As mentioned in our previous guide on Truth-In-Advertising laws, there are regulations in place to protect consumers from unfair and deceptive advertisements. As a small business owner, it might be difficult to determine if your advertising campaign complies with the many Truth-In-Advertising laws enforced by the Federal Trade Commission (FTC) as well as state and local governments. If your ad is deceptive, you risk facing legal problems whether you intended to mislead the customer or not. Here are three tips to consider when evaluating the legality of advertisements for your small business:
1. Be careful if you use the word “free”
The FTC and consumer protection agencies tend to carefully scrutinize advertisements that offer “free” merchandise or services to make sure consumers are not misled. Basically, if your business advertises something for free, you cannot recoup the cost of the “free” item in any way. For example, if you have a “Buy 1 Get 1 Free” offer, you cannot raise the price of the non-free item to make up for the “free” item. Similarly, you cannot lower the quality of the “Buy 1” item to raise profit margins because that is still recouping the profits of the “free” item.
Your business should also make sure any terms and conditions associated with your “free” offer are clearly and prominently disclosed. Do not attempt to hide the real cost of the critical terms or conditions by putting them in obscure locations, burying them in lots of fine print, or placing them in small-type footnotes.
For more information, check out the FTC’s Guide Concerning Use of the Word “Free” and Similar Representations
2. Endorsements and testimonials should be honest
The FTC has guidelines on the use of endorsements and testimonials from consumers, experts, and organizations. Generally, endorsements and testimonials should reflect the honest opinions and experience of the endorser. For example:
- If your ad includes an endorser who you hold out as a particular expert, that person must actually possess qualifications to warrant the classification as that expert. For example, if you have a pet product and your ad depicts a veterinarian, that person should actually be a veterinarian. If it is simply a model or actor, you must disclose it in your ad in a clear and conspicuous manner.
- On a similar note, if your ad represents the endorser is an actual consumer, then an actual consumer should be used. If not, your company must clearly and conspicuously disclose that the person in the ad is not an actual consumer.
3. Paid “Influencer” posts should be disclosed as such
If you’re on Instagram, you’ve likely seen a post from an “influencer” who has partnered with a certain brand to promote a product. With advertisements evolving with social media and technology, regulators are making an effort to ensure consumers are not misled.