FTC Process Before Filing a Lawsuit Over Marketing Claims

When the Federal Trade Commission (FTC) identifies potentially deceptive marketing claims, they follow a structured enforcement process designed to protect consumers while encouraging voluntary compliance. This process typically begins with investigations, evidence reviews, and requests for substantiation before escalating to warnings, settlements, or lawsuits. Businesses must ensure their advertising aligns with FTC guidelines, as failure to do so can lead to legal action, fines, or reputational damage. Below, we outline key steps in the FTC’s enforcement process and actionable insights for compliance.

1. Investigation and Evidence Review

• The FTC first investigates the advertising claim, examining the ad from the perspective of a "reasonable consumer" to determine what message is conveyed, including both express and implied claims.

• The FTC assesses whether the advertiser has sufficient evidence to support the claims made. Advertisers are required by law to have substantiation for both express and implied claims before the ad runs.

2. Initial Contact: Civil Investigative Demand (CID) or Inquiry

• If the FTC suspects a violation, it typically initiates contact through a Civil Investigative Demand (CID) or a formal request for information. This compels the advertiser to provide documents, data, and substantiation for the claims in question.

3. Opportunity to Respond

• The advertiser is given an opportunity to respond to the FTC’s concerns, either by providing substantiation, ceasing the challenged claims, or modifying the advertising.

• If the advertiser cannot substantiate the claims, they may choose to revise or withdraw the ad, or conduct additional testing to support the claim.

4. Warning Letters or Negotiation

• The FTC may issue a warning letter or enter into negotiations with the advertiser to resolve the issue without litigation. This can involve voluntary compliance, such as ceasing the deceptive practice or agreeing to make corrective disclosures.

5. Settlement Discussions

• Often, the FTC and the advertiser will negotiate a settlement, which may result in a consent order. This legally binding agreement typically requires the advertiser to stop making the deceptive claims and to ensure future advertising is truthful and substantiated.

6. Escalation to Lawsuit

• If the advertiser does not cooperate or the FTC determines that voluntary compliance is insufficient, the Commission may proceed to file a lawsuit seeking remedies such as injunctions, civil penalties, corrective advertising, or consumer redress.

Summary Table: FTC Pre-Lawsuit Process

Step	Description
Investigation	Review of ad claims, context, and substantiation requirements
Civil Investigative Demand	Request for documents and substantiation from advertiser
Opportunity to Respond	Advertiser may provide evidence, withdraw, or revise claims
Warning Letter/Negotiation	FTC may issue warnings or negotiate voluntary compliance
Settlement Discussions	Possible consent order to resolve the issue without litigation
Lawsuit	Filed if earlier steps fail or in egregious cases

This process is designed to encourage compliance and correction before resorting to litigation, but the FTC can escalate to court action if necessary.

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