The FTC Act: honest ads, reviews and subscriptions
The main federal law against deceptive marketing covers businesses of every size. Here is the plain-English version, with the review, subscription and noncompete rules as they stand in October 2026.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 29, 2026.
The Federal Trade Commission Act (FTC Act) is the main federal law against unfair and deceptive business practices, and the Federal Trade Commission (FTC) enforces it. It matters if you advertise, collect reviews or sell subscriptions. We boil it down to the Glass-Counter Claims Check. Official text: 15 U.S.C. 41 to 58.
- Section 5 bans unfair or deceptive acts or practices. Its text sets no small-business cutoff.
- Since October 21, 2024, a Reviews Rule bans fake reviews, rewards for positive reviews and review suppression.
- Online subscriptions need clear terms, consent and a simple way to cancel.
- In 2026 the top civil penalty is $53,088 per violation, for knowingly breaking an FTC rule or violating a final FTC order.
Who it covers
| Group | Covered? | Note |
|---|---|---|
| Businesses of any size | Yes | No size cutoff in section 5 |
| Banks, federal credit unions, common carriers | Not by the FTC | Excluded by section 5 |
| Nonprofits | Depends | Only if organized for profit, its own or its members' |
| Tax preparers, including us | Yes, Safeguards Rule | See GLBA and HIPAA |
The numbers
| Item | Amount or date | Year |
|---|---|---|
| Top civil penalty per violation | $53,088 | 2026 |
| Older Negative Option Rule restored; noncompete rule removed | February 12, 2026 | 2026 |
Source: 16 CFR 1.98
Our checklist
We call it the Glass-Counter Claims Check.
- Claims: what a reasonable customer takes from each ad matches the facts.
- Ties: gifts, pay and family or business links shown in plain view, no click.
- Reviews: real customers only, no rewards for positive ones, insiders identified, no "all reviews" claim while hiding low ones.
- Renewals: terms before billing details, clear consent, a simple way to stop charges.
Mistakes people make
- Hiding a disclosure behind a click or hover, which the Reviews Rule's definition rules out.
- Assuming only the influencer is responsible. The advertiser can be liable too.
- Letting staff or relatives post five-star reviews without saying who they are.
When to call an attorney: an FTC or state attorney general letter arrives, or a subscription or review program must satisfy several laws at once. A CPA cannot advise on those.
Common questions
Does the FTC Act apply to a small business?
Generally yes: section 5 has no size cutoff. Banks, federal credit unions and common carriers are excluded.
Is the click-to-cancel rule in effect?
No. The Eighth Circuit vacated it July 8, 2025, and the FTC restored the older rule February 12, 2026. As of October 2026 we found no proposed replacement. ROSCA and [Illinois renewal law](/small-business-laws/illinois/automatic-contract-renewal-act/) can still apply.
Can I give a discount for a review?
Not one tied to a positive review; the Reviews Rule bars rewards that depend on sentiment. Other rewards still need a clear disclosure if readers would not expect them.
Official sources
- FTC: Policy Statement on Deception
- eCFR: 16 CFR Part 465, consumer reviews and testimonials
- eCFR: 16 CFR Part 255, Endorsement Guides
- Federal Register: FTC civil penalty amounts for 2026
- Federal Register: Negative Option Rule restored, noncompete rule removed
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