Marketing is the heart and soul of doing business and, in many of our articles, we have touched on the various advertising channels and techniques which home-based business owners should use for promoting their products and services. Today we shall approach a different topic related to marketing which any business owner should know about: the laws and regulations concerning advertising.
These days, marketers cannot make any wild claims they wish about the products and services they are promoting. They cannot post statistical numbers which are untrue, testimonials that were paid for and not offered by customers without prompting from businesses, and other such misleading and potentially ambiguous content. Now, this does not mean that we believe that the readers of our blog would resort to misleading advertising. However it is easy to break an advertising regulation without ill intent and get sued by customers who misunderstand your statements in marketing materials.
Before we move on, you should know that all marketing and advertising rules are made and enforced by the Federal Trade Commission and we encourage you to visit their website frequently in order to be up to date with the latest changes in applicable regulations. And now let us focus on the core aspects of advertising regulated by the FTC:
1. The Lanham Act
This particular regulation is not addressed to consumers, but to business entities. Thus, if any company feels their trademark was used by a competitor in marketing and advertising materials in a deceptive manner they can sue and win if they can prove that:
⦁ There were false claims made in connection with the product;
⦁ The deception included in the advertising material affected a large number of consumers;
⦁ The deception represented a significant, or a major part of, the advertising message;
⦁ The product was resold across states;
⦁ The trademark holder was injured and likely to incur loss due to the deceptive advertising.
What does it mean for small business owners? If you open an online store reselling products under trademarks, make sure that every claim you make about the characteristics and benefits of the product is in full agreement with the official description provided by the trademark holder.
2. Pricing Regulations
These regulations apply to any kind of special promotions and discounts which companies promote in their advertising. Thus, whenever you promote a discounted price, you should also publish the catalog (regular) price for which the item is sold, allowing people to discern the benefit of the discount.
Another aspect revolves around promoting your price for an item as lower than that practiced by comparative-sized companies or retailers. Whenever you make such a claim, you should be able at any moment to back it up by a market study of reasonable diligence. For example, it is fair to say that your price for a pair of shoes is $30 compared to $45 in similar store; however, it is dishonest to search for the highest price practiced by a few boutique stores and state that you sell shoes normally priced at $70 for $30.
Thirdly, be very careful of the use of the word “free” in your advertising materials. There are laws against the abuse of this word as clickbait, for example in the situation when people will receive a free item, but only on condition of making a purchase.
3. Testimonials/Product Presentations
Except for celebrity endorsements (which are generally known to be paid), whenever you offer compensation for testimonials, this should be specified within the advertisement. Also, whenever you feature customers using your product, if you apply any kind of retouching to the photos or videos, use the products outside the normal environment and normal conditions which the average customer will experience, this should also be stated in clear terms.
4. Spam Policy
In the US there is a zero tolerance policy against unsolicited emails. Since most small businesses use email marketing in order to gain more customers and keep the existing ones loyal and engaged, it is very important to know that each of your email messages must contain a disclaimer in the footer stating that it is not an unsolicited email and to offer simple and clear steps for unsubscribing from receiving further emails. Needless to say, if you receive an unsubscribe request, you must follow through at once and refrain from sending any other message to that email address, except for the confirmation that the user was unsubscribed successfully.
As you can observe, these rules and regulations are quite simple, straightforward and make lots of sense. Be honest in presenting the features and benefits of your products, disclose any paid testimonials you publish, and refrain from spamming people and you will be safe.