In these tough economic times, driving business into the showroom is more important than ever. Many merchants invest significant resources into advertising their products in a manner designed to entice potential customers who might not otherwise walk in the door. This is a perfectly legal and time-honored tradition, but you have to do it right.
In general, advertising cannot be deceptive and must be capable of substantiation. Here are the general rules for avoiding unfair and deceptive advertising claims.
An ad is deceptive if it contains a “material statement” that is likely to mislead consumers acting reasonably under the circumstances. A “material statement” is one that is important to a consumer’s decision to buy or use the product. Omitting a material statement from your advertising can also be deceptive.
The FTC enforces deceptive advertising claims. In doing so, it looks at the ad from the point of view of the “reasonable consumer” (i.e. the typical person looking at the ad). It focuses on the overall context of the ad—how the words, phrases, and pictures work together—to determine what it conveys to consumers. From this inquiry, it identifies the “express” and “implied” claims in the ad.
An “express” claim is literal and straightforward. For example, “Our cars get 45 mpg” expressly claims the product gets 45 mpg. It would be deceptive if not true or if it was qualified by a small print footnote that said, “when being towed.”
An “implied” claim is one made indirectly or by inference. “Our cars are environmentally friendly” implies that the advertised vehicles give off fewer pollutants than other vehicles. Although the ad doesn’t literally say that, it would be reasonable for a consumer to conclude as much. Under the law, advertisers must have proof to back up express and implied claims that consumers take from an ad.
The FTC also looks at what is left out of the ad. For example, if you were to advertise an environmentally-friendly car that came with a gas or electric engine and did not disclose that in order to get the environmental benefit you would have to opt for the electric engine, the ad would be deceptive.
Make sure you maintain objective evidence that supports the claims in your ads. At a minimum, advertisers must have evidence to support their claims. For example, you shouldn’t claim, “Our cars are the most environmentally-friendly in the world” without reliable evidence of that fact, e.g. an objective survey. Subjective statements from satisfied customers are not sufficient to support factual claims.
So, as you run those ads (print, TV, radio, etc.) in your pursuit of today’s elusive customers, take a moment to be sure that your ad copy is not deceptive and that you can back up your claims. You’ll be glad you did.
Michael Benoit is a partner in the Washington D.C. office of Hudson Cook LLP. He is a frequent speaker and writer on a variety of consumer credit topics. Mr. Benoit is the author of “A Dealer’s Guide to the Red Flags Rule,” the first publication in the all-new CARLAW® Compliance Series, available at www.counselorlibrary.com. He can be reached at 202-327-9705 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Nothing in this article is intended to be legal advice and should not be taken as such. All legal questions should be addressed to competent counsel.