Responding to Deceptive Practice Allegations From the FTC

Getting a letter from the Federal Trade Commission saying they think you’ve engaged in deceptive practices can be scary. But don’t panic! With the right approach, you can respond effectively and resolve the issue.

What is a Deceptive Practice?

The FTC considers a practice deceptive if it involves a material misrepresentation that is likely to mislead a reasonable consumer. This includes things like:

• False claims about a product or service
• Misleading price statements
• Bait-and-switch techniques
• Failing to disclose important information

If the FTC believes a company has engaged in a deceptive practice, they have the authority to investigate and take enforcement action if necessary.

Responding to FTC Allegations

If you receive a letter from the FTC about a deceptive practice investigation, don’t ignore it. Here are some tips on responding:

1. Don’t panic – Carefully review the FTC’s allegations and take a breath. A letter doesn’t necessarily mean you’ve violated the law.
2. Get legal help – Consider hiring an attorney experienced with FTC investigations. They can help guide your response.
3. Be cooperative – Respond promptly and provide all information the FTC requests. Lack of cooperation may raise red flags.
4. Investigate internally – Review your marketing materials, customer complaints, etc. to understand what happened.
5. Consider settling – In many cases, it is in a company’s interest to settle FTC charges to avoid litigation.

When responding to the FTC, be sure your statements are accurate. Avoid speculation, exaggeration, or definitive conclusions about the allegations. Stick to the facts.

FTC Enforcement Options

If the FTC believes a law violation occurred, they have several options to compel compliance:

• Administrative prosecution – The FTC prosecutes the company before an administrative law judge. If violations are found, the judge can order remedies like refunds and bans on certain business practices.[1]
• Federal court injunctions – The FTC can seek a court order temporarily banning the deceptive practices while litigation proceeds.[1]
• Civil penalties – The FTC can seek financial penalties against the company, particularly for violating prior orders.[1]

In some cases, the FTC resolves investigations through consent orders. This involves the company agreeing to stop the contested practices and take remedial action, without admitting guilt.

Avoiding Deceptive Practices

The best defense is a good offense. Here are some tips to avoid engaging in deceptive practices in the first place:

• Review all ad claims, disclosures, and disclaimers to ensure they are truthful, clear, and conspicuous.
• Implement compliance training for marketing and sales staff on FTC guidelines.
• Monitor customer complaints for concerning patterns.
• Consult with legal counsel before rolling out major ad campaigns or promotions.
• Stay up-to-date on FTC enforcement actions against competitors.

Deceptive practices can erode consumer trust and ultimately hurt your business. Taking proactive steps for legal compliance and ethical marketing is wise.

Takeaways

• Respond promptly and cooperate fully when the FTC comes knocking.
• Be truthful and stick to the facts in your responses.
• Getting experienced legal help is recommended.
• Settlement may be the fastest path to resolving FTC allegations.
• Regular compliance reviews can help avoid problems in the first place.

Dealing with FTC deceptive practice allegations is no fun. But with the right approach, you can navigate the process and put the issue behind you.