In my last blog, I looked at common questions and answers regarding business law. Today I want to dive a little deeper into that subject, specifically as it relates to advertising because I think there is a misperception out there that goes something like this when it comes to advertising: “Anything goes!” After all, it is an ad, right?
The fact is, advertising is regulated by both federal and state law, and the general rule is that an ad is unlawful if it tends to mislead, deceive, or if it contains a false statement.
Let me give you an example: In Los Angeles, a used-car salesman once appeared in a television commercial with a chimpanzee and told viewers they could have one of the cars on his lot for “1,000 bananas!” When an enterprising young man drove up with a trailer of bananas, the dealer refused to sell him the car. The man sued, and won.
So consumer lawsuits are one problem with deceptive advertising. Another thing to be wary of is the feds. The Federal Trade Commission (FTC) is the main federal agency that regulates commercial advertising and over the years, the FTC has taken action against many businesses accused of engaging in deceptive advertising. The FTC can issue a cease-and-desist order, bring a civil lawsuit, or require you to run corrective ads admitting you lied and that your earlier ad was deceptive.
So you have to be careful what you say in your ads. Here are some rules to keep you safe:
1. Be Accurate. Make sure your ads are factually correct. Do not deceive or mislead the public. Yes, ”puffing” is OK (“We are the best dealer in Ohio!”), but lying is not (saying you were “voted the #1 dealer” when you in fact were not.)
2. Treat Competitors Fairly. It is fine to compare your goods and services with those of other businesses, but when you do, make sure every statement in your ad is accurate. Lying about a competitor can lead to a nasty libel suit.
3. Beware The Word “Free!” Yes, “free” is the most powerful word in all advertising and I am not telling you not to use it. But I am telling you that when you do use it, what you are advertising as free had better really be free.
4. Stock Sufficient Quantities. Most states have laws that require merchants to stock an advertised product in quantities large enough to meet a reasonable demand, unless the ad says stock is limited. If you don’t have enough supply, your state may require that you give customers a rain check if you run out of advertised goods.
5. Be Careful When Describing Savings. You must be truthful about pricing as well. Avoid using doctored price comparisons between your regular cheap prices and another company’s more expensive prices, unless it is consistently true.
Advertising is one of the best things you can do for your business. You can reap the most benefits when your ads are honest. Read on to my next blog to see the 5 advertising mistakes you should never make.