Marketers today face a constantly evolving landscape of laws and regulations affecting their businesses. In 2009, the Federal Trade Commission (FTC) published final guidelines affecting online marketing or direct website advertising. Subsequent to the implementation of these regulations, marketers have faced significant liability for non-compliance. The new regulations have had numerous workshops and modifications to provide clarifications and guidance. The FTC revised "Green Guides" in 2012, in order to help marketers avoid making misleading environmental claims, while in 2013; the FTC revised the online advertising disclosure guidelines for "Dot Com" disclosures, and hosted a workshop on updated privacy guidelines.
A slew of advertising laws were enacted that predate the FTC's guidelines, including the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), the Children's Online Privacy & Protection Act (COPPA), and the Telemarking and Consumer Fraud and Abuse Prevention Act (TCPA). The FTC is deeply immersed in ensuring proper and non-misleading disclosures to ad viewers. Hence, it is imperative that marketers understand how to navigate their way around the complex and frequently nuanced requirements.
1. Claims Substantiation
Marketers and advertisers must be able to substantiate the claims they make about their products and services. The FTC enforces advertising standards under the Federal Trade Commission Act (FTC Act) which mandates that advertisements be fair, non-deceptive and that advertisers back-up their claims.
- Before a company runs an ad, the FTC requires the company to have a "reasonable basis" for the claims: objective evidence that supports the claim; reasonable basis varies depending on the type of product or service;
- Support for all claims must be provided by a reliable study, as opposed to anecdotal evidence;
- Marketers should forward support for all general and specific claims contained in the ad;
- Ensure substantiation of all express and implied claims;
- Make certain all disclosures are clearly readable and visible so viewers can read the entire disclaimer;
- Disclose any charges beyond the advertised purchase price (e.g., shipping and handling); and
- Claims must be substantiated before disseminated (utilizing expert testimony, extrinsic evidence, studies and tests is definitely a best practice).
2. What Deceptive Advertising May Mean
Deceptive advertising may mean more than "deceptive" in the conventional sense. On March 5, 2015, a major news story broke that a direct marketing company selling "as-seen-on-TV" products including Snuggies and the Magic Mesh door covers agreed to pay the FTC $7.5 million in consumer restitution in connection with its allegedly deceptive "buy-one-get-one-free" promotions. Allstar Marketing Group, LLC led consumer to believe if they just paid "processing and handling" fees, they would receive two $19.95 products for "less than $10 each." However, according to the complaint, when all costs were factored in, the total price jumped to $35.85. This case underscores the necessity for marketers to be completely truthful in their advertisements.