The legal issues surrounding advertising are many and most of us know a few of them; such as, if we find an item on a shelf that has a price and we get to the checkout counter and are told a different price. If the salesperson tries to sell it to us at the different price it can be illegal depending on the laws of the state and FTC regulations.
Advertising legal issues are governed and enforced by the Federal Trade Commission (FTC). Also the Attorney General’s office of your state and your lawyer have current information on state and federal advertising laws.
Companies who advertise overseas have to deal with laws in different countries that may be different than our laws.
All advertising executives should understand these legal issues.
FTC regulated advertising laws:
Much of FTC regulated advertising law has to do with not misleading the public. Laws about misleading the consumer come under the following types:
1) Truth in Advertising – advertisers must be able to back up their claims and ads cannot be unfair.
2) Deceptive Advertising – advertisements should not mislead with words or statements or omitting information.
3) Unfair advertising and business practices – advertising is unfair if it causes injury to the consumer.
4) Advertising should not mislead children.
5) It is illegal to use bait and switch tactics by advertising at one price and selling at another price.
6) Express claims or direct claims and Implied claims must be true and substantiated.
7) Disclosure and Disclaimer Statements are required if express and implied claims are misleading and may be misunderstood.
The following ad types must be truthful
1) Comparative advertising
2) Endorsements and testimonials
3) Internet ads
4) Telemarketing claims
Other Advertising Law
1) Catalog sales – Ad copy should only represent claims of the supplier with no additional information that may not be correct.
2) Contests and Sweepstakes – there are many different laws and you should consult your lawyer, FTC, or the state Attorney General’s office.
3) Consumer credit – must include disclosure terms that are “clear and conspicuous.” Check with your lawyer, the ad agency, or FTC.
4) You can give anything away free as long as there is no catch.
5) Rebate ads must list the rebate price in the ad and the amount of the rebate.
6) Guarantees and Warranties must tell consumers about all details of the guarantee.
7) Mail order ads must be truthful and all orders should ship within 30 days or as stated in ad.
8) As for new products there are limits on what you can refer to as new. New can be okay for 6 months.
9) In sales advertising you may not inflate price and sell on sale at regular price.
10) Food retailers must offer rain checks or comparable substitute products.
11) You can not have a Going Out of Business Sale unless it is true.
Copyright in Advertising
There is automatic copyright protection on all art (advertisements, logos, photos, and illustrations). The artist owns it until 50 years after his death unless there is a contractual transfer of ownership.
There is also copyright protection for parts of other works such as illustrations, photographs, and graphics.
International Advertising is not regulated by the FTC but comes under the jurisdiction of the countries that the company advertises in. Laws in other countries may be very different from American laws.
Many countries have extensive laws regulating advertising. Here are some examples:
1) Alcoholic products cannot be advertised or sold in Muslim countries.
2) There are strict regulations on tobacco products in many countries.
3) In Norway and Sweden you may not direct TV ads to children under 12.
4) McDonalds advertises as a family restaurant in Sweden.
5) Comparative ads are very uncommon in the UK.
6) Comparative ads are unacceptable in Japan and Illegal in India and Brazil.
7) TV and radio ads are restrictively censored in China – words like “best” would be banned. Ads that violate “social customs” would be banned. Presenting women in “improper ways” would be banned.
8) In India an ad that offers winnings might be banned due to their gambling laws.
(Kotler &Armstrong, 2001).
There are three issues with regard to online advertising according to an article entitled “The Legal Issues of Online Advertising by Cliff Enrico. (www.entrepreneur.com/advertising/adsbytype/onlineads/article160062.html).
They are as follows:
1) Click Fraud. This is where a competitor repeatedly clicks on your ad to run your ad price up. Check on click protection programs when purchasing online ad space. You can also register with a pay per click auditing service.
2) Keyword Spamming. Uses your trademark illegally to take customers away. (Outbidding on your trademark or including invisible metatags in search engines used to find your website).
3) False Advertising. You may not engage in false advertising on the Internet.
For more information on advertising legal issues go to the Federal Trade Commission (FTC) at (www.ftc.gov/bcp/menus/business/adv.shtm ) or (www.myprofessionaladvertising.com/Legal%20Issues%20in%20Advertising1.htm)