FTC to Advertisers: Back Up Your Claims or Pay Up

The Federal Trade Commission is warning advertisers to back up claims about their products.

The FTC last week issued notices to 670 companies warning that they could face civil penalties if they make claims in their ads that cannot be substantiated.

“The requirement for advertisers to have adequate support for their advertising claims at the time they’re made is a bedrock principle of FTC law,” Sam Levine, director of the FTC’s Bureau of Consumer Protection, said in a news release.

“The prospect of steep civil penalties will help ensure that advertisers don’t play fast and loose with the truth.”

According to the release, FTC law requires companies to provide “reliable evidence” to back up product claims.

The agency said it has long tried to guide companies on how to substantiate their claims, though many sellers continue to make unsupported statements and false claims about the evidence they have.

“Consequently, the FTC is now using its penalty offense authority to remind advertisers of the legal requirement to have a reasonable basis to support objective product claims and to deter them from making deceptive claims in the future,” the release said.

The companies that received the notices were involved in marketing over-the-counter drugs, dietary supplements, homeopathic products and functional foods, the FTC said. If these companies fail to back up their claims, they could face fines of up to $50,120 per violation.

According to the commission’s website, the companies included consumer product giants such as Bausch + Lomb and Bayer, CVS Pharmacies, Coca-Cola, and Gwyneth Paltrow’s Goop.

The FTC said that a company’s “inclusion on the list does not in any way suggest that it has engaged in deceptive or unfair conduct.”

The commission’s announcement came weeks after reports that it wanted to make sure companies in the artificial intelligence (AI) sector weren’t overstating claims about their products.

Because machine learning needs a significant amount of data and storage, there is the possibility that this demand could cause “big companies to become bigger,” FTC Chair Lina Khan said during an event hosted by the Justice Department in March.

And last year brought the news that the FTC was investigating a number of cryptocurrency firms and whether those companies ran deceptive or misleading advertisements.