Selling, but not overselling, your product
Advertising is the cornerstone
of American marketing, the most direct way to tell large numbers
of consumers about your goods or services, expand your market share
and encourage customer loyalty. It is also the primary way in which
you engage your major rivals in head-to-head competition.
As with any heated contest, advertising would quickly
get out of hand without boundaries and rules. To allow deceptive
or outright fraudulent claims to go unchecked only serves to undermine
a medium whose very effectiveness depends so much on its credibility.
Step over the line in your print, electronic or Internet
advertising and you may find yourself facing legal action from any
number of quarters: the Federal
Trade Commission, your state's attorney general, your local
district attorney, consumer protection agencies, other businesses
and even individual consumers.
As the main federal watchdog, the FTC works to keep
advertisers in bounds largely through voluntary compliance, although
it has the clout to stop questionable ads, initiate civil action
and even force a company to run corrections.
In addition to the federal guidelines, most states
now have consumer fraud and deceptive practices statutes. Fudge
on those and you could face fines, restitution and even a jail sentence
depending on your state and local laws.
You want your advertising to work for you, right?
Here's how to play by the rules.
The big three
Under FTC guidelines, your advertising generally will be
bulletproof if it meets the big three criteria:
- Truthful and nondeceptive
- You must have evidence to back up your claims.
To meet the fairness test, your
ad must not cause substantial, unavoidable physical or monetary
injury to the consumer and its overall benefit should exceed
its cost. Common fairness infractions include coercing consumers
to buy unwanted goods, selling defective or unsafe goods and omission
of information that would adversely affect the consumer's buying
Your ad is truthful if it accurately presents the
qualities and prices of your goods or services. Clearly, consumers,
your competitors and the authorities will quickly determine if that
new watch you're selling is waterproof or merely water resistant.
Calling it a great watch is fine; just don't claim it can do what
A good final test for your ad is whether you back
it up with hard evidence. In a worst-case scenario, you may have
to do just that in court, and ignorance of the law won't get you
off the hook.
Endorsements and testimonials
If your ad quotes written material, uses someone's picture
or likeness or mentions any group or organization in an expressed
or implied endorsement, U.S. copyright law, specifically the "fair
use" doctrine, requires you to obtain permission beforehand,
preferably in writing. One notable exception: You may use brief
excerpts from favorable reviews or performance awards.
Baiting and deceptive pricing
Two of the quickest ways to get into trouble with an ad
are to bait-and-switch and engage in deceptive pricing.
Bait advertising is an alluring but insincere offer
to sell something you don't want or intend to sell just to lure
consumers to buy something else, usually at a higher price or at
a greater advantage to you. It is also illegal.
You may be exposed to bait advertising claims if you
fail to have sufficient quantities of an advertised item in stock
to meet reasonable demand. Your one out here is if your ad states
that quantities are limited.
Deceptive pricing attempts to sweeten an offered price
through misleading comparisons to your "regular" prices
or those of competing merchants. There is considerable gray area
here. Best self-test: Can you prove your facts and figures?
Beware the word "free"
Nothing flags whistleblowers faster than the word free.
In a nutshell, if you offer something for free, make sure all terms,
conditions and limitations are spelled out in the ad.
It is unfair and deceptive to pair a free item with
the purchase of another product if the price or quality of that
product has been manipulated without the consumer's knowledge to
offset the cost of the free item.
Consumer credit claims
Ever noticed all the fine print at the end of those zero-percent-down
car commercials? It's there because whenever you advertise specific
credit terms, federal law requires that you clearly spell out the
details, including the annual percentage rate, down payment and
terms of repayment.
Specifics aside, it's also a good idea to avoid general
statements like "easy credit" unless you really mean it.
If you require a higher down payment, shorter repayment term or
tighter collection policy for higher-risk customers, or don't extend
credit to them at all, your offer doesn't qualify as easy credit.
Do unto others ...
It's generally a bad idea to advertise your goods or services
by knocking your competition. After all, just by mentioning them,
you're giving them some of your valuable ad time. But if you must
compare, make certain you can substantiate every point, whether
expressed or implied, about your product and theirs.
The FTC has specific statements for specialized goods
and services, including food, jewelry, furniture, dietary supplements,
eye-care surgery and vocational or distance education offerings.
For a list of FTC guidelines, visit its Advertising
Policy Statements and Guidance Web site.
Jay MacDonald is a contributing
editor based in Florida.
-- Posted: Sept. 4, 2002