Widgets, whatzits, and whaddayacallems
The FTC just announced more settlements with companies that falsely promised to help homeowners facing foreclosure. “Not relevant to our business,” you say? Think again.
Although some FTC rules apply only to certain industries, most lawsuits allege violations of Section 5 of the FTC Act, the federal law broadly outlawing unfair or deceptive acts or practices. That’s why savvy marketers of widgets pay attention to FTC cases involving whatzits and whaddayacallems. Since most truth-in-advertising principles apply across the board, it’s wise to look at the big picture — and not just at legal developments directly affecting your business.
Panning for compliance nuggets? Here are tips marketers in any industry can take from recent mortgage and debt relief cases.
Sealing their fate. Some FTC actions have charged that defendants falsely claimed their programs were affiliated with the federal or state government. How did they convey that? It’s a case-by-case evaluation, of course, but relevant factors included that their websites displayed official agency seals or logos; featured links to offices like HUD, the Department of the Treasury, and the White House; and used URLs similar to actual government sites. Marketers should be careful not to suggest expressly or by implication an untruthful affiliation with or approval by a government agency.
By the numbers. Regardless of whether what’s for sale are debt relief services, weight loss products, or business opportunities, there’s a reason ads tout “90% success rates” or make similar quantifiable promises: because numbers like that grab the attention of potential customers. But just getting them in the door isn’t enough. Companies have a legal obligation to back up those claims with solid statistics.
A rogue by any other name. No, it’s not your imagination. The captions of FTC cases seem longer these days. That’s because it’s not unusual for a complaint to name officers of a company in their the corporate capacity and individually. The FTC wants to minimize the chance that the mastermind simply pulls up stakes, renames the operation, and engages in the same questionable practices against other consumers. Holding officers liable in their individual capacities is a useful check against that happening.
Too much information? Even when courts have ordered companies to refund every last penny to defrauded customers, defendants often still have access to a potentially valuable asset: confidential customer data like Social Security or credit card numbers. That’s why the FTC advocates for order provisions barring defendants from using or sharing sensitive consumer information and requiring them to securely destroy it.
Bans of gold. Another development in FTC orders: provisions banning defendants from certain industries. In many recent cases challenging practices aimed at consumers in financial distress, orders have imposed lifetime bans from involvement in mortgage relief, foreclosure rescue, or other services. In appropriate cases, the FTC hasn’t been afraid to ask courts to use their authority to protect consumers in the future.