7.13 Legal Considerations – Advertising

The advertising substantiation rule is of paramount importance for anyone collecting and evaluating information to use in a comparison ad. The advertiser must be able to substantiate any claim about a product or service with information that backs up such claims. This means that you, as the advertising professional, will follow a comprehensive information strategy in preparing the background information for any such ad.

The main governmental regulatory agency for advertising is the Federal Trade Commission. The FTC regulates unfair and deceptive practices on a case-by-case basis and occasionally with industry-wide regulations.

The FTC has the power to require that advertisers prove their claims. If the FTC determines that an advertisement is deceptive, it can stop the ad and order the sponsor to issue corrections. Corrective advertising provides information that was omitted from a deceptive ad. Some companies are fined for their illegal acts. It is extremely rare, but someone could also be jailed for a deception.

Many states also have laws that regulate deceptive advertising. Individual consumers also have the right to sue companies for deceptive advertising.

The advertising industry also has a two-tiered self-regulatory mechanism. Advertising that is charged with being deceptive can be referred to the National Advertising Division (NAD) of the Council of Better Business Bureaus. For cases that are not satisfactorily resolved through NAD, appeals can be made to the National Advertising Review Board. The Board can put pressure on advertisers through persuasion, publicity or even legal action if it is deemed necessary.