Ad agency liability: FTC looks to conduct, not the grey flannel suit

https://www.ftc.gov/news-events/blogs/business-blog/2017/08/ad-agency-liability-ftc-looks-conduct-not-grey-flannel-suit?utm_source=govdelivery

According to the “Mad Men” stereotype, you could spot an old-school advertising agency executive by the tailored wardrobe and expense account lunch. A lot has changed in the ad game, but two truths remain: 1) More than 50 years of FTC cases establish that ad agencies may be liable for their role in deceptive campaigns; and 2) Companies that may not describe themselves as “ad agencies” may still be held responsible for illegal acts or practices. In other words, the FTC looks to the facts, not the grey flannel suit.

That’s one of the messages of proposed settlements announced by the FTC and the Maine Attorney General against Synergixx, LLC, Charlie R. Fusco, and Ronald Jahner, all of whom played prominent roles in the promotion of the cognition supplement CogniPrin and a pain relief product called FlexiPrin.

Earlier this year, the FTC and the Maine AG announced settlements with two corporations and four individuals for making misleading claims for CogniPrin and FlexiPrin and for committing other violations of federal and state consumer protection law. The just-announced settlements with Synergixx, Fusco, and Jahner put an end to the litigation, but it’s worth a few minutes of your time to focus on the roles those defendants played in the promotions.

According to the complaint, Synergixx and its owner Charlie Fusco produced 30-minute radio ads for CogniPrin and FlexiPrin that were deceptively formatted to sound like educational talk shows. (Ms. Fusco also hosted the “programs.”) In addition to challenging the deceptive claims, the lawsuit alleged – among other things – that the defendants featured “experts” in the ads who didn’t have the expertise they claimed to have.

Synergixx and Fusco also created inbound call scripts that deceptively claimed that consumers could try the supplements “risk-free” with a money-back guarantee, but failed to clearly disclose the substantial hoops consumers had to jump through to get those refunds. The complaint further alleged that they didn’t clearly tell consumers they would have to enroll in an auto-ship continuity plan to qualify for that “risk-free” offer.

The FTC and AG also announced a settlement with Ronald Jahner, whom they allege was falsely presented in the ads as an objective medical expert. According to the complaint, Jahner provided an endorsement without appropriately examining the products or exercising his purported expertise. The three defendants also didn’t mention that Jahner was paid a percentage of FlexiPrin and CogniPrin sales, a material connection that should have been disclosed.

The big-picture point for modern-day Mad Men and Women is, depending on the facts, the breadth of potential liability under the FTC Act. Conscientious marketers don’t create questionable claims or engage in deceptive business practices – and they don’t look the other way when others involved in the promotion engage in iffy conduct. Whether you think of yourself as an ad agency executive or something else, the FTC will evaluate the facts, not the title.

Furthermore, when it comes to crafting ad copy, it’s fine for creatives to be creative. But you’re still under an obligation to be scrupulously accurate about the claims the ads convey to consumers and the science that supports those representations.

Finally, both Fusco and Jahner were held individually liable for their roles in the promotions. That should give any business person pause before assuming that truth in advertising is someone else’s responsibility.

 

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