Did you know there are both federal and state laws governing small business advertising and marketing?
Here in the U.S., the Federal Trade Commission and various State commissions (depending upon where you advertise) have many consumer protections in place which are relevant to Internet marketing.
My purpose in bringing this to your attention is not to scare you or preach to you about being “legal” in your business (although that is important); but, all too often newbies and even experienced marketers totally ignore the fact that there are laws applicable to our industry (IM) which could severely hamper or even shut down your business (not to mention the fines, penalties, and imprisonment that could be imposed).
I would suggest to all small business owners that they spend a few minutes and just review some of the issues the FTC is concerned about.
Here is just a sampling from the FTC Small Business FAQ’s at their web site (in their own words):
- Advertising must be truthful and non-deceptive
- Advertisers must have evidence to back up their claims
- Advertisements cannot be unfair
- Every state has consumer protection laws that govern ads running in that state
- Advertisers must have proof to back up express and implied claims that consumers take from an ad
- The FTC looks at what the ad does not say – that is, if the failure to include information leaves consumers with a mis-impression about the product
- The law requires that advertisers have proof before the ad runs
- Ads that make health or safety claims must be supported by “competent and reliable scientific evidence” – tests, studies, or other scientific evidence
- Offering a money-back guarantee is not a substitute for substantiation. Advertisers still must have proof to support their claims.
- “Bait and switch” advertising – It’s illegal to advertise a product when the company has no intention of selling that item, but instead plans to sell a consumer something else, usually at a higher price.
- My company distributes a catalog of products manufactured by other companies. Rather than just repeating what the manufacturer says about a product, catalog marketers (including companies with online catalogs) should ask for material to back up the claims.
- The FTC pays particular attention to ads aimed at children because children may be more vulnerable to certain kinds of deception. Advertising directed to children is evaluated from a child’s point of view, not an adult’s.
- A federal law requires websites to obtain verifiable parental consent before collecting, using, or disclosing personal information from children, including their names, home addresses, email addresses, or hobbies.
- The labeling and advertising of clothing and textiles are governed by special regulations. For example, websites must disclose whether the fabric was imported or made in the United States.
- Sweepstakes-type promotions that require a purchase by participants are illegal in the United States
- Ads for consumer credit must include certain disclosures about the terms and conditions of credit.
- Claims for dietary supplements and similar products must be truthful and advertisers must have substantiation for any objective product claims they make.
- A fine-print disclosure at the bottom of a print ad, a disclaimer buried in a body of text unrelated to the claim being qualified, a brief video superscript in a television ad, or a disclaimer that is easily missed on a website are not likely to be effective. Nor can advertisers use fine print to contradict other statements in an ad or to clear up mis-impressions that the ad would leave otherwise.
- Regardless of whether you advertise on TV or radio, in print ads, through direct mail or online, the law is the same
Endorsements by consumers must reflect the typical experience of consumers who use the product, not the experience of just a few satisfied customers.
- Advertisers also must disclose any material connection between a person endorsing a product and the company selling the product.
- Energy efficiency claims in ads must be based on specific standardized tests.
- The “Franchise Rule” governs the sale of franchises and business opportunities. The law requires sellers to make specific disclosures, give prospective buyers a document containing certain key information about the business opportunity, and be able to substantiate any earnings claims.
- If you’re advertising a product as “free” or offering it at a low cost in conjunction with the purchase of another item, the ad should clearly and conspicuously disclose the terms and conditions of the offer. Disclose the most important information – like the terms affecting the cost of the offer – near the advertised price.
- If an ad mentions that a product comes with a guarantee or warranty, the ad should clearly disclose how consumers can get the details. Any conditions or limits on the guarantee or warranty (such as a time limit or a requirement that the consumer return the product) also must be clearly disclosed in the ad. Finally, the law requires companies to make copies of any warranties available to consumers before the sale. This applies to retail sales, sales by phone or mail, and online transactions.
- Ad claims on the Internet must be truthful and substantiated.
- The FTC has taken action against hundreds of advertisers who have falsely promised easy weight loss. Marketers who promote diet products or services or who make representations about fat loss, weight loss, calorie burning, or the loss of inches or cellulite must make sure that their claims are backed up by sound scientific evidence.
The way I read the FTC documentation, marketing laws apply to all marketers including affiliates that do marketing in the U.S., not just product manufacturers or U.S. residents.
This is just a sampling of a few issues that should be relevant to online marketers. There are many others at the FTC web site.
In order to make your research into these issues easier, I am listing some of the FTC free pdfs that might help you. There are others at the FTC web site. If you do marketing in the U.S., please pay attention to U.S. law.
To you online business success,