If every word in my ad is literally true, can it still be deceptive?

A literally true ad can still be deceptive if its overall impression misleads reasonable consumers. The FTC's Guides for the Use of Environmental Marketing Claims give an example of the same point: an area rug labeled “50% more recycled content than before,” where the recycled fiber rose only from 2% to 3%, makes a claim that is technically true but likely conveys the false impression that the manufacturer has increased significantly the use of recycled fiber. In the Adept Management mailer case, the defendants argued that a rate statement was technically true because of the qualifying words “one of” and “we can offer,” but the court held that the statements undeniably implied the consumer was getting the best deal available.

Does the FTC need a consumer survey to prove what an ad conveys?

Not when the claim is reasonably clear from the ad itself: in one weight-loss case the court said the FTC did not need consumer survey data to prove what was obvious to any rational reader. The Commission's policy statement says it will not generally require extrinsic evidence of what reasonable consumers understood, but that in some instances extrinsic evidence will be necessary. Where an ad only faintly implies a claim, a court may decline to find the claim without extrinsic evidence of consumer perceptions.

How many consumers have to take away the misleading claim?

A significant minority of reasonable consumers, not a majority: an ad is misleading if at least a significant minority of reasonable consumers are likely to take away the misleading claim. In Telebrands, the Commission upheld the ruling that a copy-test net takeaway ranging from 10.5% to 17.3% for all claims except the fat deposit claim was sufficient to conclude the challenged claims were communicated. The standard still has a limit, because a company is not liable for every interpretation or action by a consumer.

Will a disclaimer, a contract, or a later disclosure fix a misleading impression?

Only if it is prominent and unambiguous enough to change the apparent meaning of the claims and leave an accurate impression. The Commission put the visibility point plainly in the TurboTax matter: disclosures cannot change the net impression of an ad if they are not clear and readily visible. It added that a disclosure also has to match the strength of the claim: repeated emphasis on free filing conveys a clear, strong, and compelling message, so the disclosure of any limitation on the offer must be similarly clear and strong to make a difference. In the Simple Health matter, the court held that even a verification with unambiguous disclosures failed to change the net impression created by salespeople who verbally promised comprehensive health insurance and ACA-qualified plans. A court of appeals likewise said that defendants cannot make considerable material misrepresentations to consumers and then bury corrections and disclaimers in subsequent communications. It also does not help that consumers could understand the fine print once it was pointed out to them: in its AMG Capital Management brief the FTC noted that the Ninth Circuit has rejected the argument that a net impression is not deceptive so long as most consumers can understand the fine print when that language is specifically brought to their attention. Whether qualifications are clearly and conspicuously disclosed depends on the overall net impression of the ad, so the answer is fact specific.

Does adding words like “may” or “might” avoid a misleading net impression?

Not by themselves. A federal court deciding a case about telemarketed grant-research services held that, when the statements were evaluated as a whole, the words “may” and “might” did not blunt the overall net impression that customers were guaranteed, or highly likely, to receive a grant. The reason is the same as for any other qualifier: it counts only to the extent that it changes what the ad as a whole communicates.

If my ad sends people to a page that explains the real terms, does that fix a misleading ad?

Not by itself. In the TurboTax matter the Commission applied the first-contact rule to the online setting: if the ads induce consumers to visit the webpage through false advertising, disclosures on the webpage do not absolve the company of liability for the ads. The Commission said it was especially important to reaffirm the rule's application online, where misleading click-bait ads drive traffic to advertisers' websites under false pretenses.

Does the FTC have to show that consumers were actually fooled or complained?

No. Section 5 of the FTC Act requires proof that a claim is likely to deceive, not proof of actual deception. Consumer complaints may be indicative of deception, but the presence of some satisfied customers is not a defense to liability.

Does it matter whether my business meant to make the claim?

Not for liability: a showing of an intent to make a particular claim is not required to find liability for violating Section 5 of the FTC Act. Intent can still hurt a business, because a showing of intent is powerful evidence that the alleged claim in fact was conveyed to consumers.

Does the CFPB use the same net impression test for financial products?

It does. The CFPB looks to the overall, net impression of a communication, considering the entire advertisement, transaction, or course of dealing rather than statements in isolation. CFPB examiners applied the same idea to credit card bonus advertising whose overall net impression misled or was likely to mislead consumers who could reasonably conclude they needed only to meet the stated spending requirements.

If each clause of my contract complies with state law, am I protected from a net impression claim?

No. In the Integrity Advance matter, the CFPB administrative law judge found that the individual clauses of a payday loan contract did not appear to violate the relevant Delaware laws, but that when read as a whole the contract's net impression was misleading. The judge added that compliance with state law is not a defense to a charge of deceptive conduct under the CFPA.

