Advertising Regulations in Marketing: Staying Compliant with Legal Guidelines
Advertising and marketing are two fields with pivotal roles in establishing any brand where creativity has no boundaries. However, while the canvas may be vast, it’s essential to recognize that not all strokes are permissible.
Can you create any kind of advertisement to market your product? The answer is a clear No. The advertising industry operates within a framework of regulations designed to ensure fairness, transparency, and consumer protection. These rules also act in favor of the sellers as a complaint for non-compliance can damage their reputation.
Let’s explore the fascinating intersection of creativity and compliance in advertising!
Regulations at the federal level
Federal authorities have made laws and regulatory policies to control the advertising industry. Federal Trade Commission (FTC) is a major regulatory body that audits and controls the advertising sector. Initially, it was created to keep a tab on unfair methods in e-commerce. Lately, they have started looking into consumer protection. FTC takes care of many aspects, including online advertising and regulations on advertising to children. If found guilty, the FTC can cease the unauthorized activities and impose civil penalties, amongst other things. The Federal Communications Commission (FCC) is another body regulating mass media advertising.
Besides the federal level of authority, advertising is regulated by the state and country legislators. In case of violation of any laws, the consumers can file a complaint with the concerned department. Many non-governmental organizations have also stepped into regulating the advertising industry.
It is important to know the rules and regulations of the region you are registering your business in. For example, if you are registered in Washington, try and reach out to a Northwest Registered Agent who can help you understand the nitty-gritty of the industry in that region.
Let us know about the acts, guidelines, and regulations regarding advertising in marketing.
Federal Trade Commission (FTC) Act
The Federal Trade Commission Act was created to act in favor of consumers and protect their interests. Section 5 of the Act outlines several conditions.
- The act finds the advertising as deceptive if it misleads the customer and affects the consumer’s decision about the product.
- The advertising can be said to be an unfair practice if it causes any substantial or not reasonably avoidable injury to the consumer.
- The advertisement should be substantiated if the claim is concerned with the health, safety, or performance of the consumer. There should be reliable evidence to support the claim.
- The advertisements should give clear disclaimers wherein the consumers should be able to read, analyze, and understand everything.
- The product demonstrations should include the use of the product under normal conditions.
- Refunds when promised should be given to dissatisfied customers
- Advertisements directed towards children should have special consideration. There is a Children’s Advertising Review Unit (CARU) to look into it. They have published special guidelines for advertisements directed toward children.
FTC holds advertising agencies, website designers, and catalog marketers responsible for reviewing the claims made by the manufacturer. In case of any issue with the advertisement, the FTC can investigate the advertising agency’s participation in the preparation of the advertisement and their knowledge about the deceptive or false claims.
Online privacy protection for the consumer
Consumers are constantly under threat of their private information being misused when submitted online on e-commerce sites. A report suggests that of all the websites that collect user information, only 14% provide clarity to consumers regarding using their personal information. FTC has taken steps to safeguard the consumer information that is present online. It conducts many workshops to educate sellers and consumers about protecting consumer privacy online. Sellers should use this information to implement industry-wide practices to protect consumers’ online privacy.
Children’s Online Privacy Protection Act (COPPA)
Children are one of the fastest-growing online audiences. Many advertisements are directed at children as they are unable to understand the advertisements. The Children’s Online Privacy Protection Act has been created to protect the personal information of children under 13 years of age and above. When connecting to kids through advertisements, across any online services on any connected device, advertisers must ensure
- They do not collect the personal information of kids below 13 years old for their ads.
- The measurements do not violate COPPA and rely on personal information
- Additional safety measures are to be taken when using audience profiling and interest-based targeting techniques based on personal data as you cannot use personal data of kids under 13 years.
- The click-through destination URL in the advertisements for youth should be content appropriate for children.
Zero-data approach
Zero-data settings must be made on online services, apps, and sites. No one can collect the personal information without explicit consent from the parents. COPPA-audited, Contextually-based advertising limited to the content currently in view and the domain of the site visited can be used to market products to the kids.
The Lanham Act
This is a trademark protection act wherein a business can sue the competitor for false advertising. There can be certain conditions for filing a lawsuit. If the business can prove that they have lost sales or the business or reputation has been damaged because of the competitor’s false advertisement, then it can file a complaint.
Environmental claims guidelines
Many products offer environmental friendliness in their advertisements. The FTC has guidelines for such advertisements. They should either qualify for the environmental claims or should completely avoid them. The advertisement should not make false claims.
Free products rules
Advertisements that market free products such as ‘buy one, get one free’ should clearly describe all the terms and conditions.
Jewelry guidelines
FTC has Jewelry guidelines for advertisements to ensure that the advertisements are truthful and accurate. These guides can be used to understand the use of certain terms, such as gold-plated or flawless diamonds. The guide also directs the seller to disclose accurate information to the consumers. For instance, the companies should specify if the product is an imitation, synthetic, or natural. The advertisers should adhere to these guidelines.
Mail or telephone order merchandise rule
The rule states that the advertised shipping period should be reasonable and accurate. The consumers should be updated about the shipping status in case of delays and should be provided refunds in case of cancellations.
Negative Option Rule
The sellers who advertise their products with subscription plans should carefully disclose the material information about the terms of the plan in the advertisements. In case the consumer is ready to enroll, the seller must send a notification before shipping the product. The consumer should have the option to decline the merchandise at this stage. All the terms and conditions should be disclosed to the customer before billing them.
900 Number Rule
This rule applies to advertisements that market pay-per-call services, such as services related to sweepstakes and games of chance. Such ads should disclose the cost of the call. Such ads need to deal with the bona fide education service defined in the rule to direct such ads to children under 12 years of age. They need to make additional disclosures even to target consumers under 18.
Telemarketing Sales Rule
All advertisements that encourage consumers to order goods or services by telephone need to adhere to this rule set by the FTC. Advertisements for advance fee loans, credit repair, any investment opportunity, or recovery of money paid in telemarketing transactions need to make certain disclosures to customers before accepting any payment.
FTC Guide concerning the use of testimonials and endorsements
Advertisements that include endorsements and testimonials should make claims that the advertiser can substantiate. Any kind of connection between the endorser and the company should also be disclosed. Appropriate tests and evaluations should be conducted to allow expert endorsement in the advertisement.
Written Warranty terms rule
There is a rule on pre-sale availability of written warranty terms that requires the seller to make sure that the warranties are present before the purchase of consumer products that cost more than $15. In case the advertisements include a warranty that the consumer can purchase online via mail, computer, or by using phone, then the seller must inform the consumer about the ways to get a copy of the warranty.
Guides for advertising warranties and guarantees
Sellers should be cautious about their advertisements for marketing and branding a business. If the advertisement contains terms like ‘’money-back guarantee,’’ then the intent should be to give a full refund for the mentioned reasons. The seller must inform the user about the terms of the offer.
Non-compliance with the laws
Every advertisement should abide by the guidelines and adhere to the rules made by the FTC. To keep a check on the advertisements, the FTC, along with law enforcement agencies, monitors the internet to find deceptive online advertising claims. The advertisers will have to face enforcement actions and lawsuits if they do not comply with the concerned laws.
Conclusion
There are regulations on advertising a product in every industry. Every business should follow these advertising regulations. The sellers can add lucrative offers in the ads to market their products. These offers can turn out to be different from how they sound. Advertising regulations are important to ensure that consumers can trust their surroundings. Sellers can review the mentioned regulations in detail to stay compliant with the legal guidelines.
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