To run a successful marketing campaign, you must comply with various laws and regulations. In particular, you must comply with “truth in advertising” laws. But what is truth in advertising, and how do you ensure that your ads follow the rules? Below, our marketing law attorneys break down what you need to know.
What Is Truth in Advertising?
According to truth in advertising laws, every advertisement must avoid being unfair, deceptive, or misleading. Although the laws themselves are fairly complex, the idea behind them is to prevent leaving consumers with false impressions and unmet expectations.
- Advertisements can be persuasive and enticing, but not misleading.
- Every claim for certain products, such as food products, must be substantiated with scientific evidence.
- An advertisement should always be accurate, i.e., the benefits of using a product should not be exaggerated.
There’s a fine line between truthful and misleading advertising, and it’s a tricky balance to get right. Our marketing attorneys can help with your affiliate and small business marketing needs if you’re unsure how to approach your next campaign.
What Is “Deceptive” Advertising?
Deceptive advertising is simply any advertisement that could mislead, trick, or deceive the average consumer. It doesn’t matter if you don’t intend to deceive anyone—all that matters is how the content could be perceived.
Examples of deceptive advertising include:
- Claiming, or implying, that a customer will achieve a certain outcome—such as a higher salary––if they take your course. This includes highlighting results that aren’t typical.
- Asserting that a food is 100% organic when it may contain some artificial ingredients.
- Claiming that a supplement reduces fatigue, but having no scientific evidence to support this claim.
- Using fake reviews to promote a new product or service (typically, this means buying reviews online).
- Reviewing a product positively without disclosing that you’re a brand affiliate or receiving compensation.
- Advertising that all products are discounted at 50% off, when there are many items excluded from the sale.
Essentially, if there’s a risk that the average consumer could be deceived or misled by an advertisement or marketing campaign, it could attract unwanted attention. Specifically, it could trigger an investigation from the Federal Trade Commission (FTC).
The Federal Trade Commission (FTC) and Deceptive Advertising
The Federal Trade Commission (FTC) and deceptive advertising go hand-in-hand. That’s because the FTC is the government body responsible for reviewing, investigating, and sanctioning unfair marketing practices. In other words, it’s the main body responsible for enforcing advertising law across the U.S.
The FTC has two primary jobs:
- Protect consumers from potentially misleading or even harmful advertising content; and
- Prevent businesses from using unfair marketing tactics to get an advantage over competitors.
The FTC is designed to promote a fair marketplace—and it has significant power to sanction any business it believes has used deceptive advertising. But who falls under the FTC’s jurisdiction, and what penalties can the FTC impose? Let’s take a look.
Who Must Comply With FTC Truth in Advertising Laws?
FTC truth in advertising laws affect virtually all business owners and affiliate marketers doing business in the United States. If you’re advertising to consumers in any way, shape, or form, you could fall under FTC jurisdiction.
There are only limited exceptions, including banks and insurance companies. Unless an attorney advises you otherwise, it’s safest to assume that FTC advertising rules apply to your marketing.
Consequences of Breaching Truth in Advertising Laws
The FTC may start enforcement action against you if it has reason to believe that you’re engaging in unfair marketing practices.
- The first step is usually a warning letter. The letter does not mean that you’re facing legal action, but it means that your advertising practices have been deemed problematic.
- If you don’t take action to change your advertising practices, you could face civil penalties of over $50,000 per violation.
- There’s also a risk of further civil lawsuits, depending on the extent of the allegations against you.
- In some cases, the FTC can freeze your business’s assets. Then, they’ll appoint a receiver to manage your company’s finances, which significantly impacts your day-to-day operations.
Breaching truth in advertising laws can irreparably damage your business. Our team can ensure that you understand the rules so you can avoid costly civil penalties.
How to Comply with Truth in Advertising Laws
Whether you run a small business or an advertising agency, you should prioritize FTC compliance. And while our team can help if you’re facing FTC action, prevention is always your best defense. So, with that in mind, here are five tips to help you stay on the right side of FTC advertising law.
- Substantiate claims with evidence. All claims you make should be supported with evidence. This is especially important if you’re marketing medicine, food, or anything health-related, but it’s applicable to any industry.
- Check which rules apply to you. If you’re unsure which specific laws, regulations, or FTC guidance to follow, then seek legal advice before releasing an ad or starting a campaign.
- Be transparent. Disclose any material facts, such as a pre-existing brand relationship, if you’re reviewing or advertising a new product. Think of it this way: if there’s any material fact which could bias your opinion of a product you’re advertising, you should disclose it.
- Use clear disclosures. Display disclosures for paid ads and affiliate marketing prominently. A good rule to follow is to place disclosures as close to the marketing content as possible, such as a YouTube video overlay, or an italicized statement after a product review in a blog post.
- Arrange a compliance review. An experienced marketing and eCommerce attorney can evaluate your truth in advertising compliance and help you avoid FTC investigations. They can also offer suggestions and guidance as you shape your next campaign.
Concerned About FTC Compliance? Contact Gordon Law!
The FTC takes deceptive advertising seriously. If you’re worried about whether your campaigns comply with marketing laws, our attorneys are happy to assist. We will explain how the laws apply in your situation, perform a compliance review, and advise what steps you might take to ensure FTC compliance.
From affiliate marketers to ecommerce store owners, our business attorneys understand how marketing laws affect you. We know how to help you avoid legal pitfalls and how to successfully respond to FTC challenges. Whether you’re hoping to reduce an FTC fine or settle out of court, our team is on hand to assist.
Ready to learn more about complying with truth in advertising laws? Contact Gordon Law by phone today or complete our contact form to discuss how we might help.
