As we move toward the end of the first quarter of 2022, the Federal Trade Commission (FTC) is not waning in its enforcement when it comes to misleading COVID-19 claims. In this recent article from Winston & Strawn, the commission’s focus in this area is noted and the need for direct sales companies to implement systems for identifying misleading earnings and product claims is emphasized.
According to the article about COVID-19 misleading claims:
“In 2020, the Federal Trade Commission (“FTC”) sent letters to a number of direct sellers, alleging that they or members of their sales force had made false or misleading health and earnings claims related to COVID-19. Then in 2021, Congress enacted the COVID-19 Consumer Protection Act (the “Act”), providing for civil penalties of up to $46,517 for every misleading claim about the treatment, cure, prevention, or mitigation of COVID-19. And just recently, many of our direct selling clients received letters from the FTC reminding them of the FTC’s authority under the Act.
Although these “reminder” letters do not seek actual penalties, they demonstrate the FTC is actively monitoring the direct sales channel and searching for the right opportunity to strike. In fact, since the enactment of the Act, the FTC has taken an aggressive stance in targeting those companies and their distributors who attempt to capitalize on COVID-19 and its effects. The FTC is sending a clear message to direct sellers that they must not only monitor their field to identify misleading COVID-19 claims, but they must also act swiftly to remove the claims and impose appropriate corrective measures to deter future claims considered by the FTC to be problematic.
If your company does not currently have a system for identifying misleading distributor earnings and product claims (which of course includes claims made regarding COVID-19), you should consider implementing one right away.”
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