October 10, 2020
When you launch a marketing campaign, there are many regulations out there, depending on your industry, that you need to be aware of.
If you deal with health foods, for example, you can’t make outlandish claims about their unverified weight loss properties. In order to protect consumers, the government has stepped in to reign in advertisers who historically had been known to use all sorts of deceptive tactics to sell more products.
A couple examples include the FTC going after New Balance because they claimed that their shoes could shape butt muscles, and they had no real evidence of it. In another case, the FTC permanently banned 7 Day Marketing from ever marketing via infomercials again because of deceptive claims made about a 7 Day Full Body Cleanse.
There is a whole suite of laws that are set forth by the Federal Trade Commission (FTC) that regulate what advertisers are allowed to say. Collectively, these are known as the Truth in Advertising Laws.
While these are the federal laws that apply across the U.S., there are also state and local regulations that may apply in your region in addition to these.
While you might not need legal counsel reviewing each ad your marketing team puts together, should your team have any doubts about particular language or approaches, it’s a a good idea to run it past a set of legal eyes. Sometimes simply rephrasing something slightly can help you cover your bases, while still promoting a product or service with attractive advertising.
BizCounsel can help with just this by matching you with a small business lawyer at a small business budget to help you take care of your business’s legal needs without breaking a sweat!
Now that you have a general idea of what Truth in Advertising laws are, we’ll go into the details of what you need to know about them.
Why Do We Need These Laws?
As we mentioned previously, advertisers’ goals are to sell more products, and when left completely unchecked, things can get out of hand. Think about your stereotypical turn-of-the-century snake oil salesman. They made all sorts of claims about the benefits of using this product, when it turned out it was basically just a scam. So, the FTC has put together laws that protect consumers against false or misleading advertising.
What Exactly Do Truth in Advertising Laws Do?
Ensure Truthfulness and Non-Deception
Essentially, these laws prohibit lying in advertisements.
For example, if you say that a product costs a certain amount during a specified period of time, your store has to have this particular item for sale at that price. Truth in Advertising Laws also prohibit misleading or deceptive ads. So, if a store did have that product at the advertised price, but they knowingly only had one left without mentioning that, the ad would still be breaking the law.
Ads also cannot be deceptive in any way. For example, you can’t show an image of a product that isn’t the actual product or claim you’re selling something new when it is in fact refurbished. If an ad is created to mislead or confuse the public, it is considered deceptive and is against the law.
Promote Fact-Checking
If you’re making any claims in your commercials or promotional content, you need to make sure you’re backing them up with hard facts and science. Cite your sources and make sure anything you’re claiming with regard to your products is substantiated. Fake news on your uncle’s Facebook page is ok, but not in a paid ad that shows up in your Newsfeed.
The claims companies need to support with evidence include both explicit claims and implicit claims.
The explicit ones are easy: these are the facts and figures directly said or written outright. For example, the classic “9 out of 10 dentists recommend this brand of toothpaste” is an explicit claim and these dentists can’t be made up.
An implicit claim is one that is suggested with the ad, but not overtly stated. For example, if someone is casually talking on the phone while mowing their lawn, it can be inferred that the lawn mower is especially quiet. If this is not the reality, then the ad is highlighting an unfounded claim.
It’s important to note that a review or customer testimonial is not enough to hold up in a court of law as a valid claim.
Warn Consumers and Prevent Harm
We’ve all seen the ads where they list off potentially dangerous side effects or warnings at the end. If an activity or product can harm a consumer, then this needs to be explicitly stated by the advertisers.
Of course, harm can come about in rare cases from virtually anything under the sun, so the law doesn’t apply to everything. For example, an ad for a jetski adventure on the ocean would warrant a warning, whereas a bus tour with a certified driver would not. Yes, accidents can occur in both cases, but the likelihood of harm resulting from a rental jet ski are far greater than from a regulated tour.
Further, ads are not allowed to show openly illegal behavior, such as underage drinking, to promote their products.
Who Do These Laws Apply To?
The FTC Act that encapsulates the Truth in Advertising Laws at the federal level applies to basically any kind of advertising in any industry.
Whether it’s traditional media like TV commercials or newspaper ads, or more modern avenues like Google Search Ads or in-stream videos, these laws apply to anyone advertising to the American public.
Being a federal institution, the FTC usually only looks at nationwide ads and those that are going out to large numbers of people. These of course have the highest potential to cause harm.
How Are the Truth in Advertising Laws Enforced?
The FTC has a lot of legal power behind these laws to ensure compliance. They are able to get ads pulled off the air by contacting the broadcasters and publishers directly, such as media companies, TV networks, tech companies, and more. They can also issue fines to the offending company or institution. And lastly, they can order the advertiser to issue a corrective ad at their own expense if the claims they made were egregious and harmful enough.
Keep in mind, the FTC is not a censor and does not clear ads before they air. Often, advertising networks will have their own internal measures before approving an ad, however the responsibility ultimately lies with the businesses themselves to ensure compliance.
Summary
When running ads, you need to be careful about any claims you’re making--it’s best to be fully transparent and err on the side of caution. Being truthful and honest in your advertising isn’t just to protect yourself legally, but also to build a relationship with your customers. With so many online channels, word of mouth is easy to spread and a brand’s reputation is hard to rebuild once tarnished.
If you are unsure at any point if ads you want to run are potentially in violation of the Truth in Advertising Laws, a quick consultation with a legal professional will clear it up. BizCounsel can help you find top tier legal expertise to fit your budget, so what are you waiting for? Come explore all the ways BizCounsel can make legal easy for your business!
Sources:
https://www.ftc.gov/news-events/media-resources/truth-advertising
https://smallbusiness.chron.com/federal-truth-advertising-law-54043.html
https://www.ftc.gov/tips-advice/business-center/guidance/advertising-faqs-guide-small-business
