This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

13951 

Vol. 87, No. 48 

Friday, March 11, 2022 

1As discussed further below, consumers 

encounter such claims in many contexts, including 

in seeking work, business and other money-making 

opportunities, education, and more. 

2See, e.g., Press Release, Federal Trade 

Commission, Statement on the FTC’s ‘‘Operation 

Income Illusion’’ sweep (2020), https://www.ftc.gov/ 

news-events/press-releases/2020/12/scammersleverage-pandemic-fears-ftc-law-enforcementpartners; Press Release, Federal Trade Commission, 

Statement on the FTC’s ‘‘Operation Lost 

Opportunity Sweep’’ (2012), https://www.ftc.gov/ 

news-events/press-releases/2012/11/ftc-expandsfight-against-deceptive-business-opportunityschemes; Press Release, Federal Trade Commission, 

Statement on the FTC’s ‘‘Operation Bottom Dollar’’ 

enforcement sweep (2010), https://www.ftc.gov/ 

news-events/press-releases/2010/02/ftc-cracksdown-con-artists-who-target-jobless-americans; 

Press Release, Federal Trade Commission, 

Statement on the FTC’s ‘‘Operation Short Change’’ 

enforcement sweep (2009), https://www.ftc.gov/ 

news-events/press-releases/2009/07/ftc-cracksdown-scammers-trying-take-advantage-economicdownturn; Press Release, Federal Trade 

Commission, Statement on the FTC’s ‘‘Biz Opp 

Flop’’ sweep (2005), https://www.ftc.gov/newsevents/press-releases/2005/02/criminal-and-civilenforcement-agencies-launch-major-assault. 

3See, e.g., FTC v. John Beck Amazing Profits, 865 

F. Supp. 2d 1052 (C.D. Cal. 2012) (summary 

judgment); FTC v. Grant Connect, LLC, 827 F. Supp. 

2d 1199 (D. Nev. 2011) (summary judgment); FTC 

v. Holiday Enterprises, No. 1:06–cv–2939, 2008 WL 

953358 (N.D. Ga. Feb. 5, 2008) (summary 

judgment); FTC v. Stefanchik, No. 04–cv–1852, 

2007 WL 1058579 (W.D. Wash. Apr. 3, 2007) 

(summary judgment); FTC v. Transnet Wireless 

Corp., 506 F. Supp. 2d 1247 (S.D. Fla. 2007) 

(summary judgment); FTC v. Tashman, 318 F.3d 

1273 (11th Cir. 2003) (vacating judgment and 

finding defendants liable on appeal); FTC v. 

Medicor LLC, 217 F. Supp. 2d 1048 (C.D. Cal. 2002) 

(summary judgment); FTC v. Five-Star Auto Club, 

Inc., 97 F. Supp. 2d 502 (S.D.N.Y. 2000) (final 

judgment after trial); FTC v. Minuteman Press, Inc., 

53 F. Supp. 2d 248 (E.D.N.Y. 1998) (judgment on 

liability after trial); FTC v. Wolf, No. 94–cv–8119, 

1996 WL 812940 (S.D. Fla. Jan. 31, 1996) (summary 

judgment); FTC v. Nat’l Bus. Consultants, Inc., No. 

89–cv–1740, 1990 WL 32967 (E.D. La. Mar. 20, 

1990) (judgment after trial); FTC v. U.S. Oil and Gas 

Corp., No. 83–cv–1702, 1987 U.S. Dist. LEXIS 

16137 (S.D. Fl. 1987) (summary judgment); FTC v. 

Kitco, 612 F. Supp. 1282 (D. Minn. 1985) (final 

judgment after trial). 

4See Notice of Penalty Offense Authority 

Concerning Money-Making Opportunities, available 

at https://www.ftc.gov/MMO-notice. 

5 John Beck Amazing Profits, 865 F. Supp. 2d at 

1067–76 (claims of quick and easy substantial 

income were material); see also, e.g., FTC v. 

Noland, No. 2:20–cv–0047, 2020 WL 954958, *12– 

14 (D. Ariz. Feb. 27, 2020); FTC v. World Patent 

Mktg., No. 17–cv–20848, 2017 WL 3508639, *11–12 

(S.D. Fla. Aug. 16, 2017); FTC v. Vemma Nutrition 

Co., No. 15–cv–01578, 2015 WL 11118111, *5 (D. 

Ariz. Sept. 18, 2015); Holiday Enterprises, No. 1:06– 

cv–2939, 2008 WL 953358, *6–7; FTC v. Med. 

Billers Network, Inc., 543 F. Supp. 2d 283, 306–08 

(S.D.N.Y. 2008). 

6 Grant Connect, 827 F. Supp. 2d at 1225–26 

(rejecting puffery defense and finding claims that 

‘‘[r]iches range from a few hundred dollars a month 

to $50,000 or more a year!’’ were deceptive), 

affirmed in relevant part at 763 F.3d 1094 (9th Cir. 

2014); see also, e.g., FTC v. Febre, No. 94–cv–3625, 

1996 WL 396117, *2 (N.D. Ill. Jul. 3, 1996); Noland, 

No. 20–cv–00047, 2020 WL 954958, *12–13; World 

Patent, No. 17–cv–20848, 2017 WL 3508639, *12. 

7 Five-Star Auto Club, 97 F. Supp. 2d at 528 (‘‘[I]t 

would have been reasonable for consumers to have 

assumed that the promised rewards were achieved 

by the typical [participant.]’’); see also, e.g., 

Tashman, 318 F.3d at 1276; Febre, No. 94–cv–3625, 

1996 WL 396117, *2; National Dynamics Corp., 82 

FTC 488, 512, 565 (1973) as modified at 85 FTC 

1052 (1975). 

FEDERAL TRADE COMMISSION 

16 CFR Part 462 

Deceptive or Unfair Earnings Claims 

AGENCY: Federal Trade Commission. 

ACTION: Advance notice of proposed 

rulemaking; request for public 

comment. 

SUMMARY: The Federal Trade 

Commission (‘‘FTC’’ or ‘‘Commission’’) 

is considering proposing a rule to 

address deceptive or unfair marketing 

using earnings claims. The Commission 

is soliciting written comment, data, and 

arguments concerning the need for such 

a rulemaking. In addition, the 

Commission solicits comment on how 

the Commission can ensure the broadest 

participation by affected interests in the 

rulemaking process. 

DATES: Comments must be received on 

or before May 10, 2022. 

ADDRESSES: Interested parties may file a 

comment online or on paper by 

following the instructions in the 

Comment Submissions part of the 

SUPPLEMENTARY INFORMATION section 

below. Write ‘‘Earnings Claims ANPR, 

R111003’’ on your comment, and file 

your comment online at https://

www.regulations.gov. If you prefer to 

file your comment on paper, mail your 

comment to the following address: 

Federal Trade Commission, Office of the 

Secretary, 600 Pennsylvania Avenue 

NW, Suite CC–5610 (Annex B), 

Washington, DC 20580, or deliver your 

comment to the following address: 

Federal Trade Commission, Office of the 

Secretary, Constitution Center, 400 7th 

Street SW, 5th Floor, Suite 5610 (Annex 

B), Washington, DC 20024. 

FOR FURTHER INFORMATION CONTACT: 

Melissa Dickey (202–326–2662), 

mdickey@ftc.gov, or Andrew Hudson 

(202–326–2213), ahudson@ftc.gov, 

Division of Marketing Practices, Bureau 

of Consumer Protection, Federal Trade 

Commission, Mailstop CC–5201, 600 

Pennsylvania Avenue NW, Washington, 

DC 20580. 

SUPPLEMENTARY INFORMATION: The 

Commission is publishing this notice 

pursuant to section 18 of the Federal 

Trade Commission Act (FTC Act), 15 

U.S.C. 57a, and the provisions of part 1, 

subpart B of the Commission’s Rules of 

Practice, 16 CFR 1.7 through 1.20. The 

FTC Act authorizes the Commission to 

promulgate, modify, and repeal trade 

regulation rules that define with 

specificity acts or practices that are 

unfair or deceptive in or affecting 

commerce within the meaning of 

section 5(a)(1) of the FTC Act, 15 U.S.C. 

45(a)(1). 

I. Background 

Misleading earnings claims have long 

been a significant problem for 

consumers.1 The use of such claims 

both deprives consumers of the ability 

to make informed decisions and unfairly 

advantages bad actors in the 

marketplace at the expense of honest 

businesses. The promise of significant 

earnings is a powerful inducement to 

purchase or invest time or money. 

