Do Your Advertisements Comply with FTC Requirements?

Do Your Advertisements Comply with FTC Requirements?
by Chris Hinson

The Federal Trade Commission enforces laws to prevent unfair methods of competition and unfair or deceptive acts or practices in business. The FTC has the authority to regulate advertising practices to prevent unfair or deceptive advertising. The FTC has issued guidelines and policy statements that let businesses know how to avoid advertising practices that are unacceptable. Some of these guidelines and policy statements can be accessed through the FTC website at www.ftc.gov.

Using the word "Free" or Similar Representations.

The FTC has issued a guide on the use of the word "free" and similar representations in advertising. The FTC urges advertisers to exercise extreme care when making "free" offers to avoid misleading consumers.

In order to offer something for "free," the seller must not recoup the cost of the "free" merchandise in any way. This means that if the free item is obtained by purchasing another product, the product that is being sold cannot be of lower quality or quantity and its price cannot be increased to make up for the "free" product. It must be offered at the same condition and price that it would be sold at without the "free product".

There are further restrictions on the length and amount of time that a "free" offer can be made with any particular product or service in a trade area. A product or service should not be advertised with a "free" offer for more than 6 months in any 12 month period. Furthermore, 30 days should elapse between offers and a "free" offer should not be promoted more than 3 times in a 12 month period.

Additional guides are given regarding the promotion of "free" introductory offers, the percentage of total sales that should be made with the "free" offer, the use of similar words such as "bonus" or "gift" and others. Check out the FTC website for more information.

Using Endorsements and Testimonials in Advertising.

The FTC has issued a guide on the use of endorsements and testimonials in advertising, which covers statements by consumers, experts, and organizations. In general, endorsements must reflect the honest opinions and experience of the endorser. Also, an endorser should not make any statement that could not be substantiated if it was made by the advertiser. The advertiser need not use the actual words of the endorser, but the meaning or context must not be changed. Furthermore, if the advertiser represents that it is using the actual words of the endorser then it must in fact use them.

When an advertiser represents that the endorser is an actual consumer, an actual consumer should be used in both video and audio presentations. If this is not done, then the advertiser must clearly and conspicuously disclose that the person in the advertisement is not an actual consumer.

When an advertiser represents that the endorser is an expert, the endorser must actually possess qualifications that confer expertise with respect to the endorsement. Endorsements that are made by consumers and organizations may be considered expert endorsements. If so, they must comply with the requirements for expert endorsements as well.

The FTC guides concerning use of endorsements and testimonials in advertising contain further information regarding the types of statements that may be made by various endorsers as well as the substantiation that is required for certain statements. The guide can be found on the FTC website (www.ftc.gov).