Free items are promotional devices used to attract customers. When a product has a free offer, the price of the pruchased product must not be increased from its regular price. Besides that, if a product is “free” or offered at a lower cost along with the purchase of another item, the advertisement must clearly disclose all terms and conditions of the promotion. Important information like terms affecting the offer’s cost must be placed near the advertised price.
Advertisements promoting rebates should state the before-rebate price and the amoung of the rebate. This way, consumers have the information they need to make comparisons. Rebate ads should also disclose other conditions and terms including additional fees and when consumers should expect to receive the rebate.
The FTC’s regulations on endorsements state that all endorsements made by celebrities or experts should reflect his or her honest opinion or experience of the product, and not just the experience of a few satisfied customers. The endorsement should not contain any deceptive, unsubstantiated representations. The ad must also disclose if consumers can expect the same results or limited results as the endorser’s experience.
For expert endorsements, the endorser must meet certain qualifications before he or she is considered an expert in the field. Simply being an expert, however, isn’t enough. There has to be an actual evaluation or product testing other experts would normally conduct to support the concludes made in the expert endorsement.
Advertisements on the Internet are subject to the same laws as traditional advertising. All claims made on Internet advertisements have to be substantiated and truthful. Advertisers also need to be aware of privacy issues in internet marketing. The FTC encourages marketers and companies to implement four fair information practices:
1) Give consumers notice about the website’s information practices
2) Offer consumers the choice as to how their identifying information can be used by the website
3) Provide consumers with access to the private information the website collected about them
4) Ensure the security of all private information collected
Marketers also need to be aware of the Children’s Online Privacy Protection Act, which requires verifiable parental consent before using, collecting, or disclosing any personal information about minors.
Ad agencies behind infomercials must need proof that will back up all implied and express claims made by the advertisement about the product. Besides that, the infomercial must not deliberately copy the format of talk shows, news reports, or other independent programs. The FTC also requires that the ad agencies disclose that the program is a paid advertisement during the start of the infomercial and before the ordering information is shown. Since most infomercials feature endorsements from experts and consumers, the FTC also has regulations about the use of endorsements and testimonials. Should the infomercial fail to comply with the FTC’s regulation, the manufacturer and marketer are both held liable.
The Federal Trade Commission Act can impose the following penalties on a deceptive ad, depending on the nature of the violation.
Cease and desist. This legally-binding order requires the company to stop running the ad and/or the practice, to pay a fine of $11,000 per day if the company violates the law, to have substantiation for any claims made in future ads and to report these to the FTC.
Civil penalties. This can range from thousands to millions of dollars, depending on the violation. Some advertisers give partial or full refunds to those who purchased their product.
Corrective advertising. Advertisers are required by the law to take down the new ad, correct the misleading information, notify consumers about the deceptive claims, and include disclosures in future ads.
E-mail is a cheap and quick way to promote a product or services, but advertisers should remember that the claims they make for the product or the service must be truthful. This includes honoring any promises made to remove subscribers from their mailing list.
If the e-mail claims that the person can unsubscribe and no longer receive any future messages by following instructions like “click here to unsubscribe”, all removal options must work as claimed. This means that the process of unsubscribing must successfully work. All removal claims in the email must be reviewed to make sure that any representations being made is complied with. If the e-mail includes a hyperlink to unsubscribe, the hyperlink should be accessible and functional. If the individual needs to contact an e-mail address to unsubscribe, the address must be able to receive removal requests.
Advertisers need to inform consumers about all the claims the ad conveys. When claims are being identified, the advertiser should single out not just individual statements, but also the ad as a whole, including the copy, product name and description. If the ad makes any misleading claims without qualifying information, this information needs to be disclosed. The advertisers need to determine which claims need to be qualified and which should be provided in disclosure. All disclosed information must be clear and conspicuous to keep the ad from being misleading.
The function of disclosures is to put limits on a claim in an advertisement. Disclosures cannot fix false claims. If the disclosure contradicts the claim made in the ad, it’s not enough to keep the ad from being deceptive; the claim itself must be changed.
CAN-SPAM stands for Controlling the Assault of Non-Solicited Pornography and Marketing Act. This act establishes laws for those who advertise through e-mail, imposes penalties for spammers and companies who advertise their products in spam mail. CAN-SPAM has the following provisions:
Bans false sender information. The e-mail’s “from” information, including the e-mail address and the domain name, should be accurate and should identify the person or company who sent the email.
Prohibits misleading subject lines about the content of the e-mail.
Requires an opt-out method. A return e-mail address must be provided that allows the recipient to ask the company to not send any more e-mails to that address.
Requires the e-mail to identify itself as an advertisement or solicitation. It should also include the physical postal address of the company.
A study conducted by Jupiter Research shows that consumers that go online give more reception to ads that are behavioral than advertising that is contextual. This only shows for advertisers that behavioral targeted ads outshine contextual ads when it comes to consumer attention. The statistic is actually greater than at least 10 percent covering 14 major product categories. The study confirms that Internet users are now turning on the net to check on advertising. Because of the result of the study, it was found out that behaviorally receptive consumers are more likely to have better in fact higher source of revenues and they shop on the Net a lot more times than the others.