The Commission has extensive law 

enforcement experience challenging 

misleading earnings claims under 

section 5 of the FTC Act, 15 U.S.C. 45,2

resulting in a long line of federal court 

opinions holding that the use of false, 

unsubstantiated, or otherwise 

misleading earnings claims violates 

Section 5.3 The Commission has also 

issued litigated rulings in a number of 

cases dealing with misleading earnings 

claims and has repeatedly determined 

that such claims violate Section 5.4

The cases establish, among other 

things: (a) Earnings claims are 

material; 5 (b) representations regarding 

possible earnings are not mere puffery,6

and will usually imply that such 

earnings are typical; 7 (c) the 

representation that an amount or degree 

of earnings is likely can be implied, 

including through testimonials from 

successful participants and examples of 


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13952 Federal Register / Vol. 87, No. 48 / Friday, March 11, 2022 / Proposed Rules 

8 John Beck Amazing Profits, 865 F. Supp. 2d at 

1072 (ads featuring testimonials created impression 

that ‘‘a typical consumer can easily and quickly 

earn thousands of dollars per week’’); see also, e.g., 

World Patent, No. 17–cv–20848, 2017 WL 3508639, 

*12; Macmillan, Inc., 96 FTC 208, 301 (1980); 

National Dynamics, 82 FTC at 511–13, 564 and as 

modified at 85 FTC at 1057; Universal Credit 

Acceptance Corp., 82 FTC 570, 669, 682–83 (1973); 

Von Schrader Mfg., 33 FTC 58, 65 (1941). 

9 Grant Connect, 827 F. Supp. 2d at 1214, 1226 

(‘‘Examples of deceptive conduct violative of the 

Act include unsubstantiated claims that consumers 

can make a lot of money using the defendant’s 

product . . . .’’); see also, e.g., FTC v. Digital 

Altitude, LLC, No. 2:18–cv–0729, 2018 WL 1942392, 

*7–10 (C.D. Cal. Mar. 9, 2018); John Beck Amazing 

Profits, 865 F. Supp. 2d at 1067, 1071–72; Holiday 

Enterprises, No. 1:06–cv–2939, 2008 WL 953358, 

*6–7; Von Schrader, 33 FTC at 64. 

10 Vemma, No. 2:15–cv–01578, 2015 WL 

11118111, *6 (in determining whether marketing 

made deceptive income claims, ‘‘[t]he ‘commonsense net impression’ of representations controls’’); 

see also, e.g., World Patent, No. 17–cv–20848, 2017 

WL 3508639, *11–12; John Beck Amazing Profits, 

865 F. Supp. 2d at 1073; Med. Billers Network, 543 

F. Supp. 2d at 306–07; Tashman, 318 F.3d at 1276; 

Febre, No. 94–cv–3625, 1996 WL 396117, *4. 

11World Patent, No. 17–cv–20848, 2017 WL 

3508639, *13–14 (rejecting disclaimer defense as 

they ‘‘failed to change the net impression created 

by Defendants’ salespeople who verbally promised 

financial gain’’); see also, e.g., Vemma, No. 2:15– 

cv–01578, 2015 WL 11118111, *6; John Beck 

Amazing Profits, 865 F. Supp. 2d at 1072; 

Stefanchik, No. 04–cv–1852, 2007 WL 1058579, *6; 

Minuteman Press, 53 F. Supp. 2d at 262–63. 

12 Five-Star Auto Club, 97 F. Supp. 2d at 526 

(liability for misleading earnings claims under 

Section 5 did not turn on ‘‘intent to defraud or 

deceive,’’ or ‘‘bad faith’’); see also, e.g., Holiday 

Enterprises, No. 1:06–cv–2939, 2008 WL 953358, 

*6–7; Med. Billers Network, 543 F. Supp. 2d at 304; 

Nat’l Bus. Consultants, No. 89–cv–1740, 1990 WL 

32967, *9; Wolf, No. 94–cv–8119, 1996 WL 812940, 

*5. 

13FTC Policy Statement on Deception (October 

23, 1984) (appended to Cliffdale Assocs. Inc., 103 

FTC 110, 180 & n.37 (1984); see also, e.g., 

Exposition Press, Inc. v. FTC, 295 F.2d 869, 873 (2d 

Cir. 1961); Med. Billers Network, 543 F. Supp. 2d 

at 307. 

14 Med. Billers Network, 543 F. Supp. 2d at 319– 

20 (holding seller liable for telemarketer agent’s 

earnings misrepresentations regardless of 

telemarketer’s purported independent contractor 

status); see also, e.g., Stefanchik, No. 04–cv–1852, 

2007 WL 1058579, *6; FTC v. Skybiz.com, Inc., No. 

01–cv–396, 2001 WL 1673645, *9 (N.D. Okla. Aug. 

31, 2001), aff’d, 57 F. App’x 374 (10th Cir. 2003); 

Five-Star Auto Club, 97 F. Supp. 2d at 527; U.S. Oil 

and Gas, No. 83–cv–1702, 1987 U.S. Dist. LEXIS 

16137, *48–49; Goodman v. FTC, 244 F.2d 584, 

592–593 (9th Cir. 1957). 

15 Five-Star Auto Club, 97 F. Supp. 2d at 530 

(‘‘[Defendants] violated [the] FTC Act by providing 

participants with deceptive means and 

instrumentalities,’’ specifically, marketing materials 

that included deceptive earnings claims, explaining 

that ‘‘[a]s a matter of law, ‘those who put into the 

hands of others the means by which they may 

mislead the public, are themselves guilty of a 

violation of Section 5 of the Federal Trade 

Commission Act.’ ’’); see also, e.g., Vemma, No. 

2:15–cv–01578, 2015 WL 11118111, *7. 

16See, e.g., FTC v. BINT Operations LLC, No. 

4:21–cv–518 (filed E.D. Ark. 2021); FTC v. Moda 

Latina BZ Inc., No. 2:20–cv–10832 (filed C.D. Cal. 

2020); FTC v. Digital Income System, Inc., No. 1:20– 

cv–24721 (filed S.D. Fla. 2020); FTC v. OTA 

Franchise Corp., No. 8:20–cv–287 (filed C.D. Cal. 

2020); FTC v. Ragingbull.com, LLC, No. 1:20–cv– 

3538 (filed D. Md. 2020); FTC v. National Web 

Design, LLC, No. 2:20–cv–846 (filed D. Utah 2020); 

FTC v. Noland, No. 2:20–cv–0047 (filed D. Ariz. 

2020); FTC v. Position Gurus, LLC, No. 2:20–cv–710 

(filed W.D. Wash. 2020); FTC v. 8 Figure Dream 

Lifestyle LLC, No. 8:19–cv–1165 (filed C.D. Cal. 

2019); FTC v. Zurixx LLC, No. 2:19–cv–713 (filed 

D. Utah 2019); FTC v. Advocare, Int’l, L.P., No. 

4:19–cv–715 (filed E.D. Tex. 2019); FTC v. Neora, 

LLC, No. 3:20–cv–1979 (filed D.N.J. 2019, 

transferred N.D. Tex.); FTC v. Fat Giraffe Mktg. 

Group LLC, No. 2:19–cv–63 (filed D. Utah 2019); 

FTC v. AWS, LLC, No. 2:18–cv–442 (filed D. Nev. 

2018); FTC v. Sellers Playbook, Inc., No. 18–cv– 

2207 (filed D. Minn. 2018); FTC v. Dluca, No. 0:18– 

cv–60379 (filed S.D. Fla. 2018); FTC v. Mobe Ltd., 

No. 6:18–cv–862 (filed M.D. Fla. 2018); FTC v. 

Vision Solution Marketing LLC, No. 2:18–cv–356 

(filed D. Utah 2018); FTC v. Jason Cardiff, No. 5:18– 

cv–2104 (filed C.D. Cal. 2018). 

17AMG Capital Mgmt., LLC v. FTC, 141 S. Ct. 

1341 (2021). 

18 15 U.S.C. 53(b). 

19Penalty Offenses Concerning Multi-Making 

Opportunities (issued October 2021), available at 

https://www.ftc.gov/enforcement/penalty-offenses/ 

money-making-opportunities. 

20 Disclosure Requirements and Prohibitions 

Concerning Franchising, 16 CFR part 436 (2007). 

21Business Opportunity Rule, 16 CFR part 437 

(2012). 

22Telemarketing Sales Rule, 16 CFR part 310. 

23See, e.g., FTC v. OTA Franchise Corp., No. 