Can a court decide what my ad conveys without a trial?

When the materials themselves are undisputed, a court can decide it on summary judgment. In the Adept Management mailer case the court granted the FTC's motion for summary judgment on the net impression of the mailers. In the AMG Capital Management appeal the FTC argued that, in the absence of any dispute over the disclosures themselves, the analysis of their net impression was an appropriate question of law for summary judgment. It also pointed to the Sixth Circuit's rejection of the claim that net impression must be decided by a jury.

Does the FTC always win when it alleges a misleading net impression?

No. The plaintiff has to prove the net impression it alleges. In a case brought by the FTC and the Commonwealth of Pennsylvania, the court held that the overall net impression conveyed to reasonable consumers was not deceptive, because the offers were consistently presented as free trial issues with no obligation, the annual subscription price was disclosed, and the liberal cancellation policy was repeatedly emphasized. The Pennsylvania court described a two-step inquiry: a facial evaluation of whether the alleged net impression is conveyed, and, if that is unclear, a look at extrinsic evidence that reasonable consumers were deceived. The ECM BioFilms matter shows the facial step: the Commission agreed with the ALJ that ECM's tree logo and marketing materials could not reasonably be read, on a facial analysis alone, to convey the alleged specific rate claim.

DeceptionLegal test

Net impression

Berkeley Robinson, Managing Attorney at Robinson Law Firm PLLC

Author

Berkeley Robinson, Esq.

Managing Attorney, Robinson Law Firm PLLC

Berkeley has served as the go-to counsel for many scaling businesses in a transactional and litigation management capacity. Before becoming an attorney, Berkeley grew sales teams, ran online marketing campaigns, and did everything else an entrepreneur does—and still does today as the founder of two online businesses.

Definition

In consumer-protection enforcement, the net impression of a representation is the overall message it conveys to reasonable consumers, formed by the interaction of its words, images, and other elements rather than by any single statement or by the literal truth of individual words. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission A solicitation may be likely to mislead by virtue of its net impression even though it also contains truthful disclosures. Source: Adept Management Inc., et al.: Opinion and Order - June 20, 2019

Key legal rules

A claim that rests on net impression is still tested as a deception claim, so the ordinary deception rules apply to it. The main rules are these:

A practice falls within the deception prohibition if it is likely to mislead consumers acting reasonably under the circumstances in a way that is material. Source: Adept Management Inc., et al.: Opinion and Order - June 20, 2019
An advertisement is evaluated in its entirety, not by dissecting it: the entire mosaic should be viewed rather than each tile separately. Source: Adept Management Inc., et al.: Opinion and Order - June 20, 2019
A court assessing what an advertisement represents must look to its overall, net impression rather than the literal truth or falsity of its words. Source: Order - June 4, 2008
In identifying implied claims, the Commission focuses on the overall net impression, which requires examining both the representation and the overall context, including the juxtaposition of phrases and images and the nature of the transaction. Source: FTC staff closing letter, Buckingham Manufacturing Co. Inc. (Jan. 21, 2025)
In assessing a representation or omission, the CFPB looks to the overall, net impression of the communication, considering the context of the entire advertisement, transaction, or course of dealing rather than evaluating statements in isolation. Source: CFPB Circular 2023-01, Unlawful negative option marketing practices
An ad is misleading if at least a significant minority of reasonable consumers are likely to take away the misleading claim. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission
Where an ad conveys more than one meaning, only one of which is misleading, a seller is liable for the misleading interpretation even if nonmisleading interpretations are possible. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission
When representations or sales practices are targeted to a specific audience, the Commission determines the effect of the practice on a reasonable member of that group. Source: FTC Policy Statement on Deception, appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984)
The net impression test is applied from the perspective of a reasonable consumer, not that of the seller or the seller's employees. Source: Memorandum of Decision of the District Court Concluding That Defendant Charles Gugliuzza Is Individually Liable For the Deceptive and Unfair Marketing of Online Supplier
A decision-maker may not inject novel meanings into ads and then strike them down as unsupported; ads must be judged by the impression they make on reasonable members of the public. Source: In re ECM BioFilms, Inc., Initial Decision
If an advertisement's net impression is deceptive, disclaimers or qualifications in any particular ad are not adequate to avoid liability unless they are sufficiently prominent and unambiguous to change the apparent meaning of the claims and to leave an accurate impression. Source: Adept Management Inc., et al.: Opinion and Order - June 20, 2019
The FTC's Guides for the Use of Environmental Marketing Claims apply the same idea to qualifications in that field: to prevent deceptive claims, qualifications and disclosures should be clear, prominent, and understandable, which means plain language, sufficiently large type, close proximity to the qualified claim, and no inconsistent statements or distracting elements that could undercut or contradict the disclosure. Source: 16 C.F.R. § 260.3
A disclosure only qualifies or limits a claim to avoid a misleading impression; it cannot cure a false claim, and a disclosure that contradicts a claim will not prevent the ad from being deceptive. Source: FTC, Dot.Com Disclosures (Exhibit 1 to Memorandum of Points and Authorities in Support of FTC’s Motion to Dismiss Defendant Gugliuzza’s Counterclaim)
A seller cannot make considerable material misrepresentations to consumers and then bury corrections and disclaimers in subsequent communications. Source: Sixth Circuit Opinion Affirming the District Court’s Decisions Granting the FTC’s Motion for Summary Judgment
The Federal Trade Commission Act is violated if a seller induces the first contact through deception, even if the buyer later becomes fully informed before entering the contract. Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission
The Commission will not generally require extrinsic evidence concerning the representations understood by reasonable consumers or the materiality of a challenged claim, but in some instances extrinsic evidence will be necessary. Source: FTC Policy Statement on Deception, appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984)

