How to Not Get Fined by the FTC

January 26, 2018 Marcus Varner

As the old adage goes, mistakes are okay, as long as you learn from them. But, it doesn’t say they have to be your mistakes. In fact, we can learn a lot by watching others make mistakes! Take big brands being fined by the FTC, for example.

It doesn’t take much for word to get around that a major corporation is in trouble with the FTC, and it’s usually safe to assume the business has crossed a line when it comes to anticompetitive or deceptive practices.


Download our free guide "How to Manage Compliance Workflows and Mitigate Risk" for a more in-depth look at how you can avoid FTC fines.


In many cases, deceptive marketing is due to failure in the compliance step of the approval process. Here are some examples of big-name brands and businesses that found themselves facing the FTC.

Google

Who could forget the seemingly endless courtroom battles between Google and Apple? In 2012, Google assured Apple’s Safari users they would automatically be opted out of an advertising tracking program, due to Apple’s settings. This proved to be false, and Google had to pay up big time in a $22.5 million settlement with the FTC.

Uber

In another well-known case, Uber found itself accountable to the FTC for $20 million when it exaggerated earning potential to prospective drivers and made misleading statements about financing. Honest employee recruitment is the best policy.

Warner Bros. Home Entertainment

While marketing the video game Middle Earth: Shadow of Mordor, Warner Bros. hired social media influencers to post positive videos about the game, but did not disclose that they paid the influencers.

The FTC’s response? “You cannot pass,” and Warner Bros. is now “barred from failing to make such disclosures in the future,” but did manage to get away without paying a fine (we still wouldn’t want to be slapped on the hand by the FTC, even if a fine isn’t involved).

Nordstrom

There’s nothing more devastating than finding out your bamboo sheets aren’t actually bamboo. That’s what happened to Nordstrom, Bed Bath & Beyond, Backcountry, and J.C. Penney customers. The FTC fined these companies a total of $1.3 million and put an end to retailers labeling and advertising rayon textiles as bamboo.

These businesses all learned the hard way how important the compliance portion of the approval process is.

How to Avoid an FTC Fine

Knowing that FTC fines are often a result of less-than-truthful claims, you can avoid the same fate as Google, Uber, Warner Bros., and Nordstrom (and save your company millions of dollars) by upping your compliance and approval process game.

  • Refine your approval process. Solidify your approval process so that each piece of collateral goes through the same set of steps—including compliance—and your workflow stays organized.
  • Set compliance standards. Set standards that you’ll use every time you review a piece of collateral, and carefully hold to them.
  • Focus on the quality of reviewers, not the quantity. It’s tempting to add more and more people to the approval process, hoping that yet another set of eyes will catch mistakes. But, this can actually create confusion. Instead, ensure people familiar with legal and marketing compliance, who are good at what they do, are part of your review process.
  • Keep a digital trail. Your review and approval process should automatically document reviews, feedback, changes, collateral audits, and compliance standards, giving you a trail to reference later.
  • Consider a compliance officer. Consider hiring a compliance officer who will track all collateral and ensure it is up to standard.

Take the experiences of these big brands and learn from them by improving your review and approval workflows, perfecting your compliance process, and maintaining high standards the FTC won’t have a problem with.


See "6 Valuable Marketing Lessons You can Learn From the FTC" for more tips on staying in compliance.

About the Author

Marcus Varner

Marcus is a content strategist and producer who loves helping brands craft content that improves customers' lives, builds brand credibility, and demands to be shared. For the last 10 years, Marcus has worked in every type of content—from writing to video production to design—and is currently a senior content marketing manager at Workfront, where he oversees all corporate- and awareness-level level content. When he's not producing content, he's consuming it, in the form of books, movies, and podcasts.

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