The Federal Trade Commission Act (“FTC Act”) prohibits unfair or deceptive advertising. This includes a prohibition on distributing false advertisements, defined as “advertising that is misleading in any material respect.” Ultimately, the laws and regulations under the FTC Act can be summarized in two principles:
- Advertising must be truthful and not misleading.
- Advertisers must have adequate substantiation for objective claims made (both explicitly and implicitly) in their advertisements.
Whether advertising is truthful and not misleading is evaluated from the perspective of the consumer viewing the advertisement. This means it doesn’t matter what the advertiser’s intent is. Rather, it matters what the consumer takes as the overall impression of the advertisement, including any impressions created by reasonable implication.
Adequate substantiation requires the advertiser have a reasonable basis for making the claim in the advertisement. Substantiation is evaluated on a case-by-case basis and depends on the level of support claimed, the amount and quality of the evidence, and the relatedness of the evidence to the claim.
Failure to comply with these requirements can be costly. The Federal Trade Commission enforces the FTC Act, and consumer class-action plaintiff’s lawyers can bring private actions against businesses for violations. Our advertising and marketing attorneys work with client stakeholders to ensure compliance while promoting marketing effectiveness.