8:20–cv–287 (filed C.D. Cal. 2020) (alleging 

consumer harm of over $370 million); FTC v. 

Neora, LLC, No. 3:20–cv–1979 (filed D.N.J. 2019, 

transferred N.D. Tex.) (alleging consumer harm of 

over $120 million); FTC v. Mobe, No. 6:18–cv–862, 

Dkt. No. 257, Renewed Motion for Default 

Judgment, at 5 (filed M.D. Fla. 2018) (alleging 

consumer harm of over $318 million); FTC v. The 

Tax Club, Inc., No. 13–cv–210 (filed S.D.N.Y. 2016) 

(alleging consumer harm of over $200 million). 

Individual losses can be substantial; for example, 

tens of thousands of purchasers in the OTA 

Franchise matter each paid over $10,000 for 

purported courses on how to make money trading 

in the financial markets. 

hypothetical or past profits; 8 and (d) 

earnings claims must be substantiated— 

that is, the maker must have a 

reasonable basis for the claim before 

making it.9 The well-settled law on 

deception under section 5 of the FTC 

Act applies fully to deceptive earnings 

claims: (a) Liability turns on whether 

the net impression conveyed by 

representations—not merely their 

express terms—is unsubstantiated or 

otherwise misleading; 10 (b) disclaimers 

do not bar liability, as they often fail to 

dispel a misleading impression created 

by other representations; 11 (c) as a 

matter of law, good faith or a lack of 

intent to deceive is not a defense; 12 (d) 

a company may be liable for bait-andswitch advertising or the use of 

‘‘misleading door openers,’’ ‘‘even if the 

truth is subsequently made known;’’ 13

(e) a principal may be liable for 

deceptive claims made by its 

representatives or other agents; 14 and (f) 

a company may be liable for providing 

deceptive marketing materials for others 

to use on its behalf (sometimes called 

providing ‘‘means and 

instrumentalities’’).15

Despite the Commission’s aggressive 

enforcement program,16 deceptive 

earning claims continue to proliferate in 

the marketplace. The FTC continues to 

receive widespread reports from 

consumers and informants of 

misleading earnings claims. In AMG 

Capital Mgmt., LLC v. FTC 17 the 

Supreme Court ruled that the 

Commission may not seek equitable 

monetary relief under section 13(b) of 

the FTC Act for violations of the FTC 

Act or other statutes enforced by the 

Commission.18 While the Commission 

recently issued a Notice of Penalty 

Offenses concerning earnings claims,19

which will permit the Commission to 

seek civil penalties for misleading 

earnings claims in some cases, this 

authority does not provide a basis for 

the Commission to recover funds to 

return to injured consumers. 

The Commission anticipates that a 

rule prohibiting the use of misleading 

earnings claims would enhance 

deterrence and help the Commission 

move quickly to stop illegal conduct. 

Such a rule also may further clarify for 

businesses what constitutes a deceptive 

earnings claim and what it means to 

have substantiation for an earnings 

claim. 

In addition, a rule would enable the 

Commission to seek monetary relief for 

consumers harmed by deceptive 

earnings claims, as well as civil 

penalties against those who make the 

deceptive claims. Specifically, section 

19 of the FTC Act, 15 U.S.C. 57b, 

authorizes the Commission to seek 

‘‘rescission or reformation of contracts, 

the refund of money or return of 

property, [and] the payment of 

damages,’’ among other things, to 

redress harm caused by violations of 

FTC rules, such as one prohibiting 

deceptive earnings claims. And section 

5 of the FTC Act, 15 U.S.C. 45(m), 

allows the Commission to ‘‘recover civil 

penalties’’ against those who violate 

such a rule. 

The Commission has previously 

promulgated rules regulating the use of 

earnings claims in certain industry 

settings: The Franchise Rule,20 the 

Business Opportunity Rule,21 and the 

Telemarketing Sales Rule.22 However, 

the scope of coverage of these rules is 

limited. Numerous different types of 

enterprises that do not clearly fall under 

the scope of these existing rules 

continue to use misleading earnings 

claims to deceive consumers in 

violation of section 5. The financial 

consequences of this deception for 

consumers are significant.23


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24See, e.g., FTC v. OTA Franchise Corp., No. 

8:20–cv–287 (filed C.D. Cal. 2020); FTC v. 

Ragingbull.com, LLC, No. 1:20–cv–3538 (filed D. 

Md. 2020); FTC v. Zurixx LLC, No. 2:19–cv–713 

(filed D. Utah 2019); FTC v. Nudge LLC, No. 2:19– 

cv–867 (filed D. Utah 2019); FTC v. Mobe Ltd., No. 

6:18–cv–862 (filed M.D. Fla. 2018); FTC v. Digital 

Altitude, No. 2:18–cv–0729 (filed C.D. Cal. 2018). 

25See, e.g., FTC v. Devry Education Group Inc., 

No. 2:16–cv–579 (filed C.D. Cal. 2016); 

Commonwealth of Massachusetts v. ITT 

Educational Services, Inc., No. 16–0411 (filed Mass. 

Super. Ct. 2016); State of Colorado v. Center For 

Excellence in Higher Education, Inc., No. 2014–cv– 

34530 (filed Denver City And County Dist. Ct. 

2014); Macmillan, Inc., 96 FTC 208 (1980). 

26See, e.g., Amazon.com, Inc., FTC Docket No. C– 

4746 (filed 2021); FTC v. Moda Latina BZ Inc., No. 

2:20–cv–10832 (filed C.D. Cal. 2020); FTC v. Fat 

Giraffe Mktg. Group LLC, No. 2:19–cv–63 (filed D. 

Utah 2019); FTC v. Uber Technologies, Inc., No. 

3:17–cv–0261 (filed N.D. Cal. 2017); Encyclopaedia 

Britannica, Inc., et al., 87 FTC 421, 450, 486–88, 

531–32 (1976); Abel Allan Goodman Trading As 

Weavers Guild, 52 FTC 982, 988 (1956), order 

affirmed 244 F.2d 584 (9th Cir. 1957). 

27See, e.g., FTC v. Noland, No. 2:20–cv–0047 

(filed D. Ariz. 2020); FTC v. Neora, LLC, No. 3:20– 

cv–1979 (filed D.N.J. 2019, transferred N.D. Tex.); 

FTC v. Advocare, Int’l, L.P., No. 4:19–cv–715 (filed 

E.D. Tex. 2019); FTC v. Herbalife Int’l of America, 

Inc., No. 2:16–cv–5217 (filed C.D. Cal. 2016); FTC 

v. Vemma Nutrition Co., No. 2:15–cv–01578 (filed 

D. Ariz. 2015). 

28See, e.g., United States v. We The People Forms 

and Service Centers USA, Inc., No. 04–cv–10075 

(filed C.D. Cal. 2004); FTC v. Government Careers 

Network, Inc., et al., No. 01–cv–2286 (filed S.D.N.Y. 

2001); FTC v. Minuteman Press, Inc., No. 93–cv– 

2496 (filed E.D.N.Y. 1993); FTC v. National 

Business Consultants, No. 89–cv–1740 (filed E.D. 

La. 1987). 29See, e.g., FTC v. National Web Design, LLC, No. 

2:20–cv–846 (filed D. Utah 2020); FTC v. AWS, LLC, 

No. 2:18–cv–442 (filed D. Nev. 2018); FTC v. Sellers 

Playbook, Inc., No. 18–cv–2207 (filed D. Minn. 

2018); FTC v. Advertising Strategies, LLC, No. 2:16– 

cv–3353 (filed D. Ariz. 2016); FTC v. The Online 

Entrepreneur, Inc., No. 8:12–cv–2500 (filed M.D. 

Fla. 2012). 30See, e.g., FTC v. Digital Income System, Inc., 

No. 1:20–cv–24721 (filed S.D. Fla. 2020); FTC v. 8 

Figure Dream Lifestyle LLC, No. 8:19–cv–1165 (filed 

C.D. Cal. 2019); FTC v. Money Now Funding, LLC, 

No. 2:13–cv–1583 (filed D. Ariz. 2013); FTC v. 

American Business Builders, LLC, No. 2:12–cv– 

2368 (filed D. Ariz. 2012); United States v. The 

Zaken Corp., No. 2:12–cv–9631 (filed C.D. Cal. 

2012); FTC v. Universal Advertising, Inc., No. 1:06– 

cv–152 (filed D. Utah 2006). 

31See, e.g., FTC v. BINT Operations LLC, No. 

