1. Substantiate Your Advertising Claims
Advertising substantiation is a very important requirement for advertisers. An important step to make sure your
ads comply with all
advertising laws, you must be sure that each one of your advertising claims is substantiated before you disseminate the advertisement containing the claim(s). The Federal Trade Commission issued a Policy Statement articulating its policy as to this important advertising legal compliance area. (See FTC Policy Statement Regarding Advertising Substantiation Program, Issued August 2, 1984.)Essentially, this Policy Statement confirms FTC’s commitment to the “reasonable basis” requirement. That is, you must have a reasonable basis for your objective claims before you initially disseminate them. Be forewarned: FTC vigorously enforces the requirement that advertisers must substantiate their express and implied claims. Failure to possess and rely on a reasonable basis for objective claims is an unfair and deceptive act or practice in violation of Section 5 of the Federal Trade Commission Act. Numerous articles in
Advertising Compliance ServiceÔ have examined this key advertising compliance law area throughout its 25-year history.
2. Make Sure Your Advertising Claims Aren’t “Deceptive.”
This is not nearly as easy as it sounds. The starting point for any advertiser, ad agency or their attorney is the
FTC Policy Statement on Deception, dated October 14, 1983. You should then turn to these sections of the Federal Trade Commission Act:Section 5. It declares unfair or deceptive acts or practices unlawful.
Section 12. It specifically bars false advertisements likely to induce the purchase of food, drugs, devices or cosmetics.
Section 15. This section defines a false ad for purposes of Section 12 as one that’s “misleading in a material respect.”
Next, you should keep current with the plethora of FTC and court decisions that have defined and explained–and continue to define and explain–the phrase “deceptive acts or practices.”
3. Make Sure Your Advertising Claims Aren’t “Unfair.”
In the late 1970’s and early 1980’s, a fierce battle raged over whether to strip the Federal Trade Commission of its power to regulate “
unfairness” in advertising (i.e., “unfair or deceptive acts or practices”). (See
Section 5 of the FTC Act.) The concept of consumer “unfairness” was–and–is a difficult one to accurately define. In the
FTC Policy Statement on Unfairness, dated December 17, 1980, FTC laid out a “concrete framework for future application” of FTC’s unfairness authority. That document synthesized the decided cases and rules, gleaning “the most important principles of general applicability.”Emerging from the cases are three key factors that FTC considers when applying the prohibition against consumer
unfairness:
- Whether the practice injures consumers,
- Whether it violates established public policy, and
- Whether it’s unethical or unscrupulous.
Over the years, FTC has further defined and explained these three key factors. The “unfairness” standard is one more crucial advertising law doctrine of which all advertisers, advertising agencies and their attorneys must be aware. Advertising Compliance ServiceÔ regularly explores the ongoing developments in this major area.
Under The Federal Trade Commission Act Amendments of 1994, Section 5 of the FTC Act was amended so as to require FTC–prior to finding an act or practice “unfair”–to first determine that the act or practice–
- Causes or is likely to cause substantial injury to consumers;
- Is not reasonably avoidable by consumers and
- Is not outweighed by countervailing benefits to consumers or competitors.
4. Be Sure Your Advertising Claims Measure Up to the “Truth and Accuracy” Standard.
Your ads will go a long way towards being challenge-proof if they follow the basic test laid out by the National Advertising Division (NAD) of the Council of Better Business Businesses:
“truth and accuracy.”Indeed, the advertising industry’s self-regulatory system (the NAD/National Advertising Review Board system) was designed “to foster high standards of truth and accuracy in national advertising.”Since its inception, over 435 articles have appeared in
Advertising Compliance ServiceÔ examining this highly important self-regulatory area.
5. Make Sure Your Comparative Advertising Claims Are Fully Substantiated and Are Not False or Deceptive.
Because of the great benefits inherent in
comparative advertising, FTC formally stated its pro-comparative advertising policy in 1979. (As a practical matter, that policy had been in effect since 1974.) Basically, FTC looks at
comparative advertising in much the same way as other types of advertising. Ultimately, the question is whether the comparative advertising claim has a tendency or capacity to be false or deceptive. The level of
substantiation required is also viewed as being the same level required in other types of ads.Nevertheless, because a competitor is involved, you should be certain that your ad claims possess sufficient clarity and, if necessary, appropriate disclosures to avoid deception to consumers.
