Educate Yourself on Truth in Advertising Requirements

Educate Yourself on Truth in Advertising Requirements

Educate Yourself on Truth in Advertising Requirements

The following was excerpted from the book Marketing Fear for Fun and Profit which is available on Amazon and Kindle.

The ultimate heavyweight in the ring of false advertising regulation is the Federal Trade Commission (FTC). Beyond the Better Business Bureau, Angie’s List, Google Rankings, and all the other business gossip and so-called oversight entities, really, only the FTC and the court system can hit you in the cajones if you cross the product promise line.

Here is what the Federal Trade Commission has to say on its website about false advertising messages:

Advertising FAQ’s: A Guide for Small Business

What truth-in-advertising rules apply to advertisers? Under the Federal Trade Commission Act:

  • Advertising must be truthful and non-deceptive;
  • Advertisers must have evidence to back up their claims; and Advertisements cannot be unfair.

Additional laws apply to ads for specialized products like consumer leases, credit, 900 telephone numbers, and products sold through mail order or telephone sales. And every state has consumer protection laws that govern ads running in that state.

What makes an advertisement deceptive?

According to the FTC’s Deception Policy Statement, an ad is deceptive if it contains a statement – or omits information – that:

  • Is likely to mislead consumers acting reasonably under the circumstances; and
  • Is “material” – that is, important to a consumer’s decision to buy or use the product?

What makes an advertisement unfair?

According to the Federal Trade Commission Act and the FTC’s Unfairness Policy Statement, an ad or business practice is unfair if:

  • It causes or is likely to cause substantial consumer injury which a consumer could not reasonably avoid; and,
  • It is not outweighed by the benefit to consumers.

How does the FTC determine if an ad is deceptive?

A typical inquiry follows these steps:

The FTC looks at the ad from the point of view of the “reasonable consumer” – the typical person looking at the ad. Rather than focusing on certain words, the FTC looks at the ad in context – words, phrases, and pictures – to determine what it conveys to consumers.

The FTC looks at both “express” and “implied” claims. An express claim is literally made in the ad. For example, “ABC Mouthwash prevents colds” is an express claim that the product will prevent colds.

An implied claim is one made indirectly or by inference. “ABC Mouthwash kills the germs that cause colds” contains an implied claim that the product will prevent colds.

Although the ad doesn’t literally say that the product prevents colds, it would be reasonable for a consumer to conclude from the statement “kills the germs that cause colds” that the product will prevent colds. Under the law, advertisers must have proof to back up express and implied claims that consumers take from an ad.

The FTC looks at what the ad does not say – that is, if the failure to include information leaves consumers with a misimpression about the product. For example, if a company advertised a collection of books, the ad would be deceptive if it did not disclose that consumers actually would receive abridged versions of the books.

The FTC looks at whether the claim would be “material” – that is, important to a consumer’s decision to buy or use the product. Examples of material claims are representations about a product’s performance, features, safety, price, or effectiveness.

The FTC looks at whether the advertiser has sufficient evidence to support the claims in the ad. The law requires that advertisers have proof before the ad runs.

What kind of advertising claims does the FTC focus on?

The FTC pays closest attention to ads that make claims about health or safety, such as:

  • ABC Sunscreen will reduce the risk of skin cancer.
  • ABC Water Filters remove harmful chemicals from tap water.
  • ABC Chainsaw’s safety latch reduces the risk of injury.
  • Ads that make claims that consumers would have trouble evaluating for themselves, such as:
  • ABC Refrigerators will reduce your energy costs by 25%.
  • ABC Gasoline decreases engine wear.
  • ABC Hairspray is safe for the ozone.

Ads that make subjective claims or claims that consumers can judge for themselves (for example, “ABC Cola tastes great”) receive less attention from the FTC.

What All This Means

What all this means to you is that you have to be careful and calculated in how you describe, present and market your best-product-ever to the public. The last thing you want to do while you’re selling the cure for all ills is to draw the attention of the truth police.

 

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