FTC Cracking Down On Marketing Claims – Including CBD Companies

Recently, the Federal Trade Commission (FTC) issued Notices of Penalty Offenses to approximately 670 businesses, focusing on advertising claims, endorsements, and reviews. This action serves as a significant warning and a call for companies to re-evaluate their marketing strategies.

Understanding the FTC’s Notice of Penalty Offenses

The Notices are meant to inform companies that any claims made about a product must be substantiated according to FTC guidelines. This includes ensuring that endorsements and reviews are truthful and not deceptive. The FTC’s approach indicates a commitment to actively enforcing the law against unfair or deceptive practices.

Who Received the Notices?

The FTC targeted a wide range of industries, including CBD, dietary supplements, homeopathic remedies, and over-the-counter drugs. The list of recipients includes major retail names and multinational corporations, highlighting the FTC’s broad enforcement scope.

Objectives of the FTC Notices

The Notices aim to warn and inform companies about the importance of substantiating product claims and the potential for significant civil penalties for non-compliance.

Key Areas of Focus in the Notices

  • Substantiation of Product Claims: Companies must have adequate support for objective product claims, health benefits, and safety features. Misrepresentation of the level or type of substantiation is also addressed.
  • Endorsements and Testimonials: The FTC emphasizes the need for honesty in endorsements, including disclosure of material connections and the typical consumer experience.

Implications for Businesses

Businesses found in violation of these guidelines could face civil penalties of up to $50,120 per violation. This underscores the importance of compliance and the need for companies to thoroughly review their marketing practices.

Challenges for CBD Companies

CBD companies must navigate the complex landscape of FTC Health Products Compliance Guidance and FDA regulations. Misleading claims not only attract FTC scrutiny but can also impact merchant account approvals for CBD payments.

Proactive Compliance is Key

All businesses, regardless of whether they received a notice, should conduct a compliance check. Reviewing the FTC Health Products Compliance Guidance, product labels, website content, customer reviews, and social media posts is crucial to avoid potential litigation and hefty penalties.

Bankcard International Group’s Role

As an industry leader in high-risk merchant accounts and cannabis payment processing, Bankcard International Group closely monitors these developments to support and guide businesses in navigating these regulatory challenges.

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