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June 3rd, 2011
FTC Brings First Enforcement Action Against a Consumer
The Federal Trade Commission ("FTC") recently announced that it reached a settlement with a consumer who provided an allegedly false testimonial in an infomercial for the "wealth-building" program "Winning in the Cash Flow Business" (the "Wealth Program"). The FTC, jointly with Colorado’s Attorney General, alleged that various parties involved in the marketing of the Wealth Program defrauded customers, in some cases out of thousands of dollars, with phony claims that they could make large amounts of money quickly and easily by finding, brokering, and earning commissions on seller-financed promissory notes.
The FTC alleged that the Wealth Program was marketed primarily through a 30-minute infomercial, which claimed that consumers could successfully earn substantial income brokering promissory notes in three easy steps. These claims were allegedly supported by testimonials from consumers who claimed to have made, "$1.2 million in 30 days," "$79,000 in a few hours," and "$262,216 part time," for example.
As part of its enforcement action, the FTC charged one consumer with making false claims about how much she earned by participating in the Wealth Program. The consumer has agreed to an order settling the FTC charges against her. The order is the FTC's first against a consumer charged with making misrepresentations in a testimonial.
If you have any questions about the FTC’s announcement, please contact Jeffrey A. Greenbaum at (212) 826 5525 or jgreenbaum@fkks.com, Terri Seligman at (212) 826 5580 or tseligman@fkks.com, or any other member of the Frankfurt Kurnit Advertising Group.
Other Advertising Law Alerts
What the Advertising Industry Can Learn from Kim Kardashian’s Settlement with the SEC
On October 3, 2022, the Securities and Exchange Commission (SEC) announced that it entered into a $1.26 million settlement with Kim Kardashian over her social media promotion of the EMAX token without disclosing payment she received from token issuer, EthereumMax. The matter provides important lessons for advertisers. Read more.
October 10 2022
Get Ready for California’s New “Automatic Renewal” Rules
California recently amended its Automatic Purchase Renewals law. The amended statute - effective July 1st -- require marketers to provide consumers of automatic renewal or continuous service offers with more information and easier ways to terminate. Read more.
June 22 2018
“Made in the U.S.A.” Claims Continue to be Scrutinized
In 2016, California amended Section 17533.7 of the California Business and Professions Code ("Section 17533"), liberalizing the standard for selling products labeled "Made in U.S.A" to California consumers. Read more.
June 4 2018