4:21–cv–518 (filed E.D. Ark. 2021); FTC v. Dluca, 

No. 0:18–cv–60379 (filed S.D. Fla. 2018); FTC v. 

Evans, No. 4:03–cv–178 (E.D. Tex. 2003); FTC v. 

Lightfoot, No. C 3–02–145 (filed S.D. Ohio 2002); 

FTC v. Bigsmart.com LLC, No. 01–cv–466 (filed D. 

Ariz. 2001); FTC v. Cano, No. 97–cv–7947 (filed 

C.D. Cal. 1997). 

32See, e.g., SEC v. Senderov, No. 19–cv–5242 

(filed E.D. Wa. 2019); SEC v. Peterson, No. 19–cv– 

8334 (filed C.D. Cal. 2019); In re Spectrum Concepts 

LLC, SEC No. 3–16358 (filed SEC 2015); In re 

Pankaj Kumar Srivastava, SEC No. 3–1267 (filed 

SEC 2014); SEC v. Butts, No. 13–23115 (filed S.D. 

Fla. 2013); SEC v. Shavers, No. 4:13–cv–416 (filed 

E.D. Tex. 2013). 

33See, e.g., FTC v. Position Gurus, LLC, No. 2:20– 

cv–710 (filed W.D. Wash. 2020) (marketing and 

other business-related services); FTC v. Montano, 

No. 6:17–cv–2203 (filed M.D. Fla. 2017) (‘‘automatic 

money systems’’ and ‘‘secret codes’’); FTC v. World 

Patent Mktg., No. 17–cv–20848 (filed S.D. Fla. 2017) 

(invention promotion); FTC v. Blue Saguaro 

Marketing, LLC, No. 2:16–cv–3406 (filed D. Ariz. 

2016) (grant scheme). 

34An atypical earnings claim is a representation, 

express or implied, regarding profit, earnings, or 

other financial gain, that does not reflect the 

experience of the typical purchaser, employee, 

independent contractor, or other participant 

engaged in the money-making opportunity at issue. 

Such claims often convey the message that the 

represented earnings are typical—this is deceptive. 

See notes 5 & 6, supra; FTC’s Guides Concerning 

the Use of Endorsements and Testimonials in 

Advertising (‘‘Endorsement Guides’’), 16 CFR 

255.2(b). 

35World Patent Mktg., No. 17–cv–20848, 2017 

WL 3508639, *13–14 (even if disclaimers were 

seen, ‘‘they failed to change the net impression 

created by Defendants’ salespeople who verbally 

promised financial gain’’); Vemma, No. 2:15–cv– 

01578, 2015 WL 11118111, at *6–7 (disclaimers of 

‘‘results not typical’’ not sufficient, as ‘‘consumer 

may [still] reasonably believe that a statement of 

unusual earning potential represents typical 

earnings’’); Medicor, 217 F. Supp. 2d at 1053–54 

(‘‘consumers could reasonably believe that the 

statements of earnings potential represent typical or 

average earnings’’ despite disclaimer); Minuteman 

Press, 53 F. Supp. 2d at 262–63 (written disclaimers 

contradicting oral earnings claims not sufficient, as 

‘‘a reasonable consumer could legitimately 

conclude that he or she was being furnished 

important specific earnings information, subrosa, to 

assist in the decision-making process 

notwithstanding the general disclaimers in the 

[contract]’’). 

36Endorsement Guide 16 CFR 255.2(b) n. 105. 

37 16 CFR 436.2 and 436.5(u); 16 CFR 437.2. 

The Commission believes that 

initiating a rulemaking to address the 

use of earnings claims could benefit 

consumers and could provide useful 

guidance without burdening businesses. 

The rule would be designed to deter the 

use of misleading earnings claims, 

inform market participants of their legal 

obligations by spelling out prohibitions 

plainly, and ensure the Commission can 

seek monetary relief for consumers 

deceived by misleading earnings claims. 

II. Objectives and Regulatory 

Alternatives 

The Commission requests input on 

whether and how it can most effectively 

use its authority under section 18 of the 

FTC Act, 15 U.S.C. 57a, to address 

certain deceptive or unfair acts or 

practices involving the use of false, 

unsubstantiated, or otherwise 

misleading earnings claims. 

The Commission is aware that such 

claims are used by numerous companies 

and individuals to entice prospective 

purchasers, job-seekers, investors, or 

other participants in widely varying 

contexts. For example, the Commission 

and other government agencies have 

alleged that misleading earnings claims 

have been used to tout offers as diverse 

as coaching or mentoring,24 education,25

work-from-home, ‘‘gig’’ work, and other 

job opportunities,26 multi-level 

marketing opportunities,27 franchise,28

e-commerce 29 or other business 

opportunities,30 chain referral 

schemes,31 and other investment 

opportunities,32 as well as other types of 

business or money-making 

opportunities.33 The Commission 

requests that commenters provide other 

information or evidence on the 

prevalence of these practices in these 

same contexts as well as any others. 

The Commission also is interested in 

exploring disclaimers: Specifically, 

whether a disclaimer can be sufficient to 

correct a misleading impression from an 

atypical earnings claim,34 and, if so, 

what features such a disclaimer must 

have, and in what contexts will it 

suffice. In the Commission’s experience, 

we have not seen probative evidence 

that disclaimers effectively cure atypical 

earnings claims. In Commission 

enforcement actions where defendants 

have argued that disclaimers or 

disclosures cured any deceptive 

earnings claims, courts have repeatedly 

found otherwise.35 Further, research by 

the Commission has found that even 

clear and prominent disclaimers of 

‘‘Results not typical’’ or the stronger 

‘‘These testimonials are based on the 

experiences of a few people and you are 

not likely to have similar results,’’ are 

not sufficient to dispel the implication 

that a testimonial depicts typical 

results.36 Yet, some companies continue 

to use disclaimers with such language. 

Based on the foregoing, the Commission 

seeks comment, information, and 

evidence on whether a disclaimer can 

be sufficient to correct an otherwise 

misleading impression created by 

earnings claims, and, if so, whether and 

how the issue should be addressed in a 

rule. 

The Commission also wishes to 

explore in this rulemaking whether 

some or all entities and individuals 

making earnings claims should be 

required to give recipients specific 

earnings information. The Franchise 

and Business Opportunity Rules require 

companies that make earnings claims to 

furnish prospective members with a 

disclosure document that includes 

information about earnings.37 Should 

similar provisions be implemented in an 

earnings claim rule? How would it 

effectively prevent or curb deception 

regarding earnings? If so, what 

information should such a disclosure 

include? What would be the benefit to 

consumers and the burden to business 

of such a disclosure requirement? Given 

the wide variety of commercial contexts 

in which earnings claims may be used, 

should a disclosure requirement apply 

to only certain types of entities and 

individuals or in certain contexts, or 

should its application be limited in 

some other way? For example, should 


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38For example, the Business Opportunity Rule 

bars business opportunity sellers from 

disseminating industry financial information to 

prospective purchasers unless they have 

substantiation that the information ‘‘reflects, or 

does not exceed, the typical or ordinary’’ 

experience of purchasers. 16 CFR 437.4(c). 

39 FTC v. Zurixx, No. 2:19–cv–0713, (filed D. Utah 

2019), Second Amended Complaint, Dkt. 219, para. 

62 & 88 (earnings claims included national averages 

drawn from industry sources); Dkt. 12–15 (p.7) 

(same); Dkt. 12–48 (p.35) (same); Med. Billers 

Network, 543 F. Supp. 2d at 305–06 (earnings 

claims based on industry statistics deceptively 

implied that participants in defendants’ 

opportunity would make the depicted amounts); cf. 

FTC Endorsement Guides, 16 CFR 255.2(b) 

(representations of individual consumers’ 

experiences ‘‘will likely be interpreted as 

representing that the . . . experience is 

representative of what consumers will generally 

achieve’’). 

40 Febre, No. 94–cv–3625, 1996 WL 396117, *3– 

5 (finding ads with earnings claims deceptive 

because they failed to disclose expenses); 

Encyclopaedia Britannica, 87 FTC at 445–50, 486– 

87, 505, 510, 532. See also Med. Billers Network, 

543 F. Supp. 2d at 315 (failure to disclose costs 

necessary to earn income with product was a 

deceptive telemarketing practice and violated the 

Telemarketing Sales Rule); Southwest Sunsites, Inc., 

et al., 105 FTC 7, 99–102 (1985) (claims about 

potential use of property were deceptive because 

they implied the property was a good investment 

but failed to disclose substantial expenses that 

rendered the proposed uses uneconomical), aff’d 

785 F.2d 1431, 1438 (9th Cir. 1986). 

41See, e.g., Grant Connect, 827 F. Supp. 2d at 

1225–1226 (defendants ‘‘cannot fabricate a number 

[in an earnings claim] and then fall back on the 

defense that they would not have access to the 

documentation to support that claim’’); Holiday 

Enterprises, No. 1:06–cv–2939, 2008 WL 953358, at 

*6–7 (granting summary judgement to FTC in part 

because ‘‘defendants had no substantiation for 

[their earnings] claims’’). 

