Advertising and Marketing on the Internet

by Victoria Reynolds

The Internet is connecting advertisers and marketers to customers to advertisers and marketers to customers again from Boston to Bali with text, interactive graphics, video, and audio. As you and your business join the masses online, it’s important to remember that many of the same rules that apply to other forms of advertising apply to electronic marketing. These rules and guidelines protect businesses and consumers and help maintain the credibility of the Internet as an advertising medium.

The Federal Trade Commission (FTC) is an agency of the federal government charged, among other things, with consumer protection. The FTC offers two fundamental principles to remember: Advertising must tell the truth and not mislead consumers and in addition, claims must be substantiated.

General Offers and Claims Products and Services

The Federal Trade Commission Act allows the FTC to act in the interest of all consumers to prevent deceptive and unfair acts or practices. In interpreting Section 5 of the Act, the Commission has determined that a representation, omission, or practice is deceptive if it is likely to:

• mislead consumers or
• affect consumers’ behavior of decisions about the product or service.

In addition, an act or practice is unfair if the injury it causes, or is likely to cause, is:

• substantial,
• not outweighed by other benefits, and
• not reasonably avoidable.

The FTC Act 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’s not true. For example, a lease advertisement for an automobile that promotes “$0 Down” may be misleading if significant and undisclosed charges are due at lease signing.

In addition, claims must be substantiated, especially when they concern health, safety, or performance. The type of evidence may depend on the product, the claims, and what experts believe necessary. If your ad specifies a certain level of support for a claim – “tests show X” – you must have at least that level of support.

Sellers are responsible for claims they make about their products and services. Third parties – such as advertising agencies, website designers, and catalog marketers – also may be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims.

Other points to consider:

• Disclaimers and disclosures must be clear and conspicuous. That is, consumers must be able to notice, read or hear, and understand the information. Still, a disclaimer or disclosure alone usually is not enough to remedy a false or deceptive claim.

• Demonstrations must show how the product will perform under normal use. Refunds must be made to dissatisfied consumers if you promised to make them.

• Advertising directed to children raises special issues. That’s because children may have greater difficulty evaluating advertising claims and understanding the nature of the information you provide. Sellers should take special care not to misrepresent a product or its performance when advertising to children. Additionally, as a result of The Children’s Online Privacy Protection Act (COPPA) and the FTC’s implementing Rule which took effect April 21, 2000, commercial websites directed to children under 13 years old or general audience sites that have actual knowledge that they are collecting information from a child must obtain parental permission before collecting such information.

The Internet has provided us with unprecedented opportunities for reaching consumers and collecting and sharing information and it is important as we to protect the credibility of this medium. Remember, the internet may be the “New Frontier” of commerce but it cannot be treated like the “Wild West”.

Source: Advertising and Marketing on the Internet

*SBA’s participation in this blog does not constitute an endorsement of the William E. Simon Graduate School of Business Administration or any other person or entity. SBA’s programs and services are provided to the public on a non-discriminatory basis.