The FTC recently announced a proposed settlement with a medical clinic and its owner after warning them, and then suing them, for a variety of false claims about the clinic’s treatments for addiction, cancer, Parkinson’s, Alzheimer’s and more.  As alleged in the complaint, the defendants claimed, without any competent or reliable scientific evidence, that their programs would provide a quick and painless and successful recovery.  They disseminated these messages on the clinic’s website, in YouTube videos, and through social media.

And, of most interest to me as an advertising lawyer, the defendants also promoted their services through paid media interviews on television. According to the complaint, the clinic owner paid to appear in a number of news segments on a FOX-affiliated tv station, which the FTC identified in the complaint as WXKB in Myrtle Beach. The segments featured the owner being “interviewed” by a news reporter, and “appeared to be objective news interviews or public information spots.”  The segments were not identifiable – or identified -- as commercial advertising by the clinic owner, the reporter, or the tv station.  The FTC characterized that conduct as a deceptive act or practice, and a violation of Section 5 of the FTC Act. 

The proposed order settling the complaint bars the clinic from making unsupported claims and requires the owner to pay a $100,000 civil penalty. An unremarkable result when such egregious health claims were at issue. But what is noteworthy is both the news station’s alleged failure to identify paid programming as such, and the FTC calling that out as a deceptive act of practice, at least as to the entity paying for the placement. Not surprisingly, the FTC didn’t name the news station as a defendant, but identifying the station in the complaint, and specifically calling out the undisclosed paid placement as illegal under the FTC Act, is significant.

FCC sponsor identification rules under the Communications Act have long required broadcasters to identify paid programming as such.  And the FTC has addressed deceptively formatted advertising for decades, stating in its Enforcement Policy Statement on Deceptively Formatted Advertisements, “that the Commission has long held the view that advertising and promotional messages that are not identifiable as advertising to consumers are deceptive if they mislead consumers into believing they are independent, impartial, or not from the sponsoring advertiser itself.” Many enforcement actions have involved advertising designed to look like a news report. Not many actions have involved advertising appearing as an actual news report on a mainstream tv show -- although there was one very noteworthy case in 2014 involving paid endorsers appearing on a talk show without disclosing their relationship to the company they were promoting. Unusual in that case, as it is here, was the FTC’s calling out the broadcaster whose own practices lacked transparency.

Issuing a press release with the hope that the media pick it up as newsworthy and worthy of the public’s attention is, of course, a time-honored and legitimate practice. But paying the media to run a story (or interview a spokesperson) requires transparency by both the company paying for the placement and the broadcaster running it because such placements are ads, not news.  As this enforcement action demonstrates, even if a broadcaster neglects its own obligations, advertisers should not.