Federal Trade Commission

The FTC’s Bureau of Consumer Protection issued a number of press releases regarding advertising and marketing practices in the fashion, finance, and the dietary supplement industries. The agency finalized a settlement over false and suppressed endorsement reviews. It also obtained injunctions over allegations ranging from false claims of removing negative information from credit reports to false health claims related to dissolvable film strips. The Commission also proactively issued warning letters to companies allegedly selling and advertising COVID-19 treatments.

Monday, March 21, 2022

Bureau of Consumer Protection: Endorsements, Influencers, and Reviews.

  • The FTC has finalized an order requiring Fashion Nova, LLC to pay $4.2 million and cease suppressing customer reviews of its products. As previously reported, this order resolves allegations that the “fast fashion” retailer utilized a third-party product review interface that automatically posted four- and five-star reviews but suppressed lower ratings for the company to review and approve.

Bureau of Consumer Protection: Credit and Finance

  • The FTC has obtained an injunction against Turbo Solutions Inc., a company offering credit repairs services, stopping the company and its owner from collecting money in exchange for services, communicating its services to the public, as well as other business related practices. According to the FTC, Turbo Solutions allegedly bilked consumers out of millions of dollars by falsely claiming that the company would remove negative information from credit reports. According to the complaint, the company also filed fake identity theft reports to explain negative items on customer’s credit reports. In addition, the complaint alleges that Turbo Solutions’ website and Instagram account made claims like, “We Delete Inaccurate and Negative Accounts,” and “results in 40 days!” The company’s representatives also allegedly made false claims that consumers’ credit scores would be boosted by 50-200 points in violation of the Credit Repair Organizations Act (CROA) and the Telemarketing Sales Rule (TSR).

Friday, March 25, 2022

Bureau of Consumer Protection: Advertising, Marketing, Health Claims, and Auto-ship Plans.

  • A California Federal District Court issued a judgment against Jason Cardiff, Eunjung Cardiff, and seven entities they control, doing business as Redwood Scientific Technologies (“defendants”). The defendants are ordered to stop using allegedly illegal marketing tactics that deceptively promoted dissolvable oral film strips as effective smoking cessation, weight-loss, and sexual-performance aids. The court found that the defendants’ health claims were false or unsubstantiated and their online auto-ship program was not clearly and conspicuously disclosed, violating the Restore Online Shoppers’ Confidence Act. In addition, the court found that defendants unfairly enrolled consumers in auto-ship plans without their consent, failed to honor refund policies and guarantees, used fake testimonials, made false Made-in-the-USA claims, and made illegal robocalls. Additionally, the court found the Cardiffs made deceptive earnings claims as part of a multi-level marketing scheme. The order permanently bans defendants from engaging in multi-level marketing, robocalls, negative option sales, and marketing, advertising, or selling thin film strips to consumers. The defendants are also prohibited from making unsubstantiated claims about the health benefits of goods and services, deceptively claiming that they have proof regarding any such health claim, failing to properly disclose auto-ship programs sold online, deceptively claiming that an endorser is a real consumer, deceptively claiming that any product is made in USA, making false earnings claims, and making any other misrepresentation regarding total costs, refund policies, or material restrictions or limitations connected with a sale of goods and services. However, in its press release announcing the court judgment, the FTC complained that although it alleged that consumers lost $18.2 million as a result of the defendants’ marketing practices, the court did not order any compensation as a result of the Supreme Court’s ruling in AMG v. FTC.

March Warning Letters

Unapproved New Drugs and Misbranded Products Related to COVID-19

  • The FTC and the FDA issued three warning letters to each Soda Pharm, Lotech International, LLC, and Viraldine, LLC for allegedly marketing products that could mitigate, prevent, treat, diagnose, or cure COVID-19. The FTC’s cease and desist demand detailed that if the companies continue to market these products, they risk facing legal action including a Federal District Court injunction and an order requiring the companies to pay back consumers. In addition, the companies also potentially face fines of up to $46,517 per violation pursuant to the COVID-19 Consumer Protection Act, Section 1401, Division FF, of the Consolidated Appropriations Act, 2021, P.L. 116-260.