FTC Guidelines and How They Affect Internet Marketers

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legalpic1 FTC Guidelines and How They Affect Internet Marketers

The Internet connects advertisers, marketers and customers from all parts of the globe; so if you’re thinking about advertising online, just remember many of the same rules of advertising offline apply to the electronic marketplace.

The Federal Trade Commission Act allows the FTC to act in the interest of all consumers to prevent misleading, deceptive and unfair acts or practices in advertising.


The FTC has determined that a representation, omission or practice is deceptive if it is likely to:


1. Mislead consumers


2. Affect consumers’ behavior or decisions about a product or service.


An act or practice is unfair if the injury it causes is:


1. Substantial


2. Not outweighed by other benefits


3. Not reasonably avoidable.


The FTC 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 is not true. For example, an advertisement for a car lease that says “No money Down” can be misleading if significant and undisclosed charges are due at the signing time.


Also, there can be no unsubstantiated claims, like a “cure-all tonic” which would be considered health related. Health and safety are of particular concern to the FTC when such claims unrealistic or otherwise are made concerning the performance of a product. The kind of evidence will depend on the kind of product it is, the claims, and what experts deem necessary. If the advertisement features a certain level of support for a claim, such as “9 out of ten doctors…” then you have to at least have that level of support.


Other factors that come into consideration are “Disclaimers” and “Disclosures.” They must be clear and plainly visible. That is, website visitors must must be able to see, read or hear, and be able to understand the pertinent information. However, a disclaimer or disclosure alone usually isn’t enough to make up for a false or deceptive claim.


Testimonials and endorsements must show the typical experiences of the consumers, unless within the ad, clear and conspicuous, it states otherwise. A statement like “not all consumers will experience the same results” is not enough to qualify a claim. Testimonials and endorsements cannot be used to make a claim the advertiser itself cannot substantiate.


If your ad uses a term like “money-back guarantee,” or “satisfaction guaranteed” you have to be willing to give a complete refund for any reason. You must also inform the buyer of the exact terms of the offer.  By not complying with these rules you run the serious risk of being prosecuted by the FTC. Successful prosecutions typically result in injunctions against your website and damages awarded to the violated party and in some cases the seizure of property and assets.


These rules may seem strict when you first look them over, however, they are there for our protection. So much fraud occurs online and these safeguards help keep the internet safe and secure for commerce and business, as well as personal safety and security. It would be difficult to determine on our own if all products and services were at least what they claim without these guidelines in place.


As an internet marketer it is a challenge to stay in keeping with these guidelines but just as important. Many online products are digital, that is, downloadable software, video instruction, or content. Often times valuable secrets and information are revealed at a premium and yes, results do vary according to many factors once a program is purchased. The motivation and marketing skills are certainly a factor and what works for some may not work for others. This is just an area that marketers need to be aware of and be able to honor the refund guidelines or structure a program so the return policies are clearly stated.


Another curiosity I’ve always had and I’m not sure if it is addressed or where; is the use of characters or fantastic events in an ad campaign that do not relate to the product. I alluded to this in another post about advertising. My assumption is obviously these type of ads like the “Mayhem ad”s or Geico ads may make the characters feel a certain way but it is not saying the product will do this. This is certainly a gray area and I would welcome input about how this works and what the rules are. This is especially important to me since I run another site that is founded on a fictitious character.  What are your thoughts?


This post is not intended to dispense or offer legal advice.  Consult with an attorney if you have any legal questions about your business or in the way you promote a product.


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