be unlawful. This could occur when positive reviews are fake or when a material connection between the reviewer and the company is not adequately disclosed.