Challenging FTC Findings of Deceptive Conduct

Challenging FTC Findings of Deceptive Conduct

Getting accused of deceptive practices by the FTC can be scary. But there are ways to challenge their findings, depending on the specifics of your case. This article will walk through some strategies for defending yourself.

What is “Deceptive Conduct”?

First, let’s define what the FTC means by “deceptive.” According to their policy statement[5], it involves:

• False or misleading representations
• Omissions of material information
• Misleading price claims
• Sales of hazardous or defective products

Basically, anything that could trick or mislead a reasonable consumer. Their goal is to protect people from shady business practices.

How the FTC Investigates Deception

The FTC has broad investigative powers when it comes to deceptive marketing[1]. This includes:

• Issuing subpoenas to get info
• Conducting undercover shopping
• Monitoring ads and websites
• Working with whistleblowers

If they determine your actions were likely to mislead consumers, they’ll issue a complaint spelling out the charges. Then it goes to an administrative trial before an FTC judge.

Defending Yourself in an FTC Trial

The FTC has to prove 3 elements to establish deception[5]:

1. There was a representation, omission or practice that misled or was likely to mislead consumers
2. The act or practice was material – i.e., likely to affect a consumer’s choice
3. The act or practice was likely to mislead reasonable consumers

There are a few ways to fight these charges:

• Challenge the FTC’s evidence – Pick apart their documentation and testimony. Look for weak points or logical flaws.
• Argue your actions were not material – Show that even if there were inaccuracies, they didn’t really impact decisions.
• Claim no reasonable consumer would be misled – Use surveys or expert testimony to demonstrate the language was clear.

You can also argue the FTC is overreaching its authority. Their deception powers were meant to target clearly misleading claims, not minor discrepancies or partially true statements[5].

Settling with the FTC

Many cases end in a settlement, where the company agrees to change its practices and follow certain monitoring procedures. This avoids a drawn-out court fight.

Settlement terms often include[3]:

• Stopping the contested marketing practices
• Adding new disclosures
• Implementing a compliance program
• Paying consumer refunds

Before settling, consult with a lawyer to negotiate the best possible terms.

Appealing an FTC Ruling

If you lose at trial, you can appeal the ruling in federal court. This gives another chance to argue the FTC exceeded its authority or misapplied the law.

Points to raise on appeal include:

• The FTC’s findings were arbitrary and unsupported
• Important evidence was excluded
• The FTC judge was biased
• The proposed remedies are overly broad or burdensome

However, courts give significant deference to the FTC’s determinations. Overturning their ruling is difficult. Most appeals fail unless there were major procedural errors or flaws in reasoning[1].

Avoiding Deception Charges in the First Place

The best defense is a strong offense. Build compliance into your marketing operations, including:

• Vet all ad claims with legal counsel
• Use clear, unambiguous language
• Disclose limitations and restrictions
• Keep adequate substantiation for claims
• Follow guidance on endorsements, testimonials and reviews

Regular compliance audits can identify problem areas before the FTC gets involved. And staff training ensures employees understand advertising dos and don’ts.

With vigilance and care, you can reduce the risk of an FTC deception investigation. But if you do end up facing charges, work closely with legal counsel to build the strongest case possible.