For the sake of space, this page lists only the primary rules related to this term that most businesses should follow. More may apply to your situation, and your unique facts affect how they apply.

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Why these rules exist

Courts start from the premise that a consumer does not ordinarily carefully study or weigh each word in an advertisement, and that the ultimate impression on the reader arises from the sum total of what is said and what is reasonably implied. Source: Adept Management Inc., et al.: Opinion and Order - June 20, 2019 The Commission has also recognized that in many circumstances reasonable consumers do not read the entirety of an ad, or are directed away from a qualifying phrase by the acts or statements of the seller. Source: FTC Policy Statement on Deception, appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984) Weighing the claim and its qualifier together keeps a seller from stating a prominent claim and then relying on a qualifier that few readers will notice, because the qualifier counts only to the extent it changes what the whole presentation communicates. The criterion is accordingly the impression the ad is likely to make on the general populace. Source: Sixth Circuit Opinion Affirming the District Court’s Decisions Granting the FTC’s Motion for Summary Judgment The consumer in that test is an ordinary purchaser rather than an idealized one: in a Third Circuit brief in the Magazine Solutions matter, the FTC quoted the Tenth Circuit's observation that, unlike the faith it has in the “reasonable man,” the law has “very little faith indeed in the intellectual acuity of the ‘ordinary purchaser’ who is the object of the advertising campaign.” Source: FTC Brief, FTC v. Magazine Solutions (3d Cir.)

The same test limits liability. A company is not liable for every interpretation or action by a consumer, Source: FTC Policy Statement on Deception, appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984) and an ad need not mislead a majority of reasonable consumers; it is misleading if at least a significant minority of reasonable consumers are likely to take away the misleading claim. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission The inquiry asks what consumers take away from an ad, whether or not the advertiser meant to communicate it. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission At the same time, an advertiser is not liable for an interpretation a consumer may have based on an idiosyncratic perspective. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission The FTC has described the primary purpose of Section 5(a) as lessening the harsh effects of caveat emptor. Source: FTC Opening Brief, Financial Freedom appeal Without that purpose, the buyer would carry the risk of fine print he or she never read.

The same reasoning explains why a later correction does not undo an earlier impression. A strong claim lands first, and in the Intuit matter the Commission quoted the observation that once the average mind has received the impression conveyed by the word “free,” that impression can never be completely eradicated by any other words of explanation or contradiction. Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission The cost of the misleading claim is also incurred before any correction is read, because a consumer drawn to a website by the ad spends time there before learning the offer does not apply. Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission

Enforcement examples

In re The J. B. Williams Co. (Geritol iron tonic)

In the Matter of The J. B. Williams Co., Inc., et al., Opinion of the Commission (Sept. 28, 1965)

One Geritol television ad showed a husband who is “just too tired to budge,” then dancing with his wife while the announcer said that “In only one day GERITOL iron is in your bloodstream carrying strength and energy to every part of your body.” Source: In the Matter of The J. B. Williams Co., Inc., et al., Opinion of the Commission (Sept. 28, 1965) Because only 1/100 of 1 percent to 2.4 percent of the iron would be distributed throughout the body in 24 hours, the respondents argued that their claim was true. Source: In the Matter of The J. B. Williams Co., Inc., et al., Opinion of the Commission (Sept. 28, 1965)

