FTC Alerts Nearly 700 Companies About Potential Penalties for Misleading Claims

Companies that received warning notices this week range from pharmaceutical producers such as

AstraZeneca

PLC and retailers including

CVS Health Corp.

to packaged-goods giant

General Mills Inc.,

energy-drink maker BrainJuice LLC, and Goop Inc., actress

Gwyneth Paltrow’s

media conglomerate. None of those companies responded to requests for comment.

The FTC said that a company’s inclusion on the recipient list “does not in any way suggest that it has engaged in deceptive or unfair conduct” and that it could pursue penalties against others. 

The agency’s ultimate goal is both to enhance its ability to secure monetary relief and to discourage false advertising altogether, said

Samuel Levine,

director of the FTC’s Bureau of Consumer Protection. “If their marketing is deceptive, if it’s not substantiated, they can expect more than a slap on the wrist. They can expect to pay a heavy price,” he said.

A 2021 Supreme Court decision significantly limited the FTC’s ability to seek financial damages for customers affected by such practices, but the agency still has ways to take action, said

Jeffrey A. Greenbaum,

managing partner at law firm Frankfurt Kurnit Klein & Selz, which specializes in advertising law.

The FTC can still penalize advertisers. While it only has the authority to seek $50,120 for any given violation, penalties could total millions or even hundreds of millions of dollars because of the way violations are counted, Mr. Greenbaum said.

“As a general matter, if 10 consumers see a deceptive ad, that’s 10 violations. These numbers can add up very quickly,” he said.

The letter is likely to prompt many brands to review their marketing strategies even if they didn’t receive one directly, according to Mr. Greenbaum. Companies on the list are at a disadvantage, however, because parties are only subject to penalties if they have already received such a notice, he said. 

Last year,

Walmart Inc.

and

Kohl’s Corp.

agreed to pay a combined $5.5 million for falsely promoting some products as being made from bamboo fiber when, in fact, they consisted primarily of rayon.

It was the largest judgment to date under the FTC’s newly aggressive approach to deceptive advertising, wherein the agency has targeted brands and platforms over everything from “green” marketing claims to fake reviews and investment scams, Mr. Levine said.

“We are not backing down on seeking monetary relief in our false advertising cases. Consumers should get money back, but it’s become much harder to do that since the AMG decision,” he said, referring to the 2021 Supreme Court case.

Write to Patrick Coffee at patrick.coffee@wsj.com

Companies that received warning notices this week range from pharmaceutical producers such as

AstraZeneca

PLC and retailers including

CVS Health Corp.

to packaged-goods giant

General Mills Inc.,

energy-drink maker BrainJuice LLC, and Goop Inc., actress

Gwyneth Paltrow’s

media conglomerate. None of those companies responded to requests for comment.

The FTC said that a company’s inclusion on the recipient list “does not in any way suggest that it has engaged in deceptive or unfair conduct” and that it could pursue penalties against others. 

The agency’s ultimate goal is both to enhance its ability to secure monetary relief and to discourage false advertising altogether, said

Samuel Levine,

director of the FTC’s Bureau of Consumer Protection. “If their marketing is deceptive, if it’s not substantiated, they can expect more than a slap on the wrist. They can expect to pay a heavy price,” he said.

A 2021 Supreme Court decision significantly limited the FTC’s ability to seek financial damages for customers affected by such practices, but the agency still has ways to take action, said

Jeffrey A. Greenbaum,

managing partner at law firm Frankfurt Kurnit Klein & Selz, which specializes in advertising law.

The FTC can still penalize advertisers. While it only has the authority to seek $50,120 for any given violation, penalties could total millions or even hundreds of millions of dollars because of the way violations are counted, Mr. Greenbaum said.

“As a general matter, if 10 consumers see a deceptive ad, that’s 10 violations. These numbers can add up very quickly,” he said.

The letter is likely to prompt many brands to review their marketing strategies even if they didn’t receive one directly, according to Mr. Greenbaum. Companies on the list are at a disadvantage, however, because parties are only subject to penalties if they have already received such a notice, he said. 

Last year,

Walmart Inc.

and

Kohl’s Corp.

agreed to pay a combined $5.5 million for falsely promoting some products as being made from bamboo fiber when, in fact, they consisted primarily of rayon.

It was the largest judgment to date under the FTC’s newly aggressive approach to deceptive advertising, wherein the agency has targeted brands and platforms over everything from “green” marketing claims to fake reviews and investment scams, Mr. Levine said.

“We are not backing down on seeking monetary relief in our false advertising cases. Consumers should get money back, but it’s become much harder to do that since the AMG decision,” he said, referring to the 2021 Supreme Court case.

Write to Patrick Coffee at patrick.coffee@wsj.com