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All ads must be truthful and more

by | Sep 2, 2015 | Business Formation & Planning

The Federal Trade Commission governs the truth-in-advertising regulations for advertisers. The agency is guided by these principles under the Federal Trade Commission Act:

— All advertising has to be truthful and can’t deceive consumers

— Advertisers have to have evidence that will back up any claims they make

— Advertisements must be fair

Advertisements are considered to be deceptive under the following conditions:

— Makes statements or omits material that would mislead reasonable consumers

— Makes claims or fails to include information considered to be “material,” i.e., vital, to decisions consumers make to use or buy a product

The Federal Trade Commission considers advertisements to be unfair if they are likely to cause consumers to suffer substantial injuries that would not be avoided reasonably, and also if they are not otherwise outweighed by potential benefits to consumers.

When investigating claims of deceptive advertising, the FTC examines the advertisement from the vantage point of a “reasonable consumer” reading the ad. They focus less on specific words but the context of the ad in its entirety — the photos, phrase and words — in order to conclude what the ad conveys to consumers.

Both “implied” and “express” claims are examined. Implied claims infer or indirectly reference an assertion, like “XYZ disinfectant kills bacteria that cause staph.” They never actually say that their product prevents staph, but their ad implies it will.

An express claim comes right out and declares something as fact, e.g., “Using XYZ disinfectant prevents staph infections.” The act requires that advertisers have proof to substantiate claims made in their ads.

Other laws for certain specific products may also be applicable. To learn whether your ad meets all legal criteria, a consult with a business law attorney may be helpful.

Source: Federal Trade Commission, “Advertising FAQ’s: A Guide for Small Business,” accessed Sep. 02, 2015

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