Advertising Compliance Service

Ten Things to Do So Your Ads Comply With Advertising Laws

Are you are a small Internet advertiser who uses interactive advertising, e-mail advertising, or viral marketing? Or perhaps you are a large advertiser - or would like to be one day - and you're contemplating making a broadcast network buy. Either way - and in-between, for that matter - there are many things that you need to review up-front--before you create that advertisement or place that media buy. Reason: You will avoid many costly pitfalls by systematically taking these steps beforehand. And, of course, you should consult with an attorney who specializes in advertising law before launching any advertising campaign. This article is a useful review of ten key areas you should look at when you're reviewing your advertising to make sure that your ads comply with the many advertising-related laws, rules, regulations and guidelines that may affect your ads.

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 Service™ have examined this key advertising compliance law area throughout its 25-year history.

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."

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"). 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 Service™ 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--

1. Causes or is likely to cause substantial injury to consumers;
2. Is not reasonably avoidable by consumers and
3. Is not outweighed by countervailing benefits to consumers or competitors.

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 Service™ examining this highly important self-regulatory area.

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.

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?

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. One of the greatest changes 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.

A more significant change is the advent of social media. The significance of this new way of networking - and doing business - cannot be overstated. You should - for a start - have a Twitter account and follow the key people in the advertising law field.

The latest social-network development of significance is Twitter. You can find out who has the largest number of followers on Twitter by going to TwitterCounter or Twitterati.alltop. Twitter can be an excellent resource to discover more about the latest developments in advertising law. Advertising Compliance Service has a powerful presence in such social media as Twitter and Facebook. Our Twitter account - AdvertisingLaw - In Justia LegalBirds - that ranks legal professionals on Twitter - AdvertisingLaw ranks No. 6 out of 1,783 lawyers as of 11/17/10. This ranking is based on community connections, which means that AdvertisingLaw is followed by many lawyers on Twitter. AdvertisingLaw is ranked No. 116 out of 7,222 legal professionals on Lextweet. In addition, our Facebook account has over 1,200 friends, a large percentage of whom are attorneys.

There are speed traps aplenty on the Internet, which have been discussed at length in Advertising Compliance Service™. Examples:

• Global Legal Exposure
• Privacy Issues
• Wholesale Governmental Crackdown on Advertising in Cyberspace
• Mounting Federal and State Regulation of Cyberspace Ads

Who monitors advertising to children? Here's a partial list:

• Federal Trade Commission
• Food and Drug Administration
• Congress (i.e., House and Senate)
• State Legislatures
• The Children's Advertising Review Unit (CARU) (the children's advertising review arm of the ad industry's self-regulatory system).
• Private Trade Groups

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 Service™ has covered this area for over 27 years.

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's™ International Advertising Tab regularly reviews this key, and emerging, area.

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 Service™.

See, generally, the following tabs in Advertising Compliance Service™ for more information on the broad areas discussed 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 #26, International Advertising.

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