The Notice of Penalty Offenses

The mechanism that lets the FTC seek civil penalties for undisclosed material connections — and why 700+ companies were put on notice in 2021.

The Notice of Penalty Offenses Concerning Endorsements is a specific enforcement mechanism that dramatically raises the stakes for non-compliance. Understanding it explains why the FTC can seek large penalties for conduct that its Guides technically only “interpret.”

How the mechanism works

Under Section 5(m)(1)(B) of the FTC Act, once the Commission has formally notified a company that specific conduct has been found unlawful, that company can face civil penalties if it later engages in the same conduct with knowledge that it was condemned. In October 2021, the FTC sent such a notice to more than 700 companies, putting a large swath of industry on notice about deceptive endorsements.

The enumerated penalty offenses

The notice identified conduct the FTC has already found to be unfair or deceptive, including:

1. Falsely claiming an endorsement by a third party.
2. Misrepresenting whether an endorser is an actual, current, or recent user.
3. Using an endorsement to make deceptive performance claims.
4. Failing to disclose an unexpected material connection with an endorser.
5. Misrepresenting that an endorser’s experience is typical or representative.

What it means for you

Even if your business did not personally receive a 2021 notice, the mechanism signals the FTC’s enforcement priorities and its willingness to pursue penalties. Combined with the 2024 Rule on Consumer Reviews and Testimonials, which carries penalties without any notice requirement, the message is consistent: undisclosed material connections and manipulated endorsements are enforcement targets.

See also FTC enforcement and penalties and the Fake Reviews Rule.

Last reviewed July 2026. This page is general educational information, not legal or tax advice.