Outcome. The Commission saw no doubt about the meaning of the representation in that context and agreed with the hearing examiner's interpretation. Source: In the Matter of The J. B. Williams Co., Inc., et al., Opinion of the Commission (Sept. 28, 1965) The fact that a small percentage of iron enters the bloodstream within one day was of no consequence to a tired person unless he also believed his strength and energy would increase within that time, and the advertising conveyed that belief, so the Commission held it misleading and deceptive. Source: In the Matter of The J. B. Williams Co., Inc., et al., Opinion of the Commission (Sept. 28, 1965) The Commission also amended the hearing examiner's order, which had barred only claims of relief “within 24 hours,” so that it fully prohibited misrepresenting the length of time within which Geritol will provide relief. Source: In the Matter of The J. B. Williams Co., Inc., et al., Opinion of the Commission (Sept. 28, 1965)

In re Telebrands Corp. (electronic ab belt)

In re Telebrands Corp., Docket No. 9313, Opinion of the Commission

Telebrands marketed its Ab Force electronic muscle-stimulation belt without saying what the belt was for: most of the ads did not expressly state any purpose for the product. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission Instead, the radio ads invited consumers to recall “those fantastic Electronic Ab Belt infomercials on TV.” Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission The television spots showed well-muscled, bare-chested men and trim women wearing Ab Force belts and experiencing abdominal contractions. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission

Outcome. The ALJ concluded from the interaction of the product name, visual images, text, and surrounding circumstances that the ads strongly and clearly conveyed the alleged claims. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission The Commission agreed that consumers would reasonably read the ads to mean that the device causes loss of weight, inches, or fat, creates well-defined abdominal muscles, and is an effective alternative to regular exercise, even if they had not seen ads for competing ab belts. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission Its order required respondents to substantiate all claims about weight, inch, or fat loss; muscle definition; or the health benefits, safety, or efficacy of any product, service, or program. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission

In re Novartis Corp. (Doan's back-pain reliever)

In the Matter of Novartis Corporation, et al. - Opinion

Doan's television ads such as “Graph” showed a package of Doan's beside packages of competing pain relievers, and the audio said Doan's had an ingredient that those pain relievers did not. Source: In re Novartis Corp., Opinion of the Commission The ads ran over eight years. Source: In re Novartis Corp., Opinion of the Commission

Outcome. The Commission found that the express claims that Doan's is made for back pain and contains a unique or special ingredient the other featured brands lack, coupled with the depiction of the other brands, combine to communicate that Doan's is superior to the competing analgesics for back pain. Source: In re Novartis Corp., Opinion of the Commission It treated the claim as implied but so clear as to be nearly express, and it noted that copy tests commissioned by Ciba showed that approximately 30 to 45% of the consumers tested discerned a superiority message from the ads. Source: In re Novartis Corp., Opinion of the Commission The Commission ordered a corrective message to appear for one year on all packaging and advertising, except radio and television ads of 15 seconds or less, and until Novartis had spent on Doan's advertising an amount equal to the average spent annually during the eight years of the challenged campaign. Source: In re Novartis Corp., Opinion of the Commission

FTC v. National Urological Group (weight-loss supplements)

Order - June 4, 2008

A Lipodrene advertisement ran a “Clinically PROVEN Weight Loss!” banner with the lines “Lose up to 42% of your total body fat! Lose up to 19% of your total body weight!” beneath it. Source: Order - June 4, 2008 For Thermalean, the defendants argued that the clinical results described only the product's “proprietary components,” not the product as a whole, and the court was not persuaded. Source: Order - June 4, 2008

Outcome. According to the FTC's Eleventh Circuit brief, the court considered each ad's overall, net impression and concluded that the defendants' express and obviously implied representations conveyed all but one of the asserted claims. Source: FTC v. National Urological Group, Inc., Eleventh Circuit Brief It was not convinced, however, that the ads clearly and conspicuously implied that Thermalean was clinically proven to treat obesity. Source: Order - June 4, 2008

FTC v. Roca Labs, Inc. (weight-loss products sold with a gag clause)

Roca Labs: Order Granting Plaintiff's Amended Motion for Summary Judgment as to Liability and Denying Defendants' [Amended] Motion for Partial Summary Judgment as to Count Three of the Amended Complaint - September 14, 2018

Roca Labs ran banner ads that typically had five words: “GASTRIC BYPASS NO SURGERY $480.” Source: Roca Labs: Order Granting Plaintiff's Amended Motion for Summary Judgment as to Liability and Denying Defendants' [Amended] Motion for Partial Summary Judgment as to Count Three of the Amended Complaint (Sept. 14, 2018) The ads did not disclose that the price was discounted or subsidized in exchange for a customer's agreement to refrain from publishing negative comments; that condition sat in Terms and Conditions behind a hyperlinked page. Source: Roca Labs: Order Granting Plaintiff's Amended Motion for Summary Judgment as to Liability and Denying Defendants' [Amended] Motion for Partial Summary Judgment as to Count Three of the Amended Complaint (Sept. 14, 2018)

