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While many small businesses do not believe that the Federal Trade Commission is enforcing its regulations on deceptive advertising, the FTC has updates on recent fines.

What are some recent FTC consent orders and settlements based upon false and deceptive advertising?

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Circa Direct LLC of New Jersey and its CEO Andrew Davidson settled claims that they tried to pass off advertisements for acai berry weight loss products as objective news stories. The stories were attributed to “News 6” and “New Jersey Job Report,” according to an FTC press release.

One “reporter” claimed to have shed 25 pounds in a month using a supplement, according to the FTC. The government agency submitted a monstrous record to a federal court in support of its allegations against the defendants, including a report from a University of California professor with an M.S. and Ph.D. in Nutrition who said losing such weight within that timeframe is not plausible.

The company and its CEO agreed to surrender more than $2 million in assets, including proceeds from the sale of a home in Margate, N.J., in order to keep an $11.5 million settlement from being enforced against them. The company also agreed in an FTC consent order to clearly distinguish its subjective advertisements from news reporting.  The FTC’s press release on this settlement can be found here: http://www.ftc.gov/opa/2012/10/circa.shtm  (November 2012)

FTC Enforcement Means Money

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The FTC revealed that a popular, light-giving app was not only secretly selling data to third parties, but its “option” to refuse the data collection in the first place did not work.

The FTC issued its first enforcement action related to location-based technology, reaching a settlement with the maker of Brightest Flashlight Free for allegedly hiding the fact that it sold information about the location of its users and the unique string of numbers assigned to a device.

In December 2013, this is a new settlement, so no fine has been announced yet.  The settlement with the FTC prohibits the app developer from misrepresenting how consumers’ information is collected and shared and how much control consumers have over the way their information is used. The settlement also requires the defendants to provide a just-in-time disclosure that fully informs consumers when, how, and why their geolocation information is being collected, used and shared, and requires defendants to obtain consumers’ affirmative express consent before doing so.

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According to one FTC Complaint, Maryland auto dealer Timonium Chrysler advertised “dealer discounts” and “internet prices” on its website that were not actually available to a typical consumer – instead, they resulted from an amalgamation of smaller rebates that would only be available to members of the military who are recent college grads, hold an account at a particular bank, and own a vehicle with a lien on it, etc. In the unlikely event that a consumer was able to meet these requirements, the FTC alleged that the price would still be higher than advertised.

The dealers must maintain and make available copies of all advertisements and promotional materials to the Commission for inspection upon request for the next five years, and they are required to comply with the FTC’s order for 20 years.  To read more about the FTC’s order, please read here:  http://www.ftc.gov/opa/2013/09/autoads.shtm (September 2013)