FTC Continues Crack Down on Unfounded COVID Claims

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Last month, the Federal Trade Commission (FTC) announced that it “ordered more than 20 marketers nationwide to immediately stop making baseless claims that their products and supposed therapies can treat or prevent COVID-19.” Like prior rounds of cease-and-desist demands, the letters warned that the alleged violators could be subjected to monetary penalties under the COVID-19 Consumer Protection Act, which Congress passed in 2020. Specifically, the letters warned that businesses engaging in a deceptive act or practice associated with the treatment, cure, prevention, mitigation, or diagnosis of COVID-19 or a government benefit related to COVID-19 could be subjected to penalties of up to $43,792 per violation.

As the FTC points out, however, “there’s a key point that differentiates these Demands from the more than 400 letters that preceded them.” Namely, copies of the recent round of letters were also sent to the social media platforms used by the advertisers, including Facebook, Instagram, Twitter, YouTube, Etsy, LinkedIn, Shopify, and TikTok. The FTC found that nearly all of the marketers used social media to convey their claims, with many companies utilizing multiple platforms. A recent FTC analysis on the alleged role of social media platforms in the spread of disinformation related to COVID found that deceptive marketers are able to “extend[] the reach of their deceptive COVID claims by using major social media platforms.” The FTC observed that social media’s design helps scammers amplify their deceptive messages while also identifying users most likely to be receptive to those messages. It cautioned, “[b]ogus claims of miracle cures may be successful in attracting consumers’ eyeballs, but they can have devastating consequences for Americans who forgo needed treatment or part with hard-earned money in pursuit of false cures.”

It has been nearly a year since the FTC filed its first case against a marketer for deceptive COVID-19 claims under the COVID-19 Consumer Protection Act. In April 2021, the FTC sought civil penalties against a chiropractor and his company for allegedly deceptively marketing products containing vitamin D and zinc as scientifically proven to treat or prevent COVID-19. Although the defendants advertised on social media platforms, no social media platform was named as a defendant. See United States v. Nepute, 2021 WL 5823898 (E.D. Mo. Dec. 8, 2021). Recently, in December 2021, the court denied a motion to dismiss brought by the defendants, holding that “the plain language of the FTC Act authorizes the government’s suit for civil penalties and consumer refunds for Defendants’ alleged COVID-19 Act violations,” and that the government “was not required to obtain a cease-and-desist order before seeking monetary relief for rule violations.” Id. The case is set for trial in November 2022.

With the most recent round of cease-and-desist letters, the FTC has made clear that it “will continue to monitor social media and demand that the false claims be taken down.” The FTC also insists that social media companies “do more to ensure that this type of content cannot thrive in the first place.”

About the Author: Nicholas Alford

Nick Alford represents clients in complex litigation, including product liability, mass torts, class actions and state attorney general actions.