Outcome. The court found that the defendants created an overall net impression that the price was $480, with no exceptions or limitations. Source: Roca Labs: Order Granting Plaintiff's Amended Motion for Summary Judgment as to Liability and Denying Defendants' [Amended] Motion for Partial Summary Judgment as to Count Three of the Amended Complaint (Sept. 14, 2018) Because consumers were unlikely to have noticed or clicked the link to the Terms and Conditions, the disclaimer there failed to dispel that impression, and the court granted the FTC summary judgment on that count. Source: Roca Labs: Order Granting Plaintiff's Amended Motion for Summary Judgment as to Liability and Denying Defendants' [Amended] Motion for Partial Summary Judgment as to Count Three of the Amended Complaint (Sept. 14, 2018)

FTC v. Adept Management, Inc. (newspaper subscription mailers)

Adept Management Inc., et al.: Opinion and Order - June 20, 2019

The defendants' mailers created the impression that they came from or were authorized by a newspaper, and they did so by including a single newspaper's name in several prominent positions in bold and capital letters, by suggesting a connection with consumers' existing subscriptions, and by using a format similar to a routine invoice or renewal service. Source: Adept Management Inc., et al.: Opinion and Order - June 20, 2019 The court found the disclaimers on the mailer confusing and inadequate to cure the deception. Source: Adept Management Inc., et al.: Opinion and Order - June 20, 2019

Outcome. The court held that the net impression of the mailers is that they are deceptive on their face because they are likely to mislead a reasonable consumer in a way that is material, and it granted the FTC's motion for summary judgment on that issue. Source: Adept Management Inc., et al.: Opinion and Order - June 20, 2019

In re Bank of America, N.A. (rewards credit card bonus offers)

In re Bank of America, N.A., Consent Order, No. 2023-CFPB-0007

Bank of America advertised sign-up bonuses such as a “$200 online cash rewards bonus offer” for its Cash Rewards card. Source: In re Bank of America, N.A., Consent Order, No. 2023-CFPB-0007 Some of the website ads, including the online terms and conditions, did not expressly state that the offers were limited to online applications. Source: In re Bank of America, N.A., Consent Order, No. 2023-CFPB-0007 Some consumers reasonably read the word “online” as describing the advertisement itself, and the bank did not provide the bonus to some consumers who did not apply for the card online. Source: In re Bank of America, N.A., Consent Order, No. 2023-CFPB-0007

Outcome. The CFPB found that the bank created the misleading net impression that the sign-up bonus offers were available to all applicants, including those who applied in person or by phone. Source: In re Bank of America, N.A., Consent Order, No. 2023-CFPB-0007 The consent order identified that conduct as a deceptive net impression that bonuses were available to all consumers when they were only available to consumers who applied online. Source: In re Bank of America, N.A., Consent Order, No. 2023-CFPB-0007

FTC v. AMG Capital Management, LLC (payday loans)

Order Accepting Report and Recommendation and Granting in Part and Denying in Part FTC’s Motion for Summary Judgment

The loan documents' Truth in Lending Act box showed, for a $300 loan, a $90 finance charge and total payments of $390 to be withdrawn in one payment two weeks later. Source: AMG Capital Management, LLC v. FTC, Brief for the FTC A borrower who expected to repay $390 but did not opt out of the default plan paid a total of $975. Source: AMG Capital Management, LLC v. FTC, Brief for the FTC

Outcome. The court found the net impression of the loan disclosure likely to mislead borrowers acting reasonably because the large prominent print in the TILA box implied one finance charge while the fine print created a process under which multiple finance charges would be automatically incurred unless borrowers took affirmative action. Source: Order Accepting Report and Recommendation and Granting in Part and Denying in Part FTC’s Motion for Summary Judgment In the same matter, the district court entered an injunction and ordered Tucker to pay $1.27 billion in equitable monetary relief for consumer redress and attendant expenses. Source: AMG Capital Management, LLC v. FTC, Brief for the FTC

FTC v. FleetCor Technologies, Inc. (fuel card discount ads)

FTC Brief (FTC v. FleetCor Technologies, Inc.)

According to the FTC's appellate brief, the plain text of multiple FleetCor advertisements promised that customers would receive specific discounts on each gallon of fuel pumped wherever the cards were accepted. Source: FTC Brief (FTC v. FleetCor Technologies, Inc.) FleetCor conceded that it did not actually give customers a discount on every gallon pumped, but argued the ads were not deceptive because the discount claims were sometimes followed by an asterisk pointing to a tiny fine-print disclaimer at the bottom of each ad. Source: FTC Brief (FTC v. FleetCor Technologies, Inc.)

