How the FTC Conducts Deceptive Advertising Investigations

How the FTC Conducts Deceptive Advertising Investigations

When you see an ad on TV, hear one on the radio, or come across one online, you probably don’t think much about whether it’s truthful or not. But the Federal Trade Commission (FTC) sure does! The FTC is the government agency in charge of protecting consumers from unfair or deceptive advertising. So how exactly does the FTC go about investigating if an ad is deceptive?

Well, first off, the FTC doesn’t review every single ad out there. With so many ads in newspapers, magazines, online, TV, radio, billboards, etc., that would be impossible! Instead, the FTC focuses on ads that could affect people’s health, safety, or finances – you know, the important stuff. These include ads about food, drugs, dietary supplements, alcohol, tobacco, high-tech products, and anything related to the Internet. The FTC also pays extra attention to ads targeting certain groups like kids, seniors, veterans, and people with serious illnesses.

Monitoring Advertising

So how does the FTC find out about shady ads in the first place? The agency has a few tricks up its sleeve:

• Monitoring traditional media like TV, radio, and print publications
• Surfing the web and social media sites
• Receiving complaints submitted through the FTC’s online complaint form or phone calls
• Coordinating with other government agencies like the FDA and BBB
• Reading consumer protection newsletters and reports from organizations like Truth in Advertising

When FTC investigators come across an ad that seems questionable, they start gathering as much info as they can. They’ll look at where the ad is placed, how it’s worded, any disclaimers or disclosures, what claims are made about the product, and what evidence is provided to back up those claims. If an ad seems really shady, they may open an investigation.

Investigating Advertisers

When the FTC formally investigates an advertiser, they have a ton of tools at their disposal:

• Issuing subpoenas to get info like sales records, pricing data, consumer complaints, etc.
• Requiring marketers to provide documentation for claims made in ads
• Inspecting manufacturing and testing facilities
• Interviewing company reps and employees under oath
• Doing undercover shopping to test claims made in ads

The FTC will collect as much info as it can to determine if an ad is deceptive. According to the FTC Act, ads need to be truthful, not misleading, and backed by evidence when making health, safety, or efficacy claims. If an advertiser doesn’t have solid proof for what their ad claims, they’re in trouble.

For example, let’s say an energy drink brand claims their drink will improve focus and concentration because it contains a special ingredient called NeuroStim. The FTC could demand that the company provide scientific studies showing NeuroStim actually improves brain function. If the business has no proof, their ad would be deceptive.

Taking Legal Action

When the FTC’s investigation finds an ad is deceptive, they have a few options to make the advertiser pay:

• Send a warning letter telling them to fix or remove the ad
• Reach a settlement requiring the advertiser to stop running the ad, issue refunds, and follow certain rules in the future
• Take the advertiser to court to seek compensation for harmed consumers or civil penalties up to $43,792 per violation

In serious cases, the FTC can even get courts to freeze a deceptive advertiser’s assets so they don’t hide their ill-gotten gains. The agency recently got over $478 million in refunds from a company using deceptive ads to promote a get-rich-quick scheme. Ka-ching!

But financial penalties aren’t the only consequence. Courts can ban companies from ever doing certain types of marketing again if they’ve repeatedly violated advertising laws. For example, a supplement marketer that keeps using deceptive health claims could be prohibited from making any health-related claims in future ads. That’s gotta hurt!

Working with Industry

The FTC doesn’t just crack down on deceptive advertisers – it also tries to prevent deception in the first place. The agency publishes guidance for companies on how to avoid shady marketing:

• Issuing advice on substantiating health claims, disclosing sponsorships, and using customer endorsements
• Offering business education materials on topics like native advertising and influencer marketing
• Giving seminars and workshops to educate industry professionals
• Participating in panel discussions at marketing and advertising events

The FTC also conducts undercover “surf days” where staff browse through ads online to see what types of questionable claims are being made. They use what they find to decide what industries need more education and guidance. This outreach helps stop deception before it starts.

Partnering Up

With billions of ads out there, the FTC needs help keeping tabs on deceptive marketing. The agency partners with other organizations to leverage extra resources:

• Coordinating with state Attorneys General offices on investigations and enforcement actions
• Working with the FDA to monitor ads for food, drugs, medical devices, and supplements
• Teaming up with the FCC to track false claims in telemarketing and robocalls
• Partnering with the BBB’s National Advertising Division to get companies to voluntarily change misleading ads
• Collaborating with tech companies to identify fraud and abuse on their platforms

These partnerships allow the FTC to monitor way more ads and hold more violators accountable through joint enforcement actions. Two heads – or organizations – are better than one in fighting deception!

Educating Consumers

While enforcing laws is important, the FTC also wants to help consumers protect themselves from shady ads. The agency offers tons of resources to educate people on spotting and avoiding deceptive marketing:

• Consumer alerts on the latest advertising scams
• Guidance on topics like how to spot false claims or fake reviews
• Videos breaking down deceptive advertising tactics
• Webinars on subjects like how to vet online ads and avoid fraud
• Games teaching kids how to be savvy media consumers

The FTC even has a YouTube channel and hosts Twitter chats where people can get tips directly from the FTC’s advertising experts. Empowered consumers are less likely to fall for deceptive ads – knowledge is power!

The Bottom Line

The FTC takes deceptive advertising seriously and uses every tool it can to protect consumers – monitoring ads, investigating claims, taking legal action, partnering with other agencies, and educating the public. No shady marketers are safe on the FTC’s watch! So next time you see a questionable ad, you can feel confident the FTC is hard at work making sure companies tell the truth.