FTC Asked to Investigate Whether President Involved With Alleged MLM Program

Public Citizen recently requested that the Federal Trade Commission (FTC) open an investigation on whether the President and family members engaged in deceptive and misleading advertising on behalf of American Communications Network (ACN), an alleged multi-level marketing business.

Public Citizen alleges that Mr. Trump did not disclose remuneration for endorsing CAN during speeches and in marketing videos.

According to FTC investigation lawyer Richard B. Newman, the FTC’s Endorsement Guides require that all material connections between an endorser and a product/service provider must be clearly and conspicuously disclosed. Specifically, “If there’s a connection between an endorser and the marketer . . . that connection should be disclosed. . . . The ad is misleading unless the connection is made clear. The same is usually true if the endorser has been paid or given something of value to tout the product.

The reason for requiring complete transparency in advertising is obvious: Knowing about the connection between an endorser and the product is important information for evaluating the independence of the endorsement.”

Public Citizen also represented to the FTC that ACN executives appeared on “The Apprentice” and viewers were never properly informed that the President was being paid to promote the ACN.

In addition to the television appearances, according to Public Citizen, the President allegedly endorsed ACN numerous times during the course of a business relationship and repeatedly failed to disclose to potential participants in ACN’s purported multi-level marketing business that he was paid for these efforts. According to reports, the President allegedly received hundreds of thousands of dollars for recent speeches.

Public Citizen has stated that it is encouraged that the FTC has taken the issue of celebrity endorsements seriously. In fact, after Public Citizen filed a petition to the FTC urging the agency to investigate the lack of disclosure by brand influencers to disclose business relationships with brands,the FTC sent letters to “influencers” reminding them of their legal disclosure responsibilities.

The FTC protects consumers from unfair or deceptive business practices, including deceptive advertising. Public Citizen closed its request by stating that “[u]ndertaking an investigation of Mr. Trump would instill confidence in the public that the

FTC takes deceptive advertising seriously. There are important facts to confirm and timelines to construct in this case, but the evidence available to us suggests a major violation of longstanding, core fair advertising principles. A failure to act by the FTC would send the wrong message about protecting consumers against this underreported problem.”

The letter to FTC Chairman Joseph Simons can be seen, here.

Contact an experienced FTC defense law firm if you or your company has been served with a CID or access letter.  Follow the author on Twitter.

For informational purposes only. Not legal advice. Prior case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777

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