Although advertisements are everywhere, many companies are not aware of the numerous state and federal laws and regulations that govern advertising. Below are several basic advertising concepts to help spot and avoid advertising problems.
- An advertisement cannot be false or misleading – an advertisement is false or misleading if members of the public are likely to be deceived.
- The literal truth of an advertisement will not prevent it from being deceptive if the advertisement is misleading when read as a whole – the overall visual image and placement of words and text can make an otherwise innocent advertisement deceptive.
- Disclaimers must be clear and conspicuous, and a disclaimer cannot cure inaccurate or false information in an advertisement.
- For online advertisements, all disclosures should be placed as close as possible to the advertising claim – making sure that the disclosures are able to be viewed across various devices and online platforms.
- It is illegal to advertise a product with no intent to sell the product at the price stated, but instead intend to sell something else, usually at a higher price – this is known as “bait and switch” advertising.
- California and other states prohibit sweepstakes/enter to win contests where entrants are required to pay money or other consideration to enter the contest and the winner is selected by chance – these are known as “illegal lotteries”.
- All claims must be true and advertisers should have substantiation for all claims.
- Where an advertisement includes an endorsement or testimonial, the marketer must disclose all material connections with or consideration given to the endorser that might affect the weight or credibility of the endorsement or testimonial.
- Where an advertisement lists a “regular price,” the price stated must be the amount at which the retailer has recently, openly and actively sold the product in the area – or in California, is the prevailing market price in the area at the time of the advertisement.
- Care must be taken in an advertisement that states a customer can receive a product for “free” with the purchase of another product – the product required to be purchased must be sold for the “regular price” and the advertiser cannot increase the price to directly and immediately recover the cost of the “free” product.
- Marketers should not make unqualified general environmental benefit claims – e.g., the product is “green” or “eco-friendly”.
Although seemingly simple, advertising requirements are often subtle and contain pitfalls for the unwary. Understanding key advertising legal concepts and exercising care and good judgment when designing advertisements can go a long way towards helping avoid legal issues in advertising.