10 Major Advertising Law-Related Concepts

Summary

This article, entitled -- "10 Major Advertising Law-Related Concepts" -- examines 10 of the most important concepts in advertising law. It uses the various FTC guides, policy statements and other pamphlets, reproduced in full text at this website, as the starting point for your exploration of these important ideas. As an advertiser, you need this information because there are many pitfalls and problems that could be avoided by having this knowledge.

1. Advertising Substantiation: Policy Statement

This is true whether you're an advertiser or an advertising agency. And it's true if the product you advertise is food (e.g., health claims), cosmetics, drugs (e.g., doctor recommended claims), or virtually any other product or service. If your product is regulated by the Food and Drug Administration (FDA), you should also familiarize yourself with that agency's rules concerning advertising.

2. FTC Policy Statement on Deception

Under Section 5 of the FTC Act, FTC determined that a representation, omission, or practice is deceptive if:

1. it is likely to mislead consumers acting reasonably under the circumstances; and
2. it is material, that is, likely to affect consumers' conduct or decisions with respect to the product at issue.

In a letter dated October 14, 1983 to Rep. John D. Dingell, Chairman, Committee on Energy and Commerce, from FTC Chairman James C. Miller III (Commissioners Pertschuk and Bailey dissenting), the Commission issued its FTC Policy Statement on Deception. In that letter, FTC stated that, "the Commission will find deception if there is a representation, omission or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer's detriment."

3. Comparative Advertising - FTC's Statement of Policy

On August 13, 1979, FTC issued its "Statement of Policy Regarding Comparative Advertising." At that time, FTC's staff conducted "an investigation of industry trade associations and the advertising media regarding their comparative advertising policies. In the course of this investigation, numerous industry codes, statements of policy, interpretations and standards were examined. Many of the industry codes and standards contain language that could be interpreted as discouraging the use of comparative advertising. This Policy Statement enunciates the Commission's position that industry self-regulation should not restrain the use by advertisers of truthful comparative advertising."

4. FTC Policy Statement on Unfairness

This FTC document is entitled, "FTC Policy Statement on Unfairness". It is contained in the letter dated December 17, 1980 to Senators Wendell H. Ford, Chairman, Consumer Subcommittee, Committee on Commerce, Science, and Transportation, and John C. Danforth, Ranking Minority Member, Consumer Subcommittee, Committee on Commerce, Science, and Transportation from Michael Pertschuk, FTC Chairman, and FTC Commissioners, Paul Rand Dixon, David A. Clanton, Robert Pitofsky, and Patricia P. Bailey.

In August 1994, Congress amended Section 5 of the FTC Act to provide that an act or practice is unfair if the injury it causes or is likely to cause to consumers is:

1. substantial;
2. not outweighed by countervailing benefits to consumers or to competition; and
3. not reasonably avoidable by consumers themselves

5. Guide Concerning Use of Word Free in Advertising

This publication is entitled, "FTC Guide Concerning Use of Word "Free" and Similar Representations". The Guide cites several examples of the language often used in such offers:

• "Free",
• "Buy 1-Get 1 Free",
• "2-for-1 Sale",
• "50% off with purchase of Two",

This Guide tells advertisers that these "free" offers "must be made with extreme care so as to avoid any possibility that consumers will be misled or deceived."

6. Advertising Disclosures

This FTC publication concerning advertising disclosures is called, FTC's Facts for Businesses: "Big Print. Little Print. What's the Deal?" This publication says that computer sellers - online and brick-and-mortar - "inundate consumers with advertisements for `free' or low-cost computers. The offers usually involve rebates of several hundred dollars off the computer's purchase price - if the consumer commits to a long-term contract for Internet service. Some of the offers may be good deals for consumers, but they are likely to involve complicated transactions."

This FTC publication notes that rebate promotions should clearly detail any additional terms and conditions that consumers need to know, like:

• Penalties or fees for canceling the Internet service contract early. Some rebate offers require consumers to pay back all or a portion of the rebate; others tack on an additional fee.
• Additional connection charges to access the Internet service. For example, consumers should be told that to access the Internet they may have to pay long distance phone charges, or expensive hourly surcharges for use of an 800, 888 or 877 phone number. This charge is in addition to the basic monthly Internet service fee. Consumers also should be told how to find out if local Internet access is available.
• How long before they will receive the rebate.

7. Advertising and Marketing on the Internet: Rules of the Road

This pamphlet, Advertising and Marketing on the Internet: Rules of the Road, is a useful tool if you are planning to advertise on the Internet. FTC points out 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." FTC prepared this guide to give advertisers and marketers an overview of some of the laws it enforces.

8. Guides Concerning Use of Endorsements and Testimonials in Advertising

• Consumer endorsements.
• Expert endorsements.
• Endorsements by organizations.
• Disclosure of material connections

9. Enforcement Policy Statement on Food Advertising

Go here for the full-text reproduction of FTC's "Enforcement Policy Statement on Food Advertising", issued May 1994 at this website. Among other things, this Policy Statement describes--

1. The legal framework for Commission action, and
2. What to look for when it comes to nutrient content claims (e.g., absolute nutrient content claims, comparative nutrient content claims, synonyms for nutrient content claims, implied nutrient content claims), and much more.

10. You’ve Got Spam: How to Can Unwanted Email

FTC's Publication, "You’ve Got Spam: How to `Can' Unwanted Email", offers several useful tips on how you can avoid spam, including:

• Try not to display your email address in public. That includes newsgroup postings, chat rooms, websites or in an online service's membership directory.
• Check the privacy policy when you submit your address to a website. See if it allows the company to sell your address.
• Read and understand the entire form before you transmit personal information through a website.
• Decide if you want to use two email addresses - one for personal messages and one for newsgroups and chat rooms.
• Use a unique email address.
• Use an email filter.
• Report it to the Federal Trade Commission. Send a copy of unwanted or deceptive messages to uce@ftc.gov. The FTC uses the unsolicited emails stored in this database to pursue law enforcement actions against people who send deceptive spam email.

See, generally, the following tabs in Advertising Compliance ServiceÔ for more information on the broad areas discussed in this article:

• Tab #2, General Articles.
• Tab #4, False, Unfair, Deceptive.
• Tab #5, Substantiation.
• Tab #6, Comparative Ads.
• Tab #15, New Media.
• Tab #17, Food, Drugs, Cosmetics.

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