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Last month, the Federal Trade Commission (FTC) announced an enforcement action against Evolv Technologies, alleging that the company made deceptive claims about the capabilities of its AI-powered security screening system, including in school settings. Among other allegations, the complaint alleged that Evolv advertised that its systems could reliably detect all weapons, but the systems consistently failed to detect guns and knives and routinely gave false alarms.

The FTC also announced a proposed settlement. Interestingly, the two sitting Republican commissioners, one of whom will likely be the acting chair after January 20, disagreed on the scope of the proper remedy under Section 13(b) of the FTC Act. While commissioners Andrew Ferguson and Melissa Holyoak both supported the FTC’s settlement with Evolv, they disagreed on the FTC’s authority to provide relief in the form of contract cancellation for school customers.Continue Reading The Dueling Views of FTC Commissioners Ferguson and Holyoak on the Scope of Agency Authority

Join us as we spotlight select chapters of Venable’s popular Advertising Law Tool Kit, which helps marketing teams navigate the legal risk of campaigns and promotions. Click here to download the entire Tool Kit, and tune in to the Ad Law Tool Kit Show podcast, to hear the authors of this chapter dive deeper into the issue of Understanding False Advertising Claims in this week’s episode.

The first rule of advertising compliance is that advertising must be truthful and not misleading to consumers. In addition, all material advertising claims must be substantiated. When competitors’ ads do not meet those tests, there are numerous venues in which they may be challenged. When challenging competitors’ advertising, it is critical to understand the different ways in which an advertising claim can be false or misleading.

Types of false advertising claims:Continue Reading Understanding False Advertising Claims: An Excerpt from the Advertising Law Tool Kit

Episode 9 of Venable’s Ad Law Tool Kit Show, Season 2,is now available. Listen to “Understanding False Advertising Claims, Part 1: Litigation” here, or search for it in your favorite podcast player.

The first rule of advertising compliance is that advertising must be truthful and not misleading to consumers. All material advertising claims also must be substantiated. There are many venues in which a business can challenge a competitor who fails to follow those rules. What are the different ways in which an advertising claim can be false or misleading?

In the first of two episodes about false advertising claims, Venable partners Liz Rinehart and Roger Colaizzi discuss the many types of false advertising claims and how to be sure your business can avoid them.Continue Reading Listen to Venable’s Ad Law Tool Kit Show Podcast – “Understanding False Advertising Claims, Part 1: Litigation”

Consider these six options for challenging your competitors’ advertising and marketing claims—each with its own advantages and disadvantages.
Continue Reading Event in Review: Why Can They Say That, but I Can’t? How to Challenge Your Competitors’ Advertising While Avoiding Being Targeted

Venable’s Advertising and Marketing Group hosted its 10th Advertising Law Symposium on March 21 in Washington, DC. The group welcomed in-house counsel, advertising executives, and marketing professionals for a full day of sessions on the latest developments in advertising law and what to watch for soon.

Here are some highlights:

Patchwork of Privacy Laws Makes Compliance a Challenge

Frequent data breaches and incidents like the 2018 Cambridge Analytica scandal have increased criticism of the United States’ approach to regulating privacy through a patchwork of federal and state laws and industry self-regulatory codes. But even harsh critiques have not been enough to spur Congress to pass a preemptive privacy law that would supersede the jumble of state laws and regulations and streamline things. Partner Rob Hartwell and associate Allie Monticollo said marketers and advertisers should watch what’s happening in the states and mitigate risk accordingly.Continue Reading Event in Review: 10th Advertising Law Symposium

Earlier this month, the National Advertising Division of BBB National Programs (NAD) recommended that Amyris Clean Beauty, Inc.’s (Amyris) Biossance skincare products modify or discontinue several claims regarding their “clean” and “ethically and sustainably sourced” ingredients, including:

  • “Clean ingredients and clean formulas—we ban over 2000 ingredients that are known to be toxic to you and the environment. All of our ingredients are also ethically and sustainably sourced.”
  • “Our 100% sugarcane derived squalane is ethically and sustainably sourced, keeping 2 million sharks every year safe from liver harvesting.”
  • “Did you know our squalane is sugarcane derived and it’s a hero ingredient in *every* Biossance formula? This miracle multitasker locks in weightless moisture, calms and protects, and improves elasticity.”