Outcome. The brief reports that the district court granted summary judgment for the FTC and concluded as a matter of law that the tiny, inscrutable print of the disclaimers did not cure the net impression that customers would be afforded certain per-gallon savings without condition or caveat. Source: FTC Brief (FTC v. FleetCor Technologies, Inc.) The court then entered a final injunction to prevent further violations. Source: FTC Brief (FTC v. FleetCor Technologies, Inc.)

In re POM Wonderful LLC (pomegranate juice and supplements)

In re POM Wonderful LLC, Commission Opinion, Appendix A: POM Claims Appendix

One challenged ad showed a bottle of POM Wonderful connected to leads for an EKG under the title “Amaze your cardiologist.” Source: Appendix A: POM Claims Appendix (Commission opinion) Many ads also attached adjectives to scientific claims, such as “emerging science suggests,” “promising results,” and “preliminary studies.” Source: Appendix A: POM Claims Appendix (Commission opinion)

Outcome. The Commission concluded that the EKG ad conveyed the net impression that drinking POM will reduce plaque by up to 30% and produce improvements measurable by an EKG that would impress a cardiologist. Source: Appendix A: POM Claims Appendix (Commission opinion) It found that the use of lighthearted or humorous elements did not detract from the substance of the claims, and that the scientific adjectives did not effectively qualify the claims when each ad was viewed in its entirety. Source: Appendix A: POM Claims Appendix (Commission opinion) According to the FTC's appellate brief, the Commission found that 36 of the 43 charged advertisements contained efficacy claims that POM's products could treat, prevent, or reduce the risk of disease. Source: POM Wonderful, LLC v. FTC, FTC Opposition Brief (D.C. Cir.)

In re ECM BioFilms, Inc. (biodegradable plastics additive)

In re ECM BioFilms, Inc., Opinion of the Commission

For many years ECM made a number of biodegradability claims for its plastics additive, including that treated plastics would biodegrade, would biodegrade in some period greater than a year, and would completely biodegrade in a landfill within nine months to five years. Source: In re ECM BioFilms, Inc., Opinion of the Commission After the Green Guides were revised, ECM added a qualifier: “Plastic products manufactured with [the ECM Additive] will biodegrade in any biologically-active environment (including most landfills) in some period greater than a year.” Source: In re ECM BioFilms, Inc., Opinion of the Commission

Outcome. The Commission, reviewing the evidence de novo, found that the “some period greater than a year” qualifier created the net impression that the plastics would biodegrade within a reasonably short period of time, anchored around one year. Source: In re ECM BioFilms, Inc., Opinion of the Commission It agreed with the ALJ that ECM's tree logo and marketing materials could not be read, on a facial analysis alone, to convey the alleged specific rate claim, but it found from the extrinsic evidence that at least a significant minority of reasonable consumers would read the unqualified word “biodegradable” to mean full biodegradation in landfills within five years. Source: In re ECM BioFilms, Inc., Opinion of the Commission The order the Commission entered prohibits ECM from making such claims in the future without adequate scientific substantiation. Source: In re ECM BioFilms, Inc., Opinion of the Commission

In re Intuit Inc. (TurboTax free-filing ads)

In re Intuit Inc., Docket No. 9408, Opinion of the Commission

The TurboTax home page amplified the “free” message of Intuit's other advertising through bold claims such as “Free, free free free,” “$0 Fed. $0 State. $0 to File.,” and “Easily and accurately file your simple returns for FREE, guaranteed.” Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission The limit on the offer sat in hyperlinks, pop-ups, and tiny-font boilerplate. Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission In many television and online video ads, the “simple returns” and “see details” disclosures appeared only in small print at the bottom of the screen. Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission

Outcome. The Commission found that, considered ad by ad and in each ad's entirety, the ads conveyed to reasonable consumers the net impression that they could file their taxes for free with TurboTax. Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission It reasoned that Intuit's first contact was deceptive because the net impression of its advertising was a claim that was false for about two-thirds of consumers. Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission The Commission's final order prohibited Intuit from making the kinds of misrepresentations regarding “free” offers alleged in the complaint, Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission and by its terms it terminates in twenty years. Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission

FTC v. Credit Bureau Center, LLC (free credit score website)

Memorandum Opinion and Order (FTC v. Credit Bureau Center, LLC)

The first page consumers saw featured a banner reading "Get Your Free Credit Score and Report as of [the date on which the site was visited]." Source: Memorandum Opinion and Order (FTC v. Credit Bureau Center, LLC) The site lacked any description of the monthly membership, and consumers could tell that submitting payment information would enroll them in it only by reading text smaller and less noticeable than the surrounding text. Source: Memorandum Opinion and Order (FTC v. Credit Bureau Center, LLC)

