Advertising and Marketing On The Internet: Rules of the Road - From The FTC

A person doesn't have to look too long or too far to see false advertising on the internet. We see it everyday and we wonder if the advertiser is doing it on purpose or if they just haven't got a clue. For the most part, we believe it to be on purpose.

Whether it is to sell diet aids or webspace, a purposely manipulted (skewed) online poll connected to a product advertisement or if it is used as a recruitment tool for membership to an online marketplace, it seems that false advertising happens all of the time.

The Federal Trade Commission is the watchdog of this behavior and they do prosecute these cases. A person does not have to be a paralegal or a lawyer to understand what the FTC has to say. There is no need to hire a lawyer to figure out that all that is required of you is to be completely open and truthful about your products or whatever it is you are advertising about or for.

Before you open a business, you should thoroughly research everything possible in regards to the laws, regulations, rules and guidelines regarding the type of business you want to have and how to run it properly. The FTC has a fully operational website with all of the information you need to satisfy their requirements. If you don't have internet access, the FTC can mail brochures to you for free. Ignorance of the law or claiming after the fact that an advertisement was done in fun or to be fun, will not sit well with Federal Trade Commission. If they catch wind of a false ad, you can bet your bottom dollar you will have some serious problems ahead of you.

The FTC - In Part - States:

The Internet is connecting advertisers and marketers to customers from Boston to Bali with text, interactive graphics, video and audio. If you're thinking about advertising on the Internet, remember that many of the same rules that apply to other forms of advertising apply to electronic marketing. These rules and guidelines protect businesses and consumers - and help maintain the credibility of the Internet as an advertising medium. The Federal Trade Commission (FTC) has prepared this guide to give you an overview of some of the laws it enforces.

Advertising must tell the truth and not mislead consumers.

In addition, claims must be substantiated.

GENERAL OFFERS AND CLAIMS
PRODUCTS AND SERVICES
The Federal Trade Commission Act allows the FTC to act in the interest of all consumers to prevent deceptive and unfair acts or practices. In interpreting Section 5 of the Act, the Commission has determined that a representation, omission or practice is deceptive if it is likely to:
mislead consumers and
affect consumers' behavior or decisions about the product or service.

In addition, an act or practice is unfair if the injury it causes, or is likely to cause, is:
substantial
not outweighed by other benefits and
not reasonably avoidable.

The FTC Act prohibits unfair or deceptive advertising in any medium. That is, advertising must tell the truth and not mislead consumers. A claim can be misleading if relevant information is left out or if the claim implies something that's not true. For example, a lease advertisement for an automobile that promotes "$0 Down" may be misleading if significant and undisclosed charges are due at lease signing.

In addition, claims must be substantiated, especially when they concern health, safety, or performance. The type of evidence may depend on the product, the claims, and what experts believe necessary. If your ad specifies a certain level of support for a claim - "tests show X" - you must have at least that level of support.
Sellers are responsible for claims they make about their products and services. Third parties - such as advertising agencies or website designers and catalog marketers - also may be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims.

Advertising agencies or website designers are responsible for reviewing the information used to substantiate ad claims. They may not simply rely on an advertiser's assurance that the claims are substantiated. In determining whether an ad agency should be held liable, the FTC looks at the extent of the agency's participation in the preparation of the challenged ad, and whether the agency knew or should have known that the ad included false or deceptive claims.

To protect themselves, catalog marketers should ask for material to back up claims rather than repeat what the manufacturer says about the product. If the manufacturer doesn't come forward with proof or turns over proof that looks questionable, the catalog marketer should see a yellow "caution light" and proceed appropriately, especially when it comes to extravagant performance claims, health or weight loss promises, or earnings guarantees. In writing ad copy, catalogers should stick to claims that can be supported. Most important, catalog marketers should trust their instincts when a product sounds too good to be true.

Other points to consider:

Disclaimers and disclosures must be clear and conspicuous. That is, consumers must be able to notice, read or hear, and understand the information. Still, a disclaimer or disclosure alone usually is not enough to remedy a false or deceptive claim.

Demonstrations must show how the product will perform under normal use.

Refunds must be made to dissatisfied consumers - if you promised to make them.

Advertising directed to children raises special issues. That's because children may have greater difficulty evaluating advertising claims and understanding the nature of the information you provide. Sellers should take special care not to misrepresent a product or its performance when advertising to children. The Children's Advertising Review Unit (CARU) of the Council of Better Business Bureaus has published specific guidelines for children's advertising that you may find helpful.

Dot Com Disclosures: Information About Online Advertising, an FTC staff paper, provides additional information for online advertisers. The paper discusses the factors used to evaluate the clarity and conspicuousness of required disclosures in online ads. It also discusses how certain FTC rules and guides that use terms like "writing" or "printed" apply to Internet activities and how technologies such as email may be used to comply with certain rules and guides.

Source: The FTC