Anything you say or publish about your products or services to potential customers, including claims you make in ads, emails, promotions, videos, or any other way you market your products or services, must comply with certain rules that are designed to protect consumers from being misled or deceived by false advertising. And it’s not just the words you use - the way you say things, or what you DON’T say can also be important.
All marketing materials should be:
- True: Advertising must be truthful and non-deceptive;
- Supported: Advertisers must have evidence to back up their claims; and
- Fair: Advertisements cannot be unfair to a reasonable consumer.
- (TRUE AND NOT MISLEADING) Every statement must be true, and the overall impression of the ad must not be misleading.
- This also applies to claims that are implied from the context of your ads
- Leaving out important information could cause the ad to be misleading
- If you need to disclose or disclaim some circumstance to make your claim true (e.g., voted a favorite every year* (*from 1999-2012)), you should do that in a clear, readable way, near the claim to which it applies.
- Claims about qualities of your product or service that are important to consumers in deciding to choose you must be supported with factual proof.
- Using superlative descriptions (best burger, most fun) for your business, products, or services in advertising is generally considered to be acceptable as “puffery.” . If you have it, showing external support for superlatives is likely a more convincing marketing strategy (voted best yoga studio in Pasadena 3 years running), so consumers know you’re not the only one who thinks you’re the greatest.
- If your superlative claim is something that can be verified or disproven by simple facts or measurement, however (largest pizza in the state, 8/10 people use our brand), it must be true for you to claim it in advertising. And, it may backfire to try this in marketing anyway - if you say you have the largest pancakes in the city, and everyone knows that your competitor’s are larger, people might disbelieve anything else you say in your ad.
- Remember, if you use it to sell your product, it becomes YOUR claim, even if your source is someone else’s study, survey or article, so use reliable third-party sources with good reputations to support your claims.
- FREE OFFERS/DISCOUNTS/DECEPTIVE PRICING. If you offer false discounts or “free” items that really aren’t, this is considered deceptive pricing and isn’t fair to consumers.
- “FREE” – use the word “FREE” carefully so as not to mislead consumers. To qualify as “free,” there must be NO COST to the recipient, including no fees or other costs, to obtain the item. For “Buy something, get something FREE” offers, the first object must be provided at no more than regular price and the second at no cost (that is, you can’t mark up the price of the first item to cover the cost of giving away the second for “free”).
- % DISCOUNT/% OFF – Discount offers should represent an actual discount from the regular price for an item. “Regular price” means the price at which you’ve actually sold the product or service in the recent past to more than one buyer. If you never sell at your published “rate card” prices, then you should not advertise your typical prices as a “discount” from those card rates, unless everyone else in the market does sell at the card rates.
- REBATES – You should only advertise something as a “rebate” if money will be paid to a consumer after a purchase.
- GUARANTEES - You should only use the term “satisfaction guarantee” or “money back guarantee” if you will refund the full purchase price of the advertised product or service upon request, provided all conditions were met. Any limitations or conditions that you want to apply to a guarantee must be stated clearly and prominently enough so they will be noticed and understood by purchasers.
- CASE STUDIES – You want to use positive examples of performance of your products and services for the purpose of marketing them, but a best practice is to use a performance result that is good, but more typical of what can be expected by most customers. Using a single “outlier” or an extremely well-performing account as an example to encourage people to buy your product can be unfairly misleading to them about the results they can expect. At the very least, it may create an unrealistic expectation that leads to customer dissatisfaction with your business or product after the sale.
- If you pay someone or give them free products or services to endorse or review your product, you should disclose that fact, or encourage the endorser to do so. Someone who is paid or gets something for free is potentially biased toward giving it a good review. Even if they are honest in their opinion and not influenced by the freebie, it is fair to consumers to be transparent about the situation, so they can decide for themselves how much weight they want to give that endorsement or review under the circumstances.
- An “expert” who endorses your product or service must actually be an accredited or recognized expert in the field based on his/her credentials or experience.
- Don’t falsely imply the endorsement of your product or association with your product by a celebrity, a brand, or someone likely to influence purchasers – you will mislead buyers (and the celebrity or brand may sue you (!)).
- It’s not a best practice to suppress bad reviews - this can give a misleading impression of your level of customer satisfaction. Instead, respond to them reasonably, fairly, and with information that explains your side of the story and let consumers judge for themselves how much weight to give that bad review in the context of your others.
- COMPARISONS WITH COMPETITORS. Comparisons with products of competitors are acceptable in advertising as long as they are true and not misleading, and all claims can be supported.
- In order to not mislead, you should compare like with like items
- It’s not a best practice to disparage your competitors in your marketing
- Using another person, like a customer who is endorsing you, to disparage your competitor doesn’t shield you from the consequences of this action – statements may be attributed to you if they are used in your ad.
- NO ILLEGAL CONTESTS OR SWEEPSTAKES. Contests, raffles and sweepstakes are subject to both federal and state laws, so use caution when conducting any contest, drawing or giveaway as a marketing tool (there exceptions to these rules for non-profits or other types of businesses, so just copying someone else’s contest may not mean it is legally okay for you).
- In the US, a contest is illegal if it has ALL of the following:
- a prize of value,
- selects the winner by random chance and
- requires purchase, payment or some other thing of value (including significant effort or time) to enter the contest
- In the US, a contest is illegal if it has ALL of the following:
Often, proper contest design can help you avoid this issue – try having a contest that awards the prize for merit, even if the judging criteria are somewhat subjective (best essay, funniest story, highest jump), or provide for an alternate, no-cost form of entry accessible to all. But, note that even when a contest does not fall into the realm of an illegal lottery, it may still require registration, posting a bond, or have other restrictions or requirements under a state’s laws, so check with your state’s Attorney General’s office to make sure. There are also federal and state tax requirements for giving away items above a certain value. And, certain social media sites have their own rules for conducting contests there, so check their terms before you post socially or use social engagement as a form of contest entry.
For more information on advertising guidelines applicable to local businesses, you can access the Federal Trade Commission’s Advertising FAQ's: A Guide for Small Business, here: https://www.ftc.gov/tips-advice/business-center/guidance/advertising-faqs-guide-small-business
This “Best Practices” content is provided for convenience and information only and is not intended as legal advice. We do not claim that this information represents an accurate summary of the laws in this area or that it will be updated for any changes. Please consult an attorney for questions about your compliance with applicable laws.