How to Get into Trouble for 'Unfair' Advertising - Free Enterprise
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How to Get into Trouble for 'Unfair' Advertising

When you're marketing your small business, you might be tempted to push the envelope. You may want to exaggerate your product's effectiveness or fluff up its quality level. But be wary. There's a line you shouldn't cross. You don't want to accidentally run afoul of fair advertising rules.

So it's good to give yourself a quick reminder now and then about the basics of fair advertising.

Here's a quick rundown of what you need to know:

What are the fair advertising requirements?

Under the Federal Trade Commission Act, ads must:

  • Be truthful and non-deceptive
  • Have evidence to back up their claims
  • Not be unfair

What qualifies as "deceptive" advertising?

Advertisements can be deemed deceptive if:

  • They are likely to mislead consumers, and
  • The deception ultimately effects the consumer's decision to purchase the item.

What is "unfair" advertising?

Ads can be deemed unfair if:

  • They cause a substantial consumer injury that could not be reasonably avoided, and
  • The injury is not outweighed by consumer benefit.

Do you need evidence to back up advertising claims?

Remember that you will also need some sort of evidence to back up claims in your ads. Reebok advertised that its EasyTone walking shoes toned and strengthened muscles. Turns out, they didn't have anything to prove this claim. They ended up settling with the FTC over the "deceptive advertising" for $25 million.

What type of ads does the FTC scrutinize?

The FTC says on its website that it pays particular attention to ads that tout health or safety benefits. They also pay closer attention to ads that claim benefits consumers would have difficulty evaluating themselves. For example, claims that a product is environmentally-friendly would be difficult for individuals to verify.

The FTC generally will go after advertising that is more national in scope. This doesn't mean you can freely market your small business with no regard to fair advertising rules. State and local agencies may also crack down on deceptive ads.

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