Outcome. The court held that courts routinely find explanatory text insufficient to cure a misleading description unless it changes the overall impression, and that here the net impression was that consumers were signing up to obtain a free credit score, not enrolling in a costly monthly service. Source: Memorandum Opinion and Order (FTC v. Credit Bureau Center, LLC) It concluded that the FTC was entitled to summary judgment on its FTC Act claim. Source: Memorandum Opinion and Order (FTC v. Credit Bureau Center, LLC) According to the FTC's appellate brief, the court permanently enjoined the defendants from offering credit monitoring services with a negative option feature and restricted their use of affiliate marketers. Source: Brief of the FTC, FTC v. Credit Bureau Center, LLC, Nos. 18-2847, 18-3310 (7th Cir. Mar. 12, 2019)

FTC v. Krotzer (alcoholism "cure" program)

Federal Trade Commission v. Krotzer, Order (M.D. Fla.)

The first page of the Alcoholism Cure Foundation's website announced in bold print, “Our Program is Virtually Free! Pay Little Until You See Results! Most fees payable from savings on alcohol not used.” Source: Federal Trade Commission v. Krotzer, Order (M.D. Fla.) The actual terms and conditions ran to 110 paragraphs of very small print at the end of the website, thirty printed pages after the sign-up pages. Source: Federal Trade Commission v. Krotzer, Order (M.D. Fla.)

Outcome. The court found the indisputable net impression of the website to be that the program was not expensive and that the consumer could cancel at any time after five months if not being cured. Source: Federal Trade Commission v. Krotzer, Order (M.D. Fla.) It held that the inconspicuous terms and conditions section did nothing to affect, disclaim, or qualify the repeated, highlighted, and bold-faced claims of low cost and easy cancellation, and it concluded that no issue of fact existed regarding Count III. Source: Federal Trade Commission v. Krotzer, Order (M.D. Fla.) On the website's repeated “doctor” references, the court likewise held that the fine-print “not MD” disclaimers were not adequate to dispel the net impression of the website and later communications. Source: Federal Trade Commission v. Krotzer, Order (M.D. Fla.)

FTC v. Vemma (affiliate income claims)

Order (FTC v. Vemma)

Vemma's recruiting and training material included income claims such as a speaker's statement that “you can make a million a year or a million a month.” Source: Order (FTC v. Vemma) The defendants pointed to “results not typical” disclaimers, but the court found that numerous materials still available to the public and through the Vemma Back Office carried misleading income statements with either no disclaimer or a disclaimer impossible for a reasonable viewer to notice, let alone read. Source: Order (FTC v. Vemma) In live presentations, speakers who gave a “results not typical” disclaimer often followed it with a statement such as, “I hope you’re not typical.” Source: Order (FTC v. Vemma)

Outcome. The court recognized that quoting a small portion of a presentation does not allow for a net impression, so it reviewed the videos and other media in their entirety. Source: Order (FTC v. Vemma) It concluded that the net impression was still that a Vemma affiliate is likely to earn substantial income, which is deceptive under the FTC Act. Source: Order (FTC v. Vemma) The court found that the FTC had met its burden to show a likelihood of success on the merits in demonstrating that Vemma, Mr. Boreyko and Mr. Alkazin were making material misrepresentations and omissions. Source: Order (FTC v. Vemma)

FTC v. Publishers Business Services, Inc. (telemarketed magazine subscriptions)

Order (FTC v. PBS)

In the initial sales call, PBS opened by asking the consumer to answer a few questions and offering, in return, a “small surprise, nothing big but it’s nice.” Source: Order (FTC v. PBS) Although the cost was approximately seven hundred dollars, PBS initially described it as only two dollars and seventy-six cents a week. Source: Order (FTC v. PBS) The court observed that the weekly figure was accurate but misleading, because PBS did not collect the payment weekly or even monthly. Source: Order (FTC v. PBS)

Outcome. The court found that, although some of PBS's representations may have been literally true, the net impression of the representations in the initial and verification calls was likely to mislead a consumer acting reasonably in a way that is material. Source: Order (FTC v. PBS) It identified the relevant audience as the person responsible for answering the phone at a business, because PBS did not instruct its employees to ask for the person responsible for purchases. Source: Order (FTC v. PBS) The court granted the FTC's summary judgment motion on counts one, three, and four with respect to the initial communications. Source: Order (FTC v. PBS)

