The Federal Trade Commission ("FTC") and state attorneys general have made clear that businesses that engage in "misleading" or "deceptive" advertising will face stiff penalties, including fines. If you use the Internet to market products or services, you need to be aware of the laws applicable to deceptive advertising.
First and foremost, you must be certain that all marketing claims are truthful and substantiated (for example, clinical studies that support health and beauty product claims are necessary). This will often require that you include certain disclosures in your advertising. All disclosures that are necessary to prevent an advertisement from being considered deceptive or misleading must be presented both clearly and conspicuously. When evaluating whether a disclosure is clear and conspicuous, the FTC advises advertisers to consider the following three factors:
- placement of the disclosure in the advertisement;
- proximity of the disclosure to the applicable claim; and
- prominence of the disclosure.
In connection with these factors (it may be helpful to remember them as the "3 Ps"), you should consider: (1) whether the design of the advertisement draws attention away from the disclosure; (2) whether the advertisement is so long that it requires repetition of the disclosure; and (3) whether the disclosure is easily understandable.
Placement and Proximity in the Advertisement
As far as the first two "Ps," "placement" and "proximity," are concerned, you should ensure that the disclosure appears directly adjacent to, or very close to, the relevant claim. However, there may be instances, such as when a lengthy disclosure is required, where consumers may need to scroll down to view the entire disclosure. In such cases, you should use explicit instructions regarding the need to scroll down, as opposed to a general statement, such as "see below for details."
BONUS: Does "Free" Truly Mean Free?
Further, you must be careful when using the word "free" in your advertising copy. Be sure that all terms, conditions and obligations upon which the "free" offer may be contingent appear in close proximity to the applicable offer presented.
Prominence in the Advertisement
Regarding the third "P," "prominence," the onus is on the advertiser to draw the consumer's attention to the disclosures. Be sure that the disclosure does not get lost within the rest of the advertisement. The important thing to remember is that consumers should not have to go out of their way to hunt down the disclosure. In some instances, you may need to repeat the disclosure.
Be aware that simply providing a disclosure may not be enough. The average consumer must be able to fully understand what the disclosure means. To accomplish this, you should use simple and easy-to-understand words and sentences. If consumers are unable to understand what is being disclosed to them, the entire advertisement may be considered deceptive.
Hyperlinks Should Not Hide Information
Hyperlinks may be used to communicate some disclosure information. However, any disclosures that are an "integral part of a claim" or "inseparable from it," such as additional costs that apply to a transaction, should be placed directly next to the applicable claim.
Where consumers are able to purchase goods or services via a website, you should never rely solely on a hyperlink to communicate pricing information. All pricing information, including any additional costs that may apply, should appear directly above the "submit" button. In addition, you should provide information, or access to information, above the "submit" button regarding how the consumer's data may be used by you and your business partners. To this end, it is important that you communicate to consumers that by clicking the "submit" button, consumers are providing their consent to your disclosed billing and privacy practices.
E-mail Advertisements Under CAN-SPAM
In addition to the above, please note that companies that utilize e-mail marketing are subject to additional deceptive advertising laws. The CAN-SPAM Act of 2003, as amended ("CAN-SPAM"), sets forth specific requirements that must be followed when advertising via e-mail, as well as penalties for violations of the statute. Under CAN-SPAM, the use of false or misleading header information is prohibited. In other words, you must indicate the identity of the sender in all e-mail marketing messages. Additionally, your subject line should accurately reflect the products or services advertised in the applicable e-mail. Finally, you must clearly and conspicuously identify the e-mail as an advertisement, provide a valid physical postal address for the sender and provide consumers with a mechanism for opting out from the receipt of future commercial e-mail.
When in Doubt, Ask an Advertising Lawyer
Please note that this is only a brief overview of some of the legal issues related to deceptive advertising. Remember to obtain guidance from a licensed legal professional prior to developing and publishing online advertising.
This post was originally published on November 18, 2012 and updated on July 13, 2021.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.