Have you ever been presented with a sales strategy and wondered "can we do this"?
As business owners, it’s our job to either make sales or hire a team to do it for us. Have you ever been presented with a sales strategy or a marketing campaign and wondered “can we do this”? Have you ever wondered where the line is between aggressive vs. illegal sales strategies? Is there a meaningful difference between embellishing the truth and stretching the truth? If you’ve wondered about do’s and don’ts when it comes to advertising, read on.
The primary regulator in charge of enforcing advertising laws in the U.S. is the Federal Trade Commission (FTC). While there are a plethora of laws and regulations related to advertising, they can be distilled into three principals:
Don’t be deceptive
Don’t make unsubstantiated statements
Don’t be misleading
Easy, right? Not necessarily.
Case Study
Last year, the FTC took action against an investment advice company and ordered them to pay 1.7 million for deceiving consumers. Below are some of the advertising claims that the FTC specifically called out:
“I’ll show you how you can potentially make $24,840 dollars—or more—every single week”
“[the service] granted me ultimate freedom”
“we give you everything you need, and if you’re a beginner not a problem”
“so simple and so easy that anybody could do it with just a few minutes of free time”
“could quite literally transform your life”
“put you on the path to millionaire status, no matter your starting point today”
“the opportunity of a lifetime for anyone who wants to retire stress free”
Advertising claims such as these are not uncommon and you may even have some of these in your own marketing materials. The issue is not with the claims themselves. The question is whether the claim is deceptive, unsubstantiated or misleading. Let’s take a closer look at some of the behavior that the FTC frowns upon:
Associating your business with experts
Advertising claim: Prestigious or influential “experts” are either personally providing the service or were substantially involved in designing the service.
Reality: The named experts have little or no involvement in providing or designing the service.
Explanation: Businesses are increasingly including experts and other influential people on their websites and in their marketing materials. Sometimes these individuals are labeled as “collaborators”, “advisors” or just members of the “team”. This type of positioning has the potential to create false impressions by implying that people are involved in running the business or providing services when in fact they are not.
Cherry-picking testimonials
Advertising claim: Our users get average returns of 20% on their investment.
Reality: This result is an outlier and is not typical for the average user.
Explanation: While it is tempting to cherry-pick testimonials from your most successful clients or customers, doing so might be misleading if it implies that those results are typical or likely for every purchaser.
False urgency and scarcity
Advertising claim: Spots are limited! Sign up now and get a special discount.
Reality: The business is willing to accept as many purchasers as it gets and no one actually pays the supposed “retail price”.
Explanation: Despite what your business coach may have told you, falsely creating a sense of urgency or scarcity could be illegal. Claiming that a program has “limited spots” when in reality you are willing to accept as many sign-ups as you can get is misleading.
Trying to smooth things over with disclaimers
Advertising claim: “Past performance is not indicative of future results”
Reality: This disclaimer is buried in a hard-to-find section of the website and is contradicted by all of the other marketing materials.
Explanation: Truthful disclaimers do not cure false advertising. This is especially true when the disclaimers are hard to find, require scrolling to the bottom of the web page, are written in small font and/or are written in legalistic or hard-to-understand language.
Takeaways
Your marketing team needs to be empowered with the do’s and don’ts of advertising. Chances are, they are not spending their free time perusing FTC regulations. Training and guidance from a good business attorney can help ensure that your marketing is powerful and persuasive, without creating unnecessary legal risk.
Thanks for reading the Bevel Law Blog! While this information is hopefully helpful to you, nothing in this blog is intended to be legal advice. Always consult a lawyer before making any legal decisions based on topics in this blog.
Ready to secure your intellectual property? Book a call today at bevellaw.com/call.
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