Sometimes, companies decide to “test” the market with their advertising before having adequate substantiation. If they are first-time offenders, the mistaken belief is that the FTC will not do much to them if they are caught for violating Section 5 of the FTC Act. They think that the FTC will merely require them to take the product off of the market.
Enter the COVID-19 Consumer Protection Act (“Act”), which was enacted in late December 2020 for the duration of the COVID-19 public health emergency. This Act allows the FTC to seek civil penalties against first-time offenders that violate Section 5 of the FTC Act by engaging in deceptive acts or practices “associated with the treatment, cure, prevention, mitigation, or diagnosis of COVID-19.” Indeed, the FTC brought its first case just last week against a company for marketing Vitamin D and Zinc products that were allegedly as, or more, effective than currently available vaccines.
Per the Act, the FTC can seek a maximum civil penalty of $43,280 per violation. However, it is unclear how this penalty will be applied.
The lesson is that companies marketing products in the COVID-19 space need to be weary of the significant civil penalties associated with this Act. First-time offenders of Section 5 of the FTC Act are no longer insulated from civil penalties while this COVID-19 law is operative.