Marketing and Advertising: What You Need to Know
No matter how wonderful a product or service may be, today’s companies have to appropriately promote themselves through marketing and advertising efforts if they wish to succeed, garner new customers and retain existing ones. Thus, it is essential that modern business owners not only understand how to effectively spread the word about what it is their company has to offer, but that they also understand any legal ramifications in doing so, and whether any particular advertising rules or regulations exist within their industries. Here is an overview of what today’s companies can do to enhance their businesses through marketing and advertising and what they need to know about the process.
Advertising and the Law
While most business owners want to showcase their product or service as being ‘the best,’ ‘the most effective’ or ‘the most innovative,’ the Federal Trade Commission Act prevents companies from making false claims through upholding truth-in-advertising. The FTC dictates that any claims made in advertisements must be truthful and accurate, that the business behind the ad has the ability to back up any statements made in ads with evidence and that the ads themselves can’t be considered unfair. While these rules apply to virtually all businesses, additional laws exist for particular types of businesses, such as those that offer products sold via mail or over the phone. It is also important for today’s business owners to note that each state has its own laws relating to advertising and consumer protection laws, so it is essential that company executives familiarize themselves with laws that pertain to their own state to ensure they stay on the right side of them.
Potential Penalties for Running Deceptive Ads
Businesses that fail to follow FTC guidelines in terms of fair advertising practices are subject to penalties, but exactly what those penalties are and how severe they will be depends largely on the nature of the infraction. The FTC or state courts may serve companies engaging in unfair marketing practices with cease and desist orders (stating that the company must immediately stop running deceptive advertisements), furnish substantiation for claims made in those ads, or pay fines in the event that they continue to run the deceptive ads after the cease and desist order is received. Civil penalties may also be imposed, and the monetary amount of these penalties will fluctuate alongside the severity of the infraction. In some cases, businesses may be required to compensate customers who purchased products or services under false pretenses or refund them for part of or the full amount spent. Furthermore, some companies are required to issue new ads countering the false claims they initially made about a product or service.
Considerations of Advertisers of Health, Nutrition or Safety Products
While all businesses are required to engage in fair advertising practices, those that offer products or services relating to health, nutrition or safety products are held to even higher standards. Therefore, these companies must have stronger substantiation to back up their advertising claims than companies that don’t sell these types of products. Generally, ads involving edible items, drugs, some types of cosmetics, diet products, vitamins or medical or surgical devices are expected to be able to produce at least two independent scientific studies to back up any claims made in advertisements.
The Use of Endorsements in Advertising
A number of important guidelines exist for companies that want to use endorsements, or someone’s support or public approval of a product or service, in their advertisements. First and foremost, the endorsements must be substantiated and offer the endorser’s honest opinion or experience about whatever is being advertised. Additionally, the advertiser must, in good faith, ensure the views of the endorser expressed in the advertisement continue to be that person’s views for as long as the advertisement runs. For example, say a Hollywood celebrity endorses a particular skin-care product, but then she suffers an extreme rash and publicly denounces it. The company advertising the product is then prohibited from using the celebrity’s endorsement of the product in its advertising moving forward.
Additional Advertising Considerations
No matter what an advertisement offers, it is essential that the advertiser use clear, conspicuous verbiage and that he or she is able to back up any claims made. Some advertising practices, such as offering money-back guarantees, free offers or warranties, have additional rules that apply, so it is important for today’s advertisers to perform their due diligence with respect to the type of claim or offer they are making.
It is easy for modern business owners to concentrate their efforts on designing and implementing powerful ad campaigns, rather than focusing on the legal ramifications associated with what they are promoting. However, advertisers who fail to follow guidelines will inevitably face consequences.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.