Advertising and Marketing on the Internet: Rules of the Road
(From The Department of Commerce)
The Internet is connecting advertisers and marketers to customers from Boston to Bali with text, interactive graphics,
video, and audio. If you're thinking about advertising on the Internet, remember that many of the same rules that apply
to other forms of advertising apply to electronic marketing. These rules and guidelines protect businesses and
consumers and help maintain the credibility of the Internet as an advertising medium. The Federal Trade Commission
(FTC) has prepared this guide to give you an overview of some of the laws it enforces.
Advertising must tell the truth and not mislead consumers.
In addition, claims must be substantiated.
General Offers and Claims Products and Services
The Federal Trade Commission Act allows the FTC to act in the interest of all consumers to prevent deceptive and
unfair acts or practices. In interpreting Section 5 of the Act, the Commission has determined that a representation,
omission, or practice is deceptive if it is likely to:
mislead consumers or
affect consumers' behavior or decisions about the product or service.
In addition, an act or practice is unfair if the injury it causes, or is likely to cause, is:
substantial,
not outweighed by other benefits, and
not reasonably avoidable.
The FTC Act prohibits unfair or deceptive advertising in any medium. That is, advertising must tell the truth and not
mislead consumers. A claim can be misleading if relevant information is left out or if the claim implies something that's
not true. For example, a lease advertisement for an automobile that promotes "$0 Down" may be misleading if significant
and undisclosed charges are due at lease signing.
In addition, claims must be substantiated, especially when they concern health, safety, or performance. The type of
evidence may depend on the product, the claims, and what experts believe necessary. If your ad specifies a certain
level of support for a claim - "tests show X" - you must have at least that level of support.
Sellers are responsible for claims they make about their products and services. Third parties - such as advertising
agencies, website designers, and catalog marketers - also may be liable for making or disseminating deceptive
representations if they participate in the preparation or distribution of the advertising, or know about the deceptive
claims.
Advertising agencies or website designers are responsible for reviewing the information used to substantiate ad claims.
They may not simply rely on an advertiser's assurance that the claims are substantiated. In determining whether an ad
agency should be held liable, the FTC looks at the extent of the agency's participation in the preparation of the
challenged ad and whether the agency knew or should have known that the ad included false or deceptive claims.
To protect themselves, catalog marketers should ask for material to back up claims rather than repeat what the
manufacturer says about the product. If the manufacturer doesn't come forward with proof or turns over proof that looks
questionable, the catalog marketer should see a yellow caution light and proceed appropriately, especially when it
comes to extravagant performance claims, health or weight loss promises, or earnings guarantees. In writing ad copy,
catalogers should stick to claims that can be supported. Most important, catalog marketers should trust their instincts
when a product sounds too good to be true.
Other points to consider:
Disclaimers and disclosures must be clear and conspicuous. That is, consumers must be able to notice, read or hear,
and understand the information. Still, a disclaimer or disclosure alone usually is not enough to remedy a false or
deceptive claim.
Demonstrations must show how the product will perform under normal use.
Refunds must be made to dissatisfied consumers if you promised to make them.
Advertising directed to children raises special issues. That's because children may have greater difficulty evaluating
advertising claims and understanding the nature of the information you provide. Sellers should take special care not to
misrepresent a product or its performance when advertising to children. The Children's Advertising Review Unit (CARU)
of the Council of Better Business Bureaus has published specific guidelines for children's advertising that you may find
helpful.
Dot Com Disclosures: Information About Online Advertising, an FTC staff paper, provides additional information for
online advertisers. The paper discusses the factors used to evaluate the clarity and conspicuousness of required
disclosures in online ads. It also discusses how certain FTC rules and guides that use terms like "writing" or "printed"
apply to Internet activities and how technologies such as e-mail may be used to comply with certain rules and guides.
Protecting Consumers' Privacy Online
The Internet provides unprecedented opportunities for the collection and sharing of information
from and about consumers, but studies show that consumers have very strong concerns about the security and
confidentiality of their personal information in the online marketplace. Many consumers also report being wary of
engaging in online commerce, in part because they fear that their personal information can be misused.
These consumer concerns present an opportunity for you to build on consumer trust by implementing effective voluntary
industry-wide practices to protect consumers' information privacy. The FTC has held a number of workshops for
industry, consumer groups, and privacy advocates to explore industry guidelines to protect consumers' privacy online.
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