Small Business Corner

When consumers see or hear an advertisement, whether it’s on the Internet, radio, television, or anywhere else, federal law says that ad must be truthful, not misleading, and, when appropriate, backed by scientific evidence. The Federal Trade Commission enforces these truth-in-advertising laws, and it applies the same standards no matter where an ad appears – in newspapers and magazines, online, in the mail, or on billboards or buses. 

What truth-in-advertising rules apply to advertisers? Under the Federal Trade Commission Act:

• Advertising must be truthful and non-deceptive;
• Advertisers must have evidence to back up their claims; and
• Advertisements cannot be unfair.

Additional laws apply to ads for specialized products like consumer leases, credit, 900 telephone numbers, and products sold through mail order or telephone sales. And every state has consumer protection laws that govern ads running in that state.

What makes an advertisement deceptive? According to the FTC's Deception Policy Statement, an ad is deceptive if it contains a statement - or omits information that:

• Is likely to mislead consumers acting reasonably under the circumstances; and
• Is "material" that is important to a consumer's decision to buy or use the product.

What makes an advertisement unfair? According to the Federal Trade Commission Act and the FTC's Unfairness Policy Statement, an ad or business practice is unfair if:

• It causes or is likely to cause substantial consumer injury which a consumer could not reasonably avoid; and
• It is not outweighed by the benefit to consumers.

Advertising connects businesses to consumers. Understanding advertising rules and guidelines will protect and help maintain the credibility of your business. Click here to view The Federal Trade Commissions complete guide to small business advertising.