CHICAGO — Almost all businesses, including drycleaning companies, advertise. Few think about advertising law, however, until a complaint, a competitor’s challenge or a regulator’s letter shows up.
This was the focus of a recent National Federation of Independent Business (NFIB) Small Business Legal Center webinar, “Advertising and Privacy Law Basics for Building Consumer Trust,” presented by Mary K. Engle, executive vice president of policy at BBB National Programs. Engle spent years directing the Federal Trade Commission (FTC) Division of Advertising Practices before joining BBB National Programs, and she opened with a reminder that the rules apply no matter a company’s size.
“Almost every company is going to do some form of advertising, and it’s important to know the basics,” Engle says. “FTC law does require all ads, no matter who disseminates them, who puts them out, to be truthful, not misleading, and substantiated.”
What an Ad Actually Says
Whether an ad crosses the line isn’t about what the advertiser meant to say. It’s about what a reasonable consumer takes away from it.
“The FTC and other ad regulators interpret ads from the standpoint of reasonable, ordinary members of the target audience,” Engle says. That standard shifts with the audience: an ad aimed at doctors, she says, is judged differently than one aimed at the general public. But for most businesses, such as dry cleaners, it’s the ordinary consumer’s reaction that counts, not the most sophisticated reading or the most gullible one.
Ads are also judged as a whole, not sentence by sentence. “Ads are interpreted based on the overall impression they give,” Engle says, “both what’s said directly and what may be implied by what’s said or what’s not said by depictions in the ad.”
An ad can often have more than one reasonable reading, and that’s where businesses can get fouled up.
“You as the advertiser may intend one thing, and that’s a reasonable interpretation, but consumers may take away a different meaning that’s also reasonable,” Engle says. “And if any one of those interpretations is misleading, then the ad is considered legally deceptive. A lot of times companies get tripped up on that because they say, ‘Well, that’s not what we intended, that’s not what we said or what we meant to say,’ but if it’s a reasonable interpretation, then it can still be considered misleading.”
Fine Print Has Limits
Companies often lean on footnotes, fine print or a hyperlink to soften a claim. Engle says regulators generally don’t accept it.
The FTC requires that any disclosure or qualification be clear and conspicuous: “clear,” meaning plain language, no jargon, in the same language as the main ad, and “conspicuous,” meaning hard to miss. Online, Engle says, conspicuous means “unavoidable, so it can’t be hidden, such as under a hyperlink.”
A disclosure can add information. It can’t take back what the headline already promised. Engle credits a former FTC colleague with the line she still uses to explain it: “What the headline giveth, the fine print cannot taketh away.”
Backing Up Your Claims
Once you know what an ad conveys, the next question is whether you can prove it. The FTC’s substantiation doctrine requires “a reasonable basis for the claims in your ad at the time you disseminate the ads,” Engle says, and how much proof you need depends on what’s being claimed. Health, safety or scientific claims demand scientific evidence. A comparison to a competitor’s product needs testing. A claim about mere appearance needs less.
There’s one carve-out, Engle says: puffery. Obvious exaggeration, like calling a pillow “the softest on earth” or a pizza “the best in town,” doesn’t require proof, because reasonable consumers don’t take it literally. But the line isn’t always obvious.
“It’s not always clear what’s puffery,” Engle says. “There are plenty of court cases where the courts have decided something is puffery, or it was not puffery, so just to understand that’s a pretty subjective decision.”
Come back Thursday for Part 2 of this series, where we’ll look at who can bring an advertising challenge, how the industry’s own self-regulatory system works, and the specific claims regulators are watching most closely right now.
Have a question or comment? E-mail our editor Dave Davis at [email protected].
