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The Federal Trade Commission appears to be gearing up for a crackdown on unsubstantiated product claims, after sending a notice last week reminding companies that getting loosey goosey with the facts can have pricey consequences.
Retailers and consumer brands including Walmart, Amazon, Kellogg Co., Costco, and PepsiCo were among those on the list of nearly 700 companies to which the FTC issued a gentle reminder about the Federal Trade Commission Act.
The why: The notices don’t indicate that any company on the list is currently in violation of the law. Instead, the FTC is legally triggering its authority to seek civil penalties against companies that do violate the law, which can reach up to $50,120 per violation.
Putting companies on notice is essentially a deterrent, but also, the FTC can now prove companies knew the rules in the event they break them.
The notices run through a variety of behaviors the agency has deemed unlawful, including falsely claiming endorsements, misrepresenting user experiences, and failing to have adequate support for objective product claims.
Zoom out: The FTC has proved it isn’t shy about handing out fines. Just last year it hit Walmart and Kohl’s with greenwashing accusations over sheets and towels that the retailers described as “bamboo” but were actually made of rayon. Walmart paid $3 million in civil penalties, while Kohl’s paid $2.5 million.