Running afoul of Federal Trade Commission (FTC) advertising guidelines can have significant negative consequences for a business. It’s not uncommon for FTC enforcement actions to run into millions of dollars in “consumer harm.” Even worse, these financial penalties can be so high they can shut down a business altogether.
Even when the financial consequences aren't onerous, the time and money it takes to deal with an FTC investigation can be an unnecessary distraction. So, it’s always advisable to have an attorney experienced in FTC rules and regulations review your marketing programs before they go public. It can mean the difference between a great marketing campaign or a great big headache.
Anytime you make a claim about your product, you have to be able to back it up. The type of back-up, also known as substantiation, is typically dictated by the nature of the claim. The more specific the claim, the more nuanced the substantiation needs to be.
Advertising involves claims made to consumers. And advertising can appear across the gamut of marketing tools. Consider all the ways a company can make advertising claims: display ads; promotional emails; social media statements; websites; radio and television commercials; video sales letters; Amazon Marketplace listings; product packaging and labels; billboards; and in-store signage. So, it's important to understand that, even though these different advertising platforms have unique message strategies, the FTC still considers them advertising messages. They are subject to their rules and regulations. Therefore, any advertising claim must be substantiated in order to pass muster with the FTC.
Here are common examples of claims and the substantiation required under FTC rules.
Sales records that demonstrate the product has been sold to consumers for $19.95.
Comes in your choice of 5 colors.
Product samples that show the product is available in five colors.
Our lowest price of the year!
Keep advertising and product records for that year which demonstrate the product was always sold at a higher price prior to the time the claim was made.
A certificate from a USDA-accredited agency showing that the product has been deemed organic.
I lost 10 lbs. in 2 weeks!
A testimonial affidavit from the person to whom the quote is attributed. It testifies, under penalty of perjury, that he or she lost 10 pounds in two weeks after using the product. If there are medical records or photographic evidence, keep them in a secure file as it can further back the statement.
Supports a healthy heart.
Peer-reviewed studies published in reputable medical journals that prove the active ingredient(s) in the product have a beneficial impact on cardiovascular health. The ingredients in the studies have to be taken in the same form and in approximately the same amount as is found in the product.
You can lose up to 10 lbs. in 2 weeks!
A clinical weight loss study conducted by a recognized testing facility that shows study participants who used the specific product - and not just a similar product - lost up to 10 pounds in two weeks.
You will look 10 years younger!
It is impossible to prove that average users of a product look 10 years younger. Therefore, this claim should never be made.
We recommend that you keep a substantiation file that backs up your claims. Be sure to keep it in a secure location where it will not be lost or deleted.
Make sure that you substantiate your claims at the time of your advertising. If you do, then you will have it ready if the FTC initiates a compliance investigation.
Ask an experienced attorney to review your advertising campaign messages before going live. A business owner can’t be expected to be completely knowledgeable about FTC guidelines. An attorney can offer important, and vital insights, into the risks associated with your claims.
The best way to maintain compliance is to back up everything with proof. So, when you tell consumers that your product can solve a problem, you’ve got evidence that it can.
Do not wait until you face an FTC investigation or enforcement action. At that point, any attempt to reverse engineer support or tamper with your past advertising claims could lead to even heavier penalties.
By taking these simple steps, you’ll know that your advertising programs are FTC compliant.
If your company has been informed of an FTC investigation or enforcement action, contact Kronenberger Rosenfeld. Or, if you need help to ensure your marketing programs have the right back-up substantiation, please reach out to us. Our extensive skills and experience in FTC compliance can provide you strategic support before the FTC contacts you.
We look forward to assisting you with your advertising and marketing programs.Karl Kronenberg, Partner 415-955-1155, Ext. 114
This entry was posted on Tuesday, February 26, 2019 and is filed under FTC Advertising Law Compliance, Internet Law News.