Exposure

A deceptive net impression can bring an injunction and very large monetary relief. In the AMG Capital Management matter, the district court entered an injunction barring Scott Tucker from consumer lending and related practices and ordered him to pay $1.27 billion in equitable monetary relief to be used for consumer redress and attendant expenses. Source: AMG Capital Management, LLC v. FTC, Brief for the FTC Monetary exposure in FTC court actions has since narrowed, because the Supreme Court held in AMG Capital Management, LLC v. FTC that monetary relief is not available under Section 13(b) of the FTC Act. Source: FTC v. Burton Katz et al. (11th Cir.), Opening Brief of the FTC, No. 23-11197 Where a rule violation is also involved, a separate route remains: after that decision, a court relied on Ninth Circuit authority that section 19 of the Act separately and specifically authorizes the FTC to seek monetary relief to address violations of certain rules. Source: Order, Lead Action and Contempt Action (Part 9/14) Where monetary relief is available, proof of it is eased by a presumption: in the FTC's account in the AMG Capital Management appeal, a presumption of actual reliance arises once the Commission has proved that the defendant made material misrepresentations, that they were widely disseminated, and that consumers purchased the product. Source: FTC v. AMG Capital Management, LLC (9th Cir.), Brief of the Federal Trade Commission, No. 16-17197 (Nov. 28, 2017)

The CFPB route carries penalties as well. In the CFPB's enforcement action against Armond Aria, the district court awarded restitution of $4,738,028 in revenues net of refunds and imposed a civil penalty of $10 million. Source: Opinion, CFPB enforcement action against Armond Aria (College Financial Advisory / Student Financial Resource Center) The court also awarded injunctive relief to the CFPB. Source: Opinion, CFPB enforcement action against Armond Aria (College Financial Advisory / Student Financial Resource Center) In the Integrity Advance matter, a CFPB administrative law judge concluded that the net impression of a payday loan agreement was misleading, Source: In re Integrity Advance, LLC, Recommended Decision, No. 2015-CFPB-0029 (Sept. 27, 2016) and the proposed order in that recommended decision would assess a civil penalty of $2,718,500 against each respondent for each violation of the CFPA. Source: In re Integrity Advance, LLC, Recommended Decision, No. 2015-CFPB-0029 (Sept. 27, 2016) The same proposed order would also enjoin the respondents from operating or participating in a payday lending operation for 15 years. Source: In re Integrity Advance, LLC, Recommended Decision, No. 2015-CFPB-0029 (Sept. 27, 2016)

An order can reach well beyond the ad that was found deceptive. In Telebrands, the Commission found comprehensive fencing-in relief necessary because the violations were serious and deliberate and easily transferable to other products. Source: In re Telebrands Corp., Docket No. 9313, Opinion of the Commission In the POM matter the remedy likewise included fencing-in provisions, which may be, and often are, broader than the conduct declared unlawful. Source: POM Wonderful, LLC v. FTC, FTC Opposition Brief (D.C. Cir.) The Commission ordered that the petitioners must have at least two RCTs demonstrating a product's effectiveness in the diagnosis, treatment, or prevention of any disease before making such a representation. Source: POM Wonderful, LLC v. FTC, FTC Opposition Brief (D.C. Cir.) A Commission order can also require corrective advertising: in Novartis, the Commission ordered a corrective message on all packaging and advertising for one year and until Novartis had spent on Doan's advertising an amount equal to the average spent annually during the eight years of the challenged campaign. Source: In re Novartis Corp., Opinion of the Commission An order can also require affirmative disclosure: in the Geritol matter the Commission concluded that the deception could be fully prevented only by omitting all reference to the product's effectiveness on tiredness symptoms or, if such claims were made, by an express statement of the limitations of that effectiveness. Source: In the Matter of The J. B. Williams Co., Inc., et al., Opinion of the Commission (Sept. 28, 1965) Owners and officers can be reached too: to obtain injunctive relief against an individual, the FTC must show that the individual participated directly in the entity's deceptive acts or had the authority to control them. Source: Sixth Circuit Opinion Affirming the District Court’s Decisions Granting the FTC’s Motion for Summary Judgment Related companies can be treated as a common enterprise when they maintain officers and employees in common, operate under common control, share offices, commingle funds, and share advertising and marketing. Source: Sixth Circuit Opinion Affirming the District Court’s Decisions Granting the FTC’s Motion for Summary Judgment

A Commission order can also run for a long time. In Intuit, the final order prohibited misrepresentations of the kind alleged regarding “free” offers, Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission and by its terms it terminates in twenty years. Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission

FAQs

1.050923opinion. In re Telebrands Corp., Docket No. 9313, Opinion of the CommissionSee also Order - June 4, 2008. Order - June 4, 2008See also Appendix A: POM Claims Appendix. Appendix A: POM Claims Appendix (Commission opinion)See also 050923opinion. In re Telebrands Corp., Docket No. 9313, Opinion of the Commission
2.Adept Management Inc., et al.: Opinion and Order - June 20, 2019. Adept Management Inc., et al.: Opinion and Order - June 20, 2019
3.Adept Management Inc., et al.: Opinion and Order - June 20, 2019. Adept Management Inc., et al.: Opinion and Order - June 20, 2019