Truth-in-Advertising Laws

Advertising laws are aimed at protecting consumers by requiring advertisers to be truthful about their products and to be able to substantiate their claims. All businesses must comply with advertising and marketing laws, and failure to do so could result in costly lawsuits and civil penalties. So before you start an advertising campaign, it's important you understand some basic rules.

The Federal Trade Commission (FTC) is the main federal agency that enforces advertising laws and regulations. Under the Federal Trade Commission Act:

• Advertising must be truthful and non-deceptive;
• Advertisers must have evidence to back up their claims; and
• Advertisements cannot be unfair.

Additional laws apply to ads for specialized products like consumer leases, credit, 900 telephone numbers, and products sold through mail order or telephone sales. State and local governments also regulate advertising, and enforcement is usually the responsibility of a state attorney general, a consumer protection agency or a local district attorney.

The following resources and how-to guides help small business owners comply with federal advertising laws:

General Information

• Advertising Fact Sheets for Small Businesses
  FTC fact sheets that explain how to comply with laws covering truth-in-advertising, marketing, and product labeling laws and regulations. Includes information on specific types of products and services.
• Advertising Guidance Documents
  Detailed guidance, policy statements, workshops and notifications issued by the FTC on a variety of advertising laws and regulations.
• Frequently Asked Questions : A Guide for Small Business
  Answers to common questions about truth in advertising laws, unfair practices, and rules that apply to specific products and types of advertising.
• Green Lights & Red Flags : FTC Rules of the Road for Advertisers
  Information about workshops offered nationwide about complying with federal truth-in-advertising laws.

Pricing Rules

• Guide Against Deceptive Pricing
  Guidance on how to comply with laws regarding comparison and bargain pricing.
• Guide Against Bait Advertising
  Learn how to avoid illegal bait and switch tactics when pricing products.
• Guide Concerning the Use of the Word "Free" and Similar Representations
  Learn the proper ways to advertise "free" items, such as "buy one, get one free."
• Good Pricing Practices
  It is against the law to charge more than the advertised shelf price for a product. Stores that do may be subject to civil and criminal fines. This guide provides suggestions for pricing your products and services.

Endorsements and Testimonials

• Guide Concerning Use of Endorsements and Testimonials in Advertising
  Explains how to advertise using endorsements from customers, experts and critical reviews.
  

State and Local Advertising Laws

Individual states and some localities have also passed specific truth-in-advertising laws. The Consumer Action Handbook provides links to state and local agencies responsible for enforcing truth-in-advertising and related consumer protection laws.