FTC considers new rule to address deceptive or unfair marketing using earnings claims

The Federal Trade Commission published an advanced notice of proposed rulemaking on March 11, 2022 that it is considering a rule to address deceptive or unfair marketing using earnings claims. The commission is soliciting written comment, data, and arguments concerning the need for such a rulemaking. Comments must be received on or before May 10, 2022.

The commission is examining and exploring:

• How it can most effectively use its authority to address certain deceptive or unfair acts or practices involving the use of false, unsubstantiated, or otherwise misleading earnings claims. Such claims are allegedly used by numerous companies and individuals to entice prospective purchasers, job-seekers, investors, or other participants in widely varying contexts.
• Whether a disclaimer can be sufficient to correct a misleading impression from an atypical earnings claim, and, if so, what features such a disclaimer must have, and in what contexts will it suffice?
• Whether some or all entities and individuals making earnings claims should be required to give recipients specific earnings information? Certain FTC franchise laws and state business opportunity plan laws require companies that make earnings claims to furnish prospective members with a disclosure document that includes information about earnings. The commission is exploring whether or not similar provisions should be implemented in an earnings claim rule, and if so, what information should such a disclosure include?
• Whether a rule should address the use of real or purported earnings data or statistics from an industry or professional field in the promotion of money-making opportunities?
• Whether and how a rule can most effectively provide clarity on the substantiation a company must possess before making an earnings claim, and whether those who make earnings claims should be required to keep records to demonstrate how they have substantiated the claims?
• Whether a rule should impose a recordkeeping requirement for substantiation evidence and, if so, what must be kept, in what form, and for how long?
• Whether and to what extent lifestyle claims are deceptive and what evidence a company must have before making a lifestyle claim to substantiate it.

What should those developments tell you? If you are making claims about how much people are likely to earn with your product or service, you must have written documentation that supports what you say.

Now is the time to conduct a compliance check to ensure that any earnings claims you or your agents make are backed up with verifiable proof. In addition, be careful not to mislead people by cherry picking your success stories. Verify the accuracy of what endorsers claim and ensure that their experience reflects the results that others can reasonably expect.

Here is a link to provide comments online.