Executives Beware: Personal Liability for False Advertising is a Distinct Possibility

AdvertisingAt the annual conference of the National Advertising Division, FTC attorneys and Commissioners made it clear that corporate officers may face personal liability if their companies engage in false advertising.

Lesley A. Fair, a senior attorney in the Division of Consumer Protection and Business Education, warned advertisers about the potential for personal liability and cited several agency actions that included charges against officers and executives. She also referenced a recent order from the Fourth U.S. Circuit Court of Appeals affirming a $163 million personal judgment against an executive who elected not to settle when the agency accused her company and other officers of deceiving consumers with a scareware scan.

“A lot of you have interesting entrepreneurial clients that have a great idea about a new app or something new online,” Fair said. “All I’m suggesting is … just to remind them that the ‘Inc.’ that they dutifully get after their corporate name will not necessarily shield them from liability under the FTC Act.”

She also said the Commission is turning its attention to mobile advertisers. “The moral of the story is that your clients are moving to mobile, and when they go there, they need to know that the well-established truth in advertising standards go with them.”

Although most of the FTC’s enforcement work is directed at outright fraud, under its Operation Full Disclosure, it is closely examining national advertising campaigns and FTC Chairwoman Edith Ramirez told attendees that they can expect to see more actions targeting large, reputable companies until the FTC is “confident the industry understands the need for ‘clear and conspicuous’ disclosures, and what ‘clear and conspicuous’ means.”

Author: Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.
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