42World Patent Mktg., No. 17–cv–20848, 2017 

WL 3508639, *12 (‘‘success stories’’ in ads implied 

purchasers would see similar results); John Beck 

Amazing Profits, 865 F. Supp. 2d at 1072–73 (ad 

with ‘‘numerous testimonials’’ conveyed 

impression that ‘‘a typical consumer’’ would ‘‘earn 

thousands of dollars per week’’); Cliffdale Assocs., 

Inc., 103 FTC 110, 171–72 (1984) (‘‘[b]y printing the 

testimonials, respondents implicitly made 

performance claims’’ that were deceptive; 

‘‘irrespective of the veracity of the individual 

consumer testimonials, respondents’ use of the 

testimonials to make underlying claims that were 

false and deceptive was, itself, deceptive’’); 

Macmillan, 96 FTC at 301 (‘‘testimonials . . . 

implied that the success portrayed therein was 

ordinary and typical’’). See also FTC Endorsement 

Guides, 16 CFR 255.2(b) (testimonials ‘‘will likely 

be interpreted as representing that the . . . 

experience is representative of what consumers will 

generally achieve’’). 

43For example, the Business Opportunity Rule 

requires retention of substantiation documents for 

three years after an earnings claim is made. 16 CFR 

437.7. The Franchise Rule and Business 

Opportunity Rules both require that substantiation 

materials be made available to consumers upon 

request, thereby implicitly requiring retention of 

substantiation documents. 16 CFR 436.9(d); 16 CFR 

437.6(f). 

44See, e.g., FTC v. Neora, LLC, No. 3:20–cv–1979 

(filed D.N.J. 2019, transferred N.D. Tex.); FTC v. 

Advocare, Int’l, L.P., No. 4:19–cv–715 (filed E.D. 

Tex. 2019); FTC v. Herbalife Int’l of America, Inc., 

No. 2:16–cv–5217 (filed C.D. Cal. 2016); FTC v. 

Fortune Hi-Tech Mktg., Inc., No. 13–cv–578 (filed 

N.D. Ill. 2013). 

45The Business Opportunity Rule’s definition of 

earnings claims includes lifestyle claims, but only 

if they imply a certain minimum level of earnings. 

16 CFR 437.1(f). 

its coverage exclude job postings and 

help wanted ads? Should it apply only 

to those whose claims cite atypical 

earnings figures? Or should it be limited 

on some other basis? 

Relatedly, the Commission is 

interested in exploring whether a rule 

should address the use of real or 

purported earnings data or statistics 

from an industry or professional field in 

the promotion of money-making 

opportunities.38 In the Commission’s 

experience, some such uses are 

misleading. These seemingly objective 

figures may create the impression that 

the depicted level of sales or earnings is 

typical in the industry or field, or for the 

opportunity being advertised, and by 

implication, that the prospective 

purchaser, employee, or other 

participant will achieve similar 

results.39 The Commission seeks 

comment on whether a prohibition on 

such misleading ‘‘industry’’ earnings 

claims should be included in a rule, and 

if so, what the proper scope of its 

coverage should be. 

The Commission also seeks comment 

on whether and how a rule can most 

effectively provide clarity on the 

substantiation a company must possess 

before making an earnings claim, and 

whether those who make earnings 

claims should be required to keep 

records to demonstrate how they have 

substantiated the claims. In the 

Commission’s experience, numerous 

companies have taken positions that 

appear to misunderstand the 

substantiation obligation. For example, 

the Commission is aware that, 

historically, some multi-level marketing 

companies have made earnings claims 

to potential distributors without 

knowing what expenses their 

distributors incur. But earnings claims 

that reflect gross income and omit 

material expenses are misleading.40

Before making an earnings claim, a 

business must have a reasonable basis 

for the claim 41—that means both gross 

income and expenses incurred in 

generating that income. As another 

example, entities and individuals often 

argue before the Commission that 

earnings claims made in testimonials 

are substantiated if the testimonialist 

provides evidence that he or she 

attained the results described in the 

testimonial. But confirming that a 

testimonialist is accurately describing 

their own experience does not 

substantiate a key message that such 

representations usually convey—that 

prospective participants can expect 

similar results.42 Given the frequency 

with which these and other similar 

issues arise, the Commission is 

considering how a rule might provide 

clarity on the matter. How should a rule 

define the evidence necessary to meet 

the substantiation requirement? Also, 

should a rule impose a recordkeeping 

requirement for substantiation 

evidence? Such requirements ensure 

that the Commission can obtain the 

evidence necessary to evaluate a 

company’s claims that its earnings 

representations are substantiated.43 If 

the rule includes a recordkeeping 

requirement, what must be kept? In 

what form? For how long? What would 

be the costs of such a requirement, and 

are there ways to streamline the 

requirement to minimize the costs on 

businesses? 

Additionally, the Commission seeks 

comments on whether, if at all, lifestyle 

claims should be addressed by a rule. 

Lifestyle claims are claims that 

participating in a money-making 

opportunity will lead to a material 

change in lifestyle—such as getting to go 

on expensive vacations, quitting your 

job, or buying a luxury car. These claims 

are being used frequently on online 

advertisements and social media. And 

the Commission has initiated several 

enforcement actions that involved 

deceptive lifestyle claims.44 The 

Commission, however, has never 

comprehensively analyzed such claims, 

instead addressing them on a case-bycase basis.45 Comment, evidence, and 

information is therefore sought on (a) 

whether and what lifestyle claims are 

deceptive; (b) the benefits to businesses 

and consumers from receiving guidance 

on this topic; and (c) what evidence a 

company must have before making a 

lifestyle claim to substantiate it. 

Finally, the Commission seeks 

comment on, among other things, the 

costs and benefits of a rule that would 

address the above practices, and on 

alternatives to such a rulemaking, such 

as the publication of additional 

consumer and business education. In 

their replies, commenters should 

provide any available evidence and data 

that supports their position, such as 

empirical data, consumer perception 

studies, and consumer complaints. 

III. Request for Comments 

Members of the public are invited to 

comment on any issues or concerns they 

believe are relevant or appropriate to the 

Commission’s consideration of potential 

rulemaking in this area. The 

Commission requests that commenters 

also submit any relevant factual data 


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46See, e.g., Amazon.com, Inc., FTC Docket No. C– 

4746 (filed 2021); FTC v. Uber Technologies, Inc., 

No. 3:17–cv–0261 (N.D. Cal. filed 2017); 

Encyclopaedia Britannica, 87 FTC at 450, 486–88, 

531–32; Abel Allan Goodman, 52 FTC at 988, order 

affirmed 244 F.2d 584 (9th Cir. 1957). 

upon which their comments are based. 

In addition to the issues raised above, 

the Commission solicits public 

comment on the specific questions 

identified below. These questions are 

designed to assist the public and should 

not be construed as a limitation on the 

issues on which public comment may 

be submitted. 

Questions 

1. How widespread is the use of false, 

unsubstantiated, or otherwise 

misleading earnings claims by entities 

or individuals in connection with the 

offer or sale of a good or service, 

participation in a job or other work 

opportunity, or in a business, 

investment, or other money-making 

opportunity? Is the practice prevalent 

among those who make earnings claims? 

Are there certain business contexts or 

industries in which the practice is 

prevalent, or certain business contexts 

or industries in which it is not? For 

example, are deceptive earnings claims 

prevalent among all businesses that 

offer work or employment, or just 

among those in certain industries? 46 If 

so, describe the relevant industry or 

business context and the basis for your 

position. Provide any evidence, such as 

empirical data, consumer perception 

studies, or consumer complaints, that 

demonstrates the extent of such 

practices. Provide all evidence that 

supports your answer. 

2. Are there circumstances in which 

the practices described in Question 1, 

above, would not be deceptive or 

unfair? If so, what are those 

circumstances? Should the Commission 

exclude such circumstances from the 

scope of any rulemaking? Why or why 

not? Provide all evidence that supports 

your answer. 

