Marketing is key to growing your brand and generating new business. But did you know that if you sell or promote goods or services in any capacity, then you might be subject to Federal Trade Commission (FTC) oversight?
FTC compliance is commonly overlooked, especially when you’re focused on running your business. However, these strict advertising rules apply to any business, no matter how big or small. And as the year draws to a close, it’s the perfect time to consider whether you’re meeting your compliance obligations.
If you find FTC rules overwhelming, don’t worry. This is where we can help. Below, our advertising and marketing attorneys break down the most common FTC compliance mistakes and explore how you can increase your chances of advertising success in the new year and beyond.
What Is the FTC?
The Federal Trade Commission, or FTC, is a federal agency committed to consumer protection. It upholds consumers’ interests by preventing businesses from using misleading or deceptive practices to sell goods and services.
In short, by stopping companies from using unfair tactics to grow their business, the FTC promotes healthy marketplace competition—which directly benefits consumers. It achieves this goal by holding commercial businesses to strict compliance standards, which we’ll explore below.
Who Must Comply With FTC Rules?
The simple answer is anyone who advertises on the internet must comply with FTC rules and guidelines. Specifically, the following groups must be FTC compliant or else risk facing significant financial penalties:
- Affiliate marketers
- Content creators
- Business owners
- Marketing companies
Unsure if you’re required to follow FTC marketing and advertising rules? Give the Gordon Law team a call and we can steer you in the right direction.
Which Rules Must Businesses Follow?
If you fall under the FTC’s jurisdiction, then you must, at a minimum, comply with the FTC Act. The Act sets rules and standards to prevent unfair marketing practices and it’s crucial that you understand how it might affect you.
There are other rules you must abide by, depending on what type of marketing or advertising you do. For example, if you use endorsements, you must follow FTC rules on using testimonials. And anyone claiming they have eco-friendly “green” products must have scientific evidence to support these assertions.
Given how quickly consumer law evolves, and how complex the rules can be, it’s always worth considering seeking legal advice to ensure you are complying with the relevant provisions.
Penalties for Non-Compliance
Should a business fail to comply with FTC rules, they could face consequences including:
- Formal warning letters
- Civil lawsuits
- Financial penalties
Fines for FTC non-compliance can be significant—up to $50,120 per violation! This is why it’s so crucial to seek legal advice if you’re at all unsure whether you need a compliance checkup. But in the meantime, here are six common errors you should avoid when you’re assessing your FTC compliance.
1. Paying for Reviews
It might seem obvious, but don’t pay for fake reviews! Not only could this be deemed unfair or deceptive, but it could damage your business reputation.
Sure, reviews are hugely beneficial for businesses. But the best way to secure meaningful and helpful reviews is to ask consumers to review a product and make it easy for them to do so e.g. through a clear email link.
Remember, consumers need to know they can trust your brand. It’s better to have slightly less reviews from genuine consumers than multiple false reviews.
2. Offering Incentives for Reviews
Even if you don’t pay for reviews, you can’t compel or incentivize people to leave reviews either. Why? Well, there are two main reasons.
- The consumer is unlikely to disclose that they received an incentive for leaving the review. This means that other consumers have no way of knowing about the incentive.
- Offering gift cards or discounts if someone leaves a review could mean they’re more likely to leave a positive review. Not only is this potentially misleading to other consumers, but it could be deemed an unfair marketing tactic.
Make it easy and convenient for consumers to leave reviews, but don’t incentivize them to do so.
3. Failing to Disclose Sponsored Content
To comply with FTC requirements, affiliates and influencers must disclose any material business connections they have. Consumers can then bear this relationship in mind when they decide how much “weight” to give your product review, opinion, or endorsement.
Specifically, you must disclose:
- Your relationship with a brand e.g. brand ambassador
- Commission you receive and how you receive it e.g. affiliate links
- “Perks” received e.g. a free restaurant meal in exchange for a review
Include prominent disclosures that are readily visible, such as at the top of a blog post, or a statement within a YouTube video.
4. Making Disclosures Unclear
Even if you do disclose an affiliation or relationship, you could still fall short of FTC compliance if you don’t make the disclosure sufficiently clear. The goal is to ensure that consumers can easily spot the disclosure without actively searching for it. So, for example, a single “#ad” hashtag buried between multiple hashtags on an Instagram post is unlikely to be clear enough.
You might place disclosures in the following places:
- Within video content (visually and audibly)
- Superimposed onto an Instagram post
- At the beginning of social media posts e.g. Instagram captions
For example, rather than saying you have a commission link for a product, be specific that you are paid whenever someone shops through this link. The more transparent you are, the better your chances of FTC compliance.
5. Making Unsubstantiated Claims
To protect consumers, you can’t claim that a product offers certain health benefits unless there’s scientific evidence e.g. research papers and studies to directly support your claim. Otherwise, you risk being accused of manipulating consumers into falsely relying on your product. You must use scientific evidence to support assertions you make if you sell or endorse products including the following:
- Supplements
- Foods
- Medicines
- Health and fitness devices
Unsure how to comply with this rule? Our team can explain how much evidence you’ll need to support assertions you make, depending on the product you’re selling or marketing.
6. Implying Guaranteed Results
There’s no such thing as guaranteed success. Implying that consumers will achieve a certain goal, or outcome, by purchasing your product is misleading, and so it’s against FTC rules. Examples of potentially “deceptive” claims include:
- Claiming (or implying) that everyone who takes your course will earn a certain income level.
- Promoting an above-average result and implying that everyone who uses your product can expect the same result.
- Implying that everyone who signs up for your online job-hunting class will find a better job.
Put simply, implying guaranteed results misleads consumers and could even cause emotional, financial, or physical harm. So, be sure to use examples that are typical of the average results or experience. Use obvious disclaimers and manage consumers’ expectations to avoid being misleading.
Steps to FTC Compliance
So, with all that in mind, how can you improve your FTC compliance? Here’s a summary of steps to take.
- Make it easy for consumers to leave product reviews, but never offer incentives for doing so.
- Don’t pay for reviews. Let the genuine reviews speak for themselves.
- Always disclose any connections you have, however tenuous, which could influence your review or opinion on a product’s effectiveness.
- Err on the side of caution when declaring material connections, sponsored content, and affiliations. Disclose any such connections you have close to your endorsement or positive comments.
- Give every individual piece of content its own disclosure. One disclosure does not cover all content.
- Never make claims about a product’s effectiveness without evidence to support the claims.
To ensure FTC compliance, reach out to our experienced advertising attorneys for guidance.
Unsure About FTC Compliance? Contact Gordon Law!
Are you concerned about FTC investigations or FTC compliance? Then call Gordon Law. With over 10 years’ experience in defending clients against FTC investigations, we know how to help you handle FTC complaints.
Whether you’re worried about a fine, about to complete your annual marketing review, or you’re simply unsure how to meet your compliance obligations, let our experienced team help you today!
Don’t let the stress of FTC investigations overwhelm you. Make 2025 a year of marketing success! To learn more about Gordon Law’s advertising and marketing legal services, get in touch today.
