Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: November 30, 2021
The Firm
201-896-4100 info@sh-law.com
A product endorsement by a celebrity or a social media influencer can be invaluable in growing sales of new products. The profits from these sales, however, can quickly disappear if your advertisement draws the ire of regulators like the Federal Trade Commission (the “FTC”).
The FTC recently issued warning letters to hundreds of companies alerting them to widespread illegal practices in the use of endorsements. The recipients included top consumer products companies, leading retailers and retail platforms, and major advertising agencies.
“Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses,” Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said in a related press statement. “Advertisers will pay a price if they engage in these deceptive practices.”
The warning letters took the form of FTC Notice of Penalty Offenses (the “Notice”). Under Section 45(m)(1)(B) of the FTC Act, the FTC may notify companies that certain acts or practices have been found in administrative decisions (other than consent orders) to be deceptive or unfair. As the FTC explained in a blog post discussing the Notice, companies that receive a Notice are now deemed to have “actual knowledge” that those practices violate the law. If the company engages in that conduct in the future, the statute allows the FTC to sue the company, seeking civil penalties of up to $43,792.00 per violation.
The Notice sent to the companies outlines a number of practices that the FTC has determined to be unfair or deceptive in prior administrative cases, including:
The FTC emphasized that recipients of the Notice are not alleged to have engaged in any wrongdoing, noting that “the fact that a company received a Notice was not based on a review of its advertising and in no way suggests that the company has violated the law.” Nonetheless, the FTC’s actions still send a clear message that it plans to step up enforcement of Section 5 in this area.
The FTC’s reliance on the Notice suggests that the agency is shifting gears in the wake of the Supreme Court’s decision in AMG Capital Mgmt. v. FTC, which limited the FTC’s ability to use Section 13 of the FTC Act to obtain restitution and disgorgement from entities that engage in unfair or deceptive advertising practices. Going forward, the agency will likely continue to rely on less frequently used enforcement tools to accomplish its enforcement goals.
Notably, the FTC similarly relied on the FTC Act’s penalties to target false claims by for-profit colleges. In a press release announcing that the agency had sent a Notice of Penalty Offense to 70 colleges, FTC Chair Lina M. Khan stated that the FTC was “resurrecting a dormant authority to deter wrongdoing and hold accountable bad actors who abuse students and taxpayers.”
Recipients of the Notice are now on notice that any future online advertising practices alleged to be “deceptive” could result in penalties of up to $43,792.00 per violation. For all businesses that use online endorsements, the Notice provides an important opportunity to review your advertising practices to ensure that any endorsements comply with the FTC Act. We have previously discussed the use of online endorsements here and remain ready to help businesses ensure that their advertising campaigns do not result in unintended liability. Additional resources are also available on the FTC Business Center’s Endorsements, Influencers, and Reviews portal.
If you have any questions or if you would like to discuss the matter further, please contact me, Ajoe Abraham, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]
Author: Dan Brecher

How Courts Evaluate Testamentary Capacity and Undue Influence Will contests in New Jersey are difficult to win, given the strong presumption that a properly executed will reflects the testator’s intent. However, challenges based on lack of testamentary capacity and undue influence remain common, particularly where there are concerns about mental capacity or the involvement of […]
Author: Marc J. Comer

Bringing on outside investors can provide the capital and strategic support a business needs to grow. However, raising capital also introduces important legal, financial, and operational considerations. Before bringing on investors, businesses should address key legal issues to reduce risk, streamline investor due diligence, and position the company for long-term success. Early preparation signals that […]
Author: Dan Brecher

How the Updated Law Shapes Retirement and Estate Planning The SECURE 2.0 Act of 2022 materially reshapes the required minimum distribution (RMD) landscape, extending tax deferral opportunities while accelerating distribution requirements for many beneficiaries. For high-net-worth individuals and families, these changes are not merely technical. They require a reassessment of retirement income strategies, beneficiary planning, […]
Author: Marc J. Comer

Small businesses considering buying commercial property in New Jersey must evaluate a range of legal, financial, and operational factors. While ownership can offer long-term value and control, it also introduces significant risks if not properly structured. This guide outlines key considerations to help New Jersey business owners make informed decisions, minimize legal exposure, and successfully […]
Author: Robert L. Baker, Jr.

On January 28, 2026, staff of the U.S. Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement clarifying how existing federal securities laws apply to tokenized securities. The SEC’s “Statement on Tokenized Securities” does not establish new law, but it does provide greater clarity on the […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!