3. Do the practices described in 

Question 1, above, cause injury to 

consumers, and if so, how much? Do 

such practices cause injury to other 

businesses by unfairly disadvantaging 

them? Provide any evidence that 

quantifies or estimates these injuries if 

possible, including the size of the 

discrepancy between misleading 

earnings claims and actual earnings. 

Provide all evidence that supports your 

answer. 

4. Do the practices described in 

Question 1, above, disproportionately 

target or affect certain groups, including 

communities of color or other 

historically underserved communities? 

If so, why and how? Provide all 

evidence that supports your answer. 

5. Please provide any evidence 

concerning consumer perception of, or 

experience with, earnings claims that is 

relevant to the practices described in 

Question 1, above. 

6. Is there a need for new regulatory 

provisions to prevent the practices 

described in Question 1, above? If yes, 

why? If no, why not? What evidence 

supports your answer? 

7. How should a rule addressing the 

practices described in Question 1, 

above, be crafted to maximize the 

benefits to consumers while minimizing 

the costs to businesses? Provide all 

evidence that supports your answer, 

including any evidence that quantifies 

the benefits to consumers, and the costs 

to businesses. 

8. Should the Commission consider 

additional consumer, employee, 

independent contractor, and business 

education to reduce harm to consumers 

associated with the practices described 

in Question 1, above? If so, what should 

such education materials include, and 

how should the Commission 

communicate that information to 

consumers and businesses? 

9. What alternatives to regulations 

should the Commission consider to 

address the practices described in 

Question 1, above? Would those 

alternatives obviate the need for 

regulation? If so, why? If not, why not? 

What evidence supports your answer? 

10. Should a rule addressing the 

practices described in Question 1, 

above, define or describe the 

substantiation required to make an 

earnings claim? Why or why not? If so, 

how should it do so? Should a rule 

adopt the Business Opportunity Rule’s 

language of ‘‘a reasonable basis’’ for a 

claim at the time the claim is made, or 

should it use some other definition? If 

the latter, what? What are the benefits 

to consumers, and costs to businesses, 

and in particular small businesses, from 

such a rule? Provide all evidence that 

supports your answer, including any 

evidence that quantifies the benefits to 

consumers, and the costs to businesses, 

and in particular small businesses. 

11. Should a rule addressing the 

practices described in Question 1, 

above, require the preservation or 

documentation of substantiation? Why 

or why not? If so, what types of 

recordkeeping requirements should be 

required? What are the benefits to 

consumers, and costs to businesses, and 

in particular small businesses, from 

such a rule? Provide all evidence that 

supports your answer, including any 

evidence that quantifies the benefits to 

consumers, and the costs to businesses, 

and in particular small businesses. 

12. What requirements, if any, should 

a rule impose to address earnings claims 

made by agents or others interacting 

with prospective purchasers, 

employees, independent contractors, or 

participants on a company’s behalf, to 

address the potential use of misleading 

claims? How can the Commission 

ensure that companies effectively 

monitor the actions of such agents or 

other persons? Should a rule addressing 

the practices described in Question 1, 

above, impose affirmative requirements 

on companies regarding earnings claims 

made by their agents or others acting 

with them or on their behalf? Why or 

why not? If so, how? What are the 

benefits to consumers, and costs to 

businesses from such a rule? Provide all 

evidence that supports your answer, 

including any evidence that quantifies 

the benefits to consumers, and the costs 

to businesses. 

13. Are there circumstances in which 

disclaimers or disclosures can 

effectively dispel a misleading 

impression regarding earnings or profits, 

or prevent such an impression? If so, 

describe such circumstances in detail, 

including all necessary aspects of such 

disclaimer or disclosure, such as 

language, format, or the context in 

which it is presented. Provide all 

evidence that supports your answer, or 

that otherwise addresses the 

effectiveness of disclaimers or 

disclosures. 

14. In the cases the Commission has 

brought, we have repeatedly seen 

circumstances where earnings claims 

convey the impression that the 

represented earnings are typical. Are 

there circumstances where they do not? 

If so, describe such circumstances in 

detail. Provide all evidence that 

supports your answer. 

15. How should the rule address 

disclaimers? Are there any 

circumstances in which a rule should 

require a disclaimer, such as with 

atypical earnings claims? Why or why 

not? If so, describe such circumstances 

in detail. How should a rule define or 

describe such disclaimer? Should the 

rule address conduct that may minimize 

the effectiveness of any disclaimer, and 

if so, how? What are the benefits to 

consumers, and costs to businesses from 

such a rule? Provide all evidence that 

supports your answer, including any 

evidence that quantifies the benefits to 

consumers, and the costs to businesses. 

16. Based on the Commission’s 

enforcement experience, representations 

of an expensive or otherwise desirable 

lifestyle—such as images of or 

references to mansions, yachts, luxury 


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goods or automobiles, exotic or 

otherwise desirable vacations, or even 

just having more free time—convey the 

impression that a money-making 

opportunity can or will provide 

participants sufficient income to afford 

a similar lifestyle. Under what 

circumstances, if any, do such 

representations not convey such an 

impression? Describe such 

circumstances in detail. Provide all 

evidence that supports your answer. 

17. Should a rule addressing the 

practices described in Question 1, 

above, address the use of ‘‘lifestyle’’ 

claims of the type described in Question 

15? Why or why not? If so, how? What 

are the benefits to consumers, and costs 

to businesses from such a rule? Provide 

all evidence that supports your answer, 

including any evidence that quantifies 

the benefits to consumers, and the costs 

to businesses. 

18. Should a rule addressing the 

practices described in Question 1, 

above, exempt from its coverage 

businesses or individuals that are 

subject to the Business Opportunity 

Rule, the Franchise Rule, or the 

Telemarketing Sales Rule? Why or why 

not? If so, how and to what extent? 

What are the benefits to consumers, and 

costs to businesses from such a rule? 

Provide all evidence that supports your 

answer, including any evidence that 

quantifies the benefits to consumers, 

and the costs to businesses. 

19. If a rule addressing the practices 

described in Question 1, above, is 

adopted, should the Business 

Opportunity Rule, the Franchise Rule, 

or the Telemarketing Sales Rule be 

amended? Why or why not? If so, how 

and to what extent? 

20. Should a rule addressing the 

practices described in Question 1, 

above, exempt from its coverage any 

other businesses or individuals? Why or 

why not? If so, how and to what extent? 

What are the benefits to consumers, and 

costs to businesses from such a rule? 

Provide all evidence that supports your 

answer, including any evidence that 

quantifies the benefits to consumers, 

and the costs to businesses. 

21. Should a rule addressing the 

practices described in Question 1, 

above, include an example earnings 

disclosure statement that would not be 

mandatory, but would provide guidance 

for companies on how to make a lawful 

earnings claim? Why or why not? If so, 

what should be contained in the 

example statement? What are the 

benefits to consumers, and costs to 

businesses from such a rule? Provide all 

evidence that supports your answer, 

including any evidence that quantifies 

the benefits to consumers, and the costs 

to businesses. 

22. Should a rule addressing the 

practices described in Question 1, 

above, require that an earnings claim 

disclosure document be provided to 

consumers prior to purchase, prior to 

accepting an offer for work, or at any 

other time? Why or why not? If so, how 

should the rule define or describe the 

required disclosure, the time(s) at which 

it must be provided, the manner in 

which it must be provided (so it cannot 

be hidden or obscured by other 

paperwork), the languages in which it 

must be provided, and who must 

provide it? What are the benefits to 

consumers, and costs to businesses, and 

in particular small businesses, from 

such a rule? Provide all evidence that 

supports your answer, including any 

evidence that quantifies the benefits to 

consumers, and the costs to businesses, 

and in particular small businesses. 

23. How prevalent is the deceptive or 

misleading use of real or purported 

industry earnings data or statistics in 

the promotion of money-making 

opportunities? Provide any evidence, 

such as empirical data, consumer 

perception studies, or consumer 

complaints, that demonstrates the extent 

of such practices. Provide all evidence 

that supports your answer. 

24. Do the practices described in 

Question 21, above, cause injury to 

consumers, and if so, how, and how 

much? Provide any evidence that 

quantifies or estimates that injury if 

possible, including any non-financial or 

indirect injuries to consumers, and 

including the size of the discrepancy 

between misleading earnings claims and 

actual earnings. Provide all evidence 

that supports your answer. 

