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Deal Accelerators: False Advertising & Advertising Compliance 101

Posted by Jen McCabe on December 11, 2017 at 9:05 AM
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Series Note: The goal of our Deal Accelerators series is to help in-house attorneys provide greater support to their business teams by sharing useful resources – written in plain English by our team of former in-house lawyers – designed to educate, encourage collaboration and facilitate the completion of important business objectives. In previous posts, we have shared checklists to promote marketing collateral compliance and avoid delays with online product launches. 

 

The Basics of Advertising Compliance What is False Advertising

As you know, advertising is a highly-regulated business practice. Legal risks associated with false advertising exist at the federal and state level, under consumer protection laws and through NAD challenges, and more importantly, on a consumer level, such practices can lead to upset customers, poor reviews and negative press. By collaborating with business units in the “early stages” of new brand development, marketing campaigns, sales strategy, legacy product updates and other initiatives, legal team members are likely to uncover key concerns well-ahead of important deadlines, enabling them to offer solutions for minimizing risk while still achieving the desired marketing objectives.

The legal team should start by educating internal client groups on the basics of advertising compliance. Below are some suggestions on what to include in your in-house training materials.

1. Provide an overview of the types of advertising claims and their potential pitfalls.

Comparative Advertising

Comparative advertising is a technique used by advertisers to claim superiority or parity of a product (or service) against another product. The comparison can be direct or indirect and can be against a third party or against the claimant’s own alternative products. Because comparative claims are often challenged by the affected competitor, it is important that truthful, documented substantiation of such claims is in-hand prior to such claims being made.

Non-Comparative Advertising

Non-comparative advertising, also known as “monadic” claims, are claims made by advertisers touting the alleged benefits of the product itself, based on its own attributes, without comparisons to another product. Although third party products are not mentioned, monadic claims can be challenged for being false and/or misleading, and therefore, substantiation is also advised. 

Implied Advertising

Even if an advertising statement is literally true, it still might not be lawful. A truthful claim can be challenged for being open to interpretation as false or misleading. In other words, the statement may be accused of conveying a message beyond the words themselves, therefore creating an implied advertising claim. Determining how a claim may be interpreted involves a careful examination of the context in which the claim is made, including consideration of the consumer’s reasonable interpretation and the reliability of the substantiation supporting the claim.

2. Explain what types advertising will require legal review.

All outward facing materials must be submitted for review, including

  • Traditional print, TV, radio and internet banner ads
  • Labeling, packaging or brochures that accompany the purchase
  • In-Store Signage, Point-of-Sale displays, Fact Tags
  • Copy posted on the brand’s or any website, including blog posts and articles
  • Contests and Sweepstakes, their rules, any associated promotional materials and websites and related documents
  • Promotional emails and letters to customers
  • Social media pages and posts, comments, responses, endorsements, and testimonials
  • Press releases, external communication, industry announcements, and newsletters
  • Branded content, sponsored articles, or other native advertisings
  • Home shopping advertisements, scripts, infomercial, etc.

Advertising materials must be reviewed EVEN IF the submitter says…

  • “I got it from a co-worker or from another territory and they 
    said I can use it or it was previously approved by Legal.”
  • “I got it off something that was approved before.”
  • “I found it on the internet.”
  • “I got it off the website.”
  • “I got it off another business group (and just assumed it was legally approved).”
  • “Our competitors say the same thing.”
  • “We always do it this way”

3. Clarify the role of disclaimers and how to make effective advertising disclosures.

Disclaimers
Disclaimers cannot fix false or misleading copy, and will not provide protection against accusations of false or misleading advertising. Instead, disclaimers are often used to explain details about a claim or to include legally mandated information. In general, disclaimers must abide by the following guidelines:

  • Disclaimers should clarify, but not contradict, the copy to which they refer.
  • Disclaimers must be readable and understandable. What is readable and understandable will depend on the actual medium of the advertising, how large the font size is on the claims made, and who the target audience is and how they are receiving the information.
  • Disclaimers must be placed close to the copy to which they relate and be “clear and conspicuous.” To determine if a disclosure meets this standard, use the “4 P’s of Disclosures” adopted by the FTC:
    • Prominence – Disclosure must be big and bold enough for consumers to easily see and notice.
    • Presentation – Disclosure must be worded in a way that consumers can easily understand.
    • Placement – Disclosure must appear where consumers are likely to look.
    • Proximity – Disclosure must be close to the claim it modifies.

For a downloadable version of these advertising compliance training materials, please click here.

 

Jen McCabe is a Member of Outside GC’s New England-area team. As a former GC, she has managed cross-functional operations, developed corporate and legal strategies, mitigated risk and ensured legal compliance on behalf of her clients. Jen can be reached at jmccabe@outsidegc.com.

Topics: Advertising

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