Continue Reading NAD Issues Decision Addressing “Clean,” “Ethically and Sustainably Sourced,” and Efficacy Claims for Amyris Clean Beauty, Inc. Biossance Skincare Products

The National Advertising Division of BBB National Programs (NAD) recommended last month that Stihl Incorporated USA (Stihl), a manufacturer of equipment and tools, discontinue or modify its unqualified “Made in America” claims. Modified claims would need to make clear that “not all (or virtually all) of its products are made in the United States and that not all (or virtually all) of the parts of those products are from the United States,” according to the recommendations.

The Claims at Issue

NAD reviewed “Made in America” claims made on Stihl’s website, social media, commercials, and print ads. In addition to claiming “Made in America,” Stihl ran ads stating, “It’s just three words. But they tell you everything you need to know…Not everyone can say them. But we can. MADE IN AMERICA.”Continue Reading In “Made in America” Case NAD Finds That Advertisers Should Not Rely on Disclosures to Cure a False or Misleading Claim

Last week, New York Attorney General Letitia James filed a lawsuit against the world’s largest beef producer JBS USA Food Company and JBS USA Food Company Holdings (JBS Group). The lawsuit challenges the company’s claim that it will achieve net zero greenhouse emissions by 2040 despite its documented plans to increase production and lack of supporting evidence that the aspirational claim is attainable.

Generally, achieving “net zero” means negating the amount of greenhouse gases produced by activity by reducing emissions and implementing methods of absorbing carbon dioxide from the atmosphere (also known as “offsetting”). According to the complaint, there are no proven agricultural practices that would allow the JBS Group to reduce its greenhouse gas emissions to net zero at the company’s current scale, and offsetting the emissions would be a “costly undertaking of unprecedented degree.”Continue Reading New York Attorney General Says JBS Net Zero Claims Are Greenwashing

Last week, the Federal Trade Commission issued a Notice of Penalty Offense regarding substantiation for product claims to 670 companies in the health-related marketing space. This new Notice is yet another signal from the FTC that it intends to aggressively pursue its enforcement agenda using all available tools, including previously long-dormant avenues, like its Penalty Offense Authority.

Using its Penalty Offense Authority, the FTC can seek civil penalties from a company or individual that engages in conduct the FTC has determined was unfair or deceptive in a litigated administrative enforcement proceeding, provided the FTC can prove they had actual knowledge that the conduct was unlawful. The purpose of the notice letter is to allow the FTC to argue that the recipients had the requisite “actual knowledge” to support civil penalties of up to $50,120 per violation.Continue Reading New Notice of Penalty Offenses: Are You in the Danger Zone?

The Federal Trade Commission’s recent settlement with Dalal A. Akoury and AWAREmed Health & Wellness Resource Center provides a good overview of how today’s FTC approaches medical claims it believes are unsubstantiated. The case also serves as a reminder that if medical claims sound too good to be true, they probably are.

According to the complaint, filed by the Justice Department on behalf of the FTC, defendants, under Khoury’s leadership, engaged in deceptive acts or practices in violation of Sections 5 and 12 of the FTC Act and the Opioid Addiction Recovery Fraud Prevention Act (OARFPA). The complaint states that defendants deceived reasonable consumers into believing that the medical clinic’s treatments could cure cancer, chronic diseases such as Alzheimer’s and Parkinson’s, and a range of addictions, including to opioids, sex, food, and gambling.

The FTC had previously warned defendants on numerous occasions that making unsubstantiated addiction treatment claims is against the law. Khoury and AWAREmed, a set of companies Khoury controls that operate as a medical clinic, apparently ignored such warnings, causing the Justice Department to try and permanently halt defendants’ deceptive advertising and recover civil penalties. With this complaint the FTC continues its aggressive use of the Opioid Act to fill the hole in its remedial authority after AMG.Continue Reading In AWAREmed Settlement FTC Says Opioid and Chronic Disease Ad Claims Must Be Backed by Science