25. Should a rule addressing the 

practices described in Question 1, 

above, include a provision concerning 

the use of real or purported industry 

earnings data or statistics? Why or why 

not? If so, how? Should the coverage of 

such a provision be limited? If so, how 

and why? Provide all evidence that 

supports your answer, including any 

evidence that quantifies the benefits to 

consumers, and the costs to businesses. 

26. Do existing laws and regulations 

covering false, unsubstantiated, or 

otherwise misleading earnings claims 

affect businesses, particularly small 

businesses? If so, how? Provide all 

evidence that supports your answer. 

27. Are there other commercial acts or 

practices involving earnings claims that 

are deceptive or unfair that should be 

addressed in the proposed rulemaking? 

If so, describe the practices. How 

widespread are the practices? Provide 

all evidence that supports your answer, 

and please answer Questions 2–9 with 

respect to the practices. 

28. Do current or impending changes 

in technology or market practices affect 

the need for rulemaking? If so, describe 

the changes and how they affect 

whether and how a rulemaking should 

proceed. Provide all evidence that 

supports your answer. 

IV. Comment Submissions 

You can file a comment online or on 

paper. For the Commission to consider 

your comment, we must receive it on or 

before May 10, 2022. Write ‘‘Earnings 

Claims ANPR, R111003’’ on your 

comment. Your comment—including 

your name and your state—will be 

placed on the public record of this 

proceeding, including, to the extent 

practicable, on the https://

www.regulations.gov website. 

Because of the public health 

emergency in response to the COVID–19 

outbreak and the agency’s heightened 

security screening, postal mail 

addressed to the Commission will be 

subject to delay. We strongly encourage 

you to submit your comments online 

through the https://www.regulations.gov 

website. To ensure the Commission 

considers your online comment, please 

follow the instructions on the webbased form. 

If you file your comment on paper, 

write ‘‘Earnings Claims Rulemaking, 

R111003’’ on your comment and on the 

envelope, and mail your comment to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

600 Pennsylvania Avenue NW, Suite 

CC–5610 (Annex B), Washington, DC 

20580, or deliver your comment to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

Constitution Center, 400 7th Street SW, 

5th Floor, Suite 5610 (Annex B), 

Washington, DC 20024. If possible, 

please submit your paper comment to 

the Commission by courier or overnight 

service. 

Because your comment will be placed 

on the public record, you are solely 

responsible for making sure that your 

comment does not include any sensitive 

or confidential information. In 

particular, your comment should not 

contain sensitive personal information, 

such as your or anyone else’s Social 

Security number; date of birth; driver’s 

license number or other state 

identification number or foreign country 

equivalent; passport number; financial 

account number; or credit or debit card 

number. You are also solely responsible 

for making sure your comment does not 

include any sensitive health 

information, such as medical records or 

other individually identifiable health 


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Federal Register / Vol. 87, No. 48 / Friday, March 11, 2022 / Proposed Rules 13957 

1Press Release, Federal Trade Commission, As 

Scammers Leverage Pandemic Fears, FTC and Law 

Enforcement Partners Crack Down on Deceptive 

Income Schemes Nationwide, December 14, 2020, 

https://www.ftc.gov/newsevents/press-releases/ 

2020/12/scammers-leverage-pandemic-fears-ftclaw-enforcement-partners. 

2Press Release, Federal Trade Commission, 

Operators of Bous Income Scam Targeting Latinas 

Face FTC Settlement, March 2, 2021, https://

www.ftc.gov/news-events/press-releases/2021/03/ 

operators-bogus-income-scam-targeting-latinasface-ftc-settlement. 

3 FTC v. Moda Latina BZ Inc., No. 2:20–cv–10832 

(filed C.D. Cal. 2020), https://www.ftc.gov/system/ 

files/documents/cases/001_complaint.pdf. 

4Press Release, Federal Trade Commission, 

Amazon to Pay $61.7 Million to Settle FTC Charges 

it Withheld Some Customer Tips from Amazon Flex 

Drivers, February 2, 2021, https://www.ftc.gov/ 

news-events/pressreleases/2021/02/amazon-pay617-million-settle-ftc-charges-it-withheld-some. 

information. In addition, your comment 

should not include any ‘‘[t]rade secret or 

any commercial or financial information 

which . . . is privileged or 

confidential’’—as provided in section 

6(f) of the FTC Act, 15 U.S.C. 46(f), and 

FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2) 

—including in particular competitively 

sensitive information such as costs, 

sales statistics, inventories, formulas, 

patterns, devices, manufacturing 

processes, or customer names. 

Comments containing material for 

which confidential treatment is 

requested must be filed in paper form, 

must be clearly labeled ‘‘Confidential,’’ 

and must comply with FTC Rule 4.9(c). 

In particular, the written request for 

confidential treatment that accompanies 

the comment must include the factual 

and legal basis for the request, and must 

identify the specific portions of the 

comment to be withheld from the public 

record. See FTC Rule 4.9(c). Your 

comment will be kept confidential only 

if the General Counsel grants your 

request in accordance with the law and 

the public interest. Once your comment 

has been posted publicly at 

www.regulations.gov—as legally 

required by FTC Rule 4.9(b)—we cannot 

redact or remove your comment, unless 

you submit a confidentiality request that 

meets the requirements for such 

treatment under FTC Rule 4.9(c), and 

the General Counsel grants that request. 

Visit the FTC website to read this 

document and the news release 

describing it. The FTC Act and other 

laws that the Commission administers 

permit the collection of public 

comments to consider and use in this 

proceeding as appropriate. The 

Commission will consider all timely 

and responsive public comments it 

receives on or before May 10, 2022. For 

information on the Commission’s 

privacy policy, including routine uses 

permitted by the Privacy Act, see 

https://www.ftc.gov/site-information/ 

privacy-policy. 

By direction of the Commission. 

April J. Tabor, 

Secretary. 

Statement of Commissioner Rebecca 

Kelly Slaughter Regarding Advance 

Notice of Proposed Rulemaking on the 

Use of Earnings Claims 

Unfair and deceptive earnings claims 

underpin some of the worst and most 

financially ruinous scams Americans 

face. Pyramid schemes, phony 

investments, and multi-level-marketing 

all exploit people’s hopes—for financial 

stability, for a chance to improve their 

lives—with false promises. These 

scammers often take advantage of 

national and financial crises to exploit 

the newly vulnerable. And 

unfortunately, we’ve seen that in the 

Covid–19 pandemic as well. The extent 

of these scams is astounding. In a 2020 

law enforcement crackdown the FTC 

pursued over a billion dollars lost to 

these schemes.1

Combating these schemes illuminates 

something important about the agency’s 

authority and our mission, too. Section 

5’s requirement that earnings claims are 

honest and substantiated reflects an 

underappreciated obligation of the FTC: 

To protect Americans as workers and 

not simply as the consumers of products 

and services. Markets cannot function 

effectively without honest and 

transparent pricing. That is just as true 

for the labor market as it is for consumer 

goods. False or misleading earnings 

claims robs people of their investments, 

their time, and the fair value of their 

labor. It is also worth remembering: 

Individuals who put their savings into 

the stock market—often wealthier 

individuals—can rely on the SEC to 

police misrepresentations about 

earnings claims with respect to those 

investments. But less wealthy folks who 

may pour their life savings into 

promised business opportunities 

deserve the protection of the federal 

government as well; that is why we 

must aggressively police misleading 

earnings claims. 

Two of our recent enforcement 

actions demonstrate how this kind of 

exploitation works in practice. Last year 

the FTC settled with the owners and 

operators of Moda Latina.2 The 

company primarily targeted Latinas 

with Spanish-language ads that made 

false promises of significant earnings 

reselling luxury products. Moda Latina’s 

marketing campaign specifically 

targeted Latina consumers interested in 

starting work-at-home businesses.3 It 

seems like none of the women targeted 

in this scheme made money but were 

instead cheated out of their time and 

funds to buy useless goods. These kinds 

of false claims crowd out honest 

opportunities for people to start 

businesses, making life even more 

precarious for vulnerable workers and 

would-be entrepreneurs. 

