E. J. Schultz reports:
When faced with allegations of false advertising, the goal for most marketers is pretty simple: settle and stay out of court. But that might be harder to do as the Federal Trade Commission begins taking a harder line on deals, requiring new boilerplate language that ad lawyers say could harm the reputation of big brands.
The FTC change involves how marketers are allowed to frame settlements. Companies used to get some cover with language stating that the FTC’s order is “for settlement purposes only” and does not equal “an admission by defendant” that “the facts alleged in the complaint, other than jurisdictional facts, are true.” Ad lawyers say the agency is now taking it a step further by stating that the defendant “neither admits nor denies” the charges.
Well, that’s a step in the right direction. I’d prefer, of course, that they be required to admit wrong-doing, but I do understand that if that language were required, many companies might prefer to take their chances in court instead of settling, which would add to the cost/time of any enforcement actions.
As Schultz reports, though, the new language may not stand:
Ad lawyers are keeping a close eye on a settlement case involving the Securities and Exchange Commission and Citigroup. U.S. District Judge Jed Rakoff took issue with the SEC’s “admit nor deny” boilerplate language (the same verbiage the FTC is moving to), saying it “deprives the court of even the most minimal assurance that the substantial injunctive relief it is being asked to impose has any basis in fact.” In other words, the company should have to admit wrongdoing. The ruling is now at an appeal’s court, whose decision could influence how all federal agencies deal with settlements.
Read more on Advertising Age.