ADVERTISING LAWS EXPLAINED

Resource Center » Advertising Laws Explained

Every day, consumers are hit with messages that advertise a wide variety of products and services. Consumers may not realize that companies are held accountable for advertisements and that strict guidelines must be followed to present those messages to the public.

Here's a common scenario: When you're watching television, you see an advertisement that makes a claim like "Our product will make you lose 20 lbs in one week - Guaranteed!" It sounds great to you, so you call and place your order for the product . After taking it for a whole week and staying the same weight, you call them for your money back. They tell you that they cannot do that because you have to send it by registered mail by the 7th day only, and that it's now past the deadline. This is a perfect example of a company that blatantly disregards the current advertising laws!

Not familiar with the advertising laws? Let us help you!

The Federal Trade Commission (FTC) has established rules governing the advertising and marketing practices of companies. In essence, the Truth-In-Advertising laws state:

Advertising must be truthful and non-deceptive - companies can make claims about products, but they must be based on truth and not make any deceptive comments.
Advertisers must have evidence to back up their claims - companies must be able to substantiate any claims that they make in the advertisement.
Advertisements cannot be unfair - companies can not be unfair in dealing with consumers. If an item has a sign saying it is a certain price, consumers have to get it for that price. Companies must be fair in dealing with all consumers.

By requiring that companies follow the established standards, the FTC provides consumers with assurance that any claims made in advertisements have merit. Here are several links to the FTC with information on advertising and marketing regulations:

FTC Advertising Guidance
FTC Advertising Facts For Businesses
FTC Trade Regulations Rules and Industry Guides
FTC Frequently Asked Questions

Often, you will see or hear a celebrity promoting a product. When you see a celebrity talk about a product, you need to be aware that the company has to follow regulations on endorsements or testimonials. Any person promoting a product must be truthful in talking about the product, and if they are being compensated for promoting the product, it must be noted on the advertisement.

Another frequently-used marketing hook is the use of contests and promotions to drive consumer behavior. For example, new businesses sometimes sponsor drawings for trips or cars at their Grand Opening celebrations. There are several factors that must be included in the contest details when holding contests or promotions. The company can not require a purchase to be eligible to enter and they must disclose the odds of winning and all other details.

Business owners and companies should know how to protect their brands. It takes a long time to build a successful brand but it could take only days for it to go away. No matter what, it is important to follow the advertising and marketing rules that have been established. You should always look at trademarks of names and logos to protect your brand. It is well worth the time and effort!

Other Resources:
Federal Trade Commission
Better Business Bureau
European Commission of Consumer Affairs
BBB National Advertising Division

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