I’m also deeply concerned about the 

effect of the over-promises of the gig 

economy on workers and the labor 

market. Last year, the FTC settled with 

Amazon over our charges that it robbed 

its Amazon Flex drivers the full amount 

of tips it promised to them.4 These gigeconomy workers signed up as drivers 

to deliver goods and groceries order 

through Amazon based on an advertised 

hourly rate and the promise of receiving 

‘‘100% of tips’’ they earned while 

completing deliveries. After people had 

already signed up to work for the 

company, Amazon secretly changed its 

payment scheme and ceased giving 

drivers their tips while still representing 

that it did so to these workers and to 

consumers. In settlement the agency 

recovered $61.7 million from Amazon, 

the full amount of the tips the agency 

believe Amazon withheld from them. By 

misrepresenting these drivers’ takehome pay Amazon distorted both the 

gig-driver labor market and the 

consumer home delivery market in what 

I believe we can fairly surmise was an 

unlawful bid to increase its market 

share and lower its labor costs. 

Effective enforcement of Section 5’s 

consumer protection obligations helps 

make these markets for labor functional, 

fair, and competitive. That’s why I’m 

eager to begin a rulemaking inquiry on 

earnings claims. I’m proud of the 

decades of enforcement actions the 

agency has undertaken to protect against 

these unfair and deceptive practices. 

But case by case enforcement has left 

gaps unscrupulous actors can exploit. 

Starting this inquiry means we can 

now gather evidence on how best to 

protect against these scams and begin to 

think about how a possible trade 

regulation rule could help level the 

playing field between workers and those 

that employ them. Pursuing rule 

violations would also reopen an avenue 

to return stolen money to consumers— 

something we can no longer do under 

section 13(b) until Congress steps in to 

fix it. 

I want to thank everyone that helped 

bring this ANPR to the Commission 

today, in particular Melissa Dickey, 

Andrew Hudson and Kati Daffan in 

DMP. I’d also like to thank Elisa Jillson, 

the CTD for the Bureau, Kenny Wright 

in the Office of the General Counsel, 

Jason Adler and Guy Ward from the 

MWRO, and David Givens, Douglas 


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13958 Federal Register / Vol. 87, No. 48 / Friday, March 11, 2022 / Proposed Rules 

1AMG Capital Mgmt., LLC v. FTC, 141 S. Ct. 1341 

(2021). 

2Emma Fletcher, Income scams: big promises, big 

losses, FTC Consumer Protection Data Spotlight 

(Dec. 10, 2020), available at https://www.ftc.gov/ 

system/files/attachments/blog_posts/%20scams

%3A%20big%20promises%2C%20big

%20losses%20/.final_.correctlink.pdf. 

3 Id. 

4See Section I of SUPPLEMENTARY INFORMATION, 

supra. See also Notice of Penalty Offense Authority 

Concerning Money-Making Opportunities, available 

at https://www.ftc.gov/MMO-notice. 

Smith, and Yan Lau, in the Bureau of 

Economics for all their work. 

Concurring Statement of Commissioner 

Christine S. Wilson on Advance Notice 

of Proposed Rulemaking Concerning 

Earnings Claims 

Today, the Commission issues an 

Advance Notice of Proposed 

Rulemaking (‘‘ANPRM’’) to commence 

proceedings to address the use of false, 

unsubstantiated, or otherwise 

misleading earnings claims. As 

explained in this Federal Register 

document, despite the Commission’s 

aggressive enforcement efforts for 

decades to combat deceptive earnings 

claims, false claims about income 

opportunities continue to proliferate. 

While I remain skeptical of unleashing 

a tsunami of rulemakings to address 

common unfair or deceptive acts or 

practices, I do not oppose seeking 

comment on today’s ANPRM. 

We contemplate this rule against the 

backdrop of AMG Capital Mgmt., LLC v. 

FTC.1 The Supreme Court’s recent 

decision in AMG limits the 

Commission’s authority to use section 

13(b) of the FTC Act to obtain monetary 

relief for consumers harmed by 

misleading earnings claims. While a 

rule would not prevent fraudsters from 

engaging in deceptive earnings claims, it 

would enhance the FTC’s ability to strip 

them of their ill-gotten gains and return 

that money to consumers. But for AMG, 

I would be skeptical about the need for 

rules regarding conduct frequently 

targeted by the FTC’s extensive fraud 

program. That said, a 13(b) fix would be 

preferable to having the FTC pursue a 

cornucopia of rules. And if a 13(b) fix 

is enacted during the pendency of this 

rulemaking, I likely would ask the 

Commission to terminate the process. 

In the wake of AMG, the exploration 

of a potential Earnings Claims rule is 

appropriate for two reasons. First, 

whether false earnings claims are made 

by frauds or legitimate businesses, no 

benefit accrues to consumers or 

competition. In fact, a 2020 FTC Data 

Spotlight about ‘‘income scams’’ stated 

that the median loss associated with 

business and work-at-home 

opportunities is $3,000.2 Consumer 

losses related to deceptively marketed 

investment seminars are even higher, 

exceeding $16,000.3 For decades, the 

Commission has challenged deceptive 

earnings claims in connection with 

coaching and mentoring schemes, multilevel marketing (‘‘MLM’’) arrangements, 

and work-from-home or other business 

opportunity scams, to name a few.4

Despite decades of aggressive 

enforcement and extensive consumer 

and business education efforts, 

deceptive earnings claims persist. 

Second, consumers cannot analyze 

the costs and benefits of investing 

significant resources to pursue 

coaching, training, MLM, or educational 

opportunities without accurate 

representations from sellers. But the 

true value of these opportunities is best 

assessed by the entities offering them. In 

other words, we see significant 

information asymmetries between 

consumers and the entities that make 

earnings claims. The monetary value of 

an opportunity is likely the central, 

material claim that consumers consider 

before spending hundreds, thousands, 

or even tens of thousands of dollars on 

financial-improvement opportunities. 

This ANPRM seeks information on how 

to ensure that when disclosures are 

made, they are substantiated. 

For these reasons, I do not oppose an 

ANPRM that explores ways to 

incentivize establishing a reasonable 

basis for earnings claims. 

[FR Doc. 2022–04679 Filed 3–10–22; 8:45 am] 

BILLING CODE 6750–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket Number USCG–2022–0085] 

RIN 1625–AA00 

Temporary Safety Zone; Tugs 

Champion, Valerie B, Nancy Anne and 

Barges Kokosing I, Kokosing III, 

Kokosing IV Operating in the Straits of 

Mackinac, MI 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Coast Guard is 

establishing a temporary safety zone for 

the navigable water within a 500-yard 

radius of several tugs and barges in the 

Straits of Mackinac. The safety zone is 

needed to protect personnel, vessels, 

and the marine environment from the 

potential hazards created by the work, 

survey, and inspection conducted 

within the Straits of Mackinac. Entry of 

vessels or persons into the zone is 

prohibited unless specifically 

authorized by the Captain of the Port 

Sault Sainte Marie or their designated 

representative. Due to the lengthy 

duration of this safety zone, the Coast 

Guard is accepting and reviewing public 

comments until March 31, 2022. While 

this document is effective beginning 

April 15, 2022, the Coast Guard reserves 

the right to modify the safety zone if an 

issue is raised by the public comments 

that requires such a modification. We 

invite your comments on this proposed 

rulemaking. 

DATES: Comments and related material 

must be received by the Coast Guard on 

or before April 11, 2022. 

ADDRESSES: You may submit comments 

identified by docket number USCG– 

2022–0085 using the Federal Decision 

Making Portal at https://

www.regulations.gov. See the ‘‘Public 

Participation and Request for 

Comments’’ portion of the 

SUPPLEMENTARY INFORMATION section for 

further instructions on submitting 

comments. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this rule, call or 

email LT Deaven S. Palenzuela, Sector 

Sault Sainte Marie Waterways 

Management Division, U.S. Coast Guard 

at (906) 635–3223 or email 

ssmprevention@uscg.mil. 

SUPPLEMENTARY INFORMATION: 

I. Table of Abbreviations 

CFR Code of Federal Regulations 

DHS Department of Homeland Security 

FR Federal Register 

NPRM Notice of proposed rulemaking 

§ Section 

U.S.C. United States Code 

II. Background, Purpose, and Legal 

Basis 

On February 3, 2022, the Project 

Manager of Kokosing Industrial notified 

the Coast Guard that they are contracted 

by American Transmission Company 

(ATC) for the pupose of protecting their 

new 138kV submarine power cables 

installed in the Straits of Mackinac RNA 

in 2021. Pursuant to 33 CFR 165.944, 

Kokosing sent the Coast Guard a letter 

notifying their 2022 project proposal 

and request to anchor and work inside 

the regulated navigation area (RNA) 

within one nautical mile of submerged 

pipeline/cable. 

The Captain of the Port Sault Sainte 

Marie (COTP) has determined that 

potential hazards associated with the 

work, survey, and inspection of 

underwater infrastructure within the 


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