Podcast - The FTC Cracks Down on Celebrity Endorsers

Good day and welcome to another podcast of Clearly Conspicuous. As we've noted in previous sessions, our goal in these podcasts is to make you succeed in this environment, make you aware of what's going on with the authorities and consumer protection and give you practical tips for success. It's a privilege to be with you today.

The FTC Focus Is on Celebrity Endorsers

And our topic is celebrity endorsers beware. Today, we analyze the recent orders for permanent injunction, monetary judgment and other relief against Nudge LLC, Dean Graziosi and Scott Yancey brought by the Federal Trade Commission and the Utah Division of Consumer Protection. The complaint alleges that these individuals and companies use false promises to sell consumers a series of expensive real estate investment training programs. Under the complaint, the federal and state governments alleged that the defendants attracted consumers to its events, using misleading infomercials and social media advertising in which celebrities promised to share investing techniques. Defendants represented that if consumers purchased their products and services, they would gain access to special tools that would enable them to become successful real estate investors. According to the complaint, the defendants would ultimately not provide such products or services and would merely pitch additional training programs that could cost as much as $30,000. Also, the complaint alleges that most consumers who purchased the defendants' products or services did not become successful investors at all, but instead struggled to even recoup the money they spent. Under the settlement, Nudge is banned from selling wealth creation products and services anywhere in the country, and they're required to provide redress to consumers in the amount of $15 million. Moreover, the Graziosi settlement includes a monetary penalty of $1.25 million, and the Yancey settlement includes a monetary penalty of $450,000.

Key Takeaway

So, here's the key takeaway. The foregoing orders demonstrate that celebrity endorsers, in addition to the companies and principles, can be liable for consumer protection claims. The settlements with Graziosi and Yancey are the FTC's first monetary settlements with celebrity endorsers. Please let me say that again. The settlements with Graziosi and Yancey are the FTC's first monetary settlements with celebrity endorsers. And this introduces an increased risk for celebrities and companies who desire to enter into advertising partnerships. Furthermore, the FTC has revealed once again its willingness to partner with state attorneys general to expand its reach and pursue localized cases for unfair and deceptive practices.