Keep in mind that your competitor is watching or reading your comparative ad. And your competitor can use the powerful Lanham Act to redress any wrongs under that Act. Indeed, the Ninth Circuit affirmed a $40 million damages award in one noted advertising law case.
6. You Should Be Familiar with the Advertising Law of the States Where You Do Business.
There are a plethora of questions you should be asking if you plan to advertise your product or service in several or more states, including:
- Have you reviewed the legal appropriateness of your company’s or client’s ads or package labels?
- Have you taken into account how that ad or label might be used in court in a future product liability suit?
- Have you scrutinized all pre-market testing of your company’s or client’s product to make sure no safety questions might arise later?
- Do you also make any safety claims, express or implied?
- Have you reviewed any instructions accompanying the product for a host of possible advertising compliance problems?
7. Are You Aware of Advertising Law Developments on Such New Media as the Internet?
You should be aware of all of the major
advertising law developments on the Internet as these will clearly have an impact on the way you advertise on this vital medium. Perhaps the greatest change in recent years is the advent of Web 2.0. This phrase, Web 2.0, was coined by
O’Reilly Media in 2003 and, according to Wikipedia, was “popularized by the first Web 2.0 conference in 2004 * * * and refers to a perceived second generation of web-based communities and hosted services — such as social-networking sites, wikis and folksonomies — which facilitate collaboration and sharing between users.” See
Wikipedia definition of Web 2.0.There are speed traps aplenty on the Internet, which have been discussed at length in
Advertising Compliance ServiceÔ. Examples:
- Global Legal Exposure
- Privacy Issues
- Wholesale Governmental Crackdown on Advertising in Cyberspace
- Mounting Federal and State Regulation of Cyberspace Ads
8. Do You Advertise to Children or Will Your Advertising Reach Substantial Numbers of Children?
Who monitors
advertising to children? Here’s a partial list:
There’s a new regulatory tendency in Washington to blame advertisers for such ills of society as teenage smoking and drinking. As evidenced by sweeping advertising regulations affecting the tobacco industry–and proposed authority restrictions on alcoholic beverages–this trend is sure to continue. Advertising Compliance ServiceÔ has covered this area for nearly 27 years.
9. What Are the Global Advertising Legal Compliance Issues Facing Your Ads?
Globalization of commerce has been increasing rapidly. Even companies that don’t consider themselves global in scope, actually are. For example, if you have a Website on the World Wide Web, you can be accessed from anywhere on Earth.Every country treats advertising law issues in different ways. There is a wide variety of
international advertising standards and laws. In most countries, for example,
comparative advertising is frowned upon or is downright unlawful.
Advertising Compliance Service’sÔ International Advertising Tab regularly reviews this key, and emerging, area.
10. You’ve Scrutinized Your Ads for What They Expressly Claim–What About Implied Claims?
Remember, you must substantiate all of your advertising claims. That includes any implied claims. Have you carefully reviewed your ads for such claims? Remember, just because you think your ad doesn’t make any implied claims is by no means the final word on this question. Who else will be looking? Here’s a partial list:
- Your competitors (who can and will do their own consumer testing to prove an implied claim does exist);
- FTC;
- FDA (for products within its jurisdiction);
- State Attorneys General;
- NAD;
- CARU (for children’s ads).
This issue cuts across a wide variety of areas and is routinely covered in Advertising Compliance ServiceÔ.
| WHO WE AREJLCom Publishing Co., LLC is the publisher of Advertising Compliance ServiceÔ. For nearly 27 years, Advertising Compliance ServiceÔ has been the authoritative, comprehensive source of information for advertising law practitioners, advertisers and advertising agencies — and their attorneys. In-house counsel and outside counsel alike regularly rely on Advertising Compliance ServiceÔ because it is a “must-read” for every attorney advising clients on advertising and marketing issues. Among the 27 areas that are regularly covered by this newsletter/reference service are these tabs mentioned in this article: Tab #2, General Articles; Tab #3, Self-Regulation; Tab #4, False, Unfair, Deceptive; Tab #5, Substantiation; Tab #6, Comparative Ads; Tab #7, Remedies (Public); Tab #8, Remedies (Private); Tab #9, State Law; Tab #15, New Media; Tab #16, Children’s Ads; Tab #17, Food, Drugs, Cosmetics; Tab #18, Alcoholic Beverages; Tab #18, Alcoholic Beverages; and Tab #26, International Advertising. |
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