Common Legal Mistakes Small Businesses Make In Advertising

An aspect of doing business that many small businesses may not be aware of is that there are stringent legal rules to follow regarding advertising. The FTC is the ruling government body that is tasked with making sure every business is following stated Federal guidelines. It doesn’t matter if you run a mom and pop or sophisticated business operation. Every business should know something about these laws in order to avoid inadvertently breaking the law. When an advertising law is broken ignorance is no defense against suffering stiff penalties. In addition to federal rules, your state also has certain laws concerning consumer protection.

Advertising is the lifeblood of many small businesses and without it they would have to close their doors. Along with advertising, though, comes a serious obligation to provide truthful information to the public. For instance, if a business is struggling to bring customers in the door, the owner cannot simply dream up a scheme that entices people with misleading promises. While there are a few unscrupulous businesses that knowingly violate consumer trust, most businesses make advertising mistakes out of pure ignorance of the law.

For example, as reported in American News Report , Millennium Labs recently won a false advertising case against drug screening lab, Ameritox. The judge ruled Ameritox had made false claims about their urine drug test process. Their reputation could take a nosedive.

Deceptive Advertising

Some of the biggest and most common mistakes that businesses make in their advertising falls under the label of deceptive advertising. There are plenty of ways to get into trouble here.

Using Free Offers

Lots of businesses advertise special offers that involve giving away an item free of cost. Consumers love this type of deal and freebies often bring eager people ready to spend money. These specials usually mean that the customer buys one item and gets a second item free. This is perfectly fine, unless, the business adds on additional charges to that free item. Suddenly, this item isn’t really free anymore. If there are going to be any additional fees to be paid along with an advertised freebie, this must be clearly stated in the ad. If it is not, this is considered deceptive.

Bait and Switch

One of the oldest advertising tricks in the book is to publicly advertise a sale on a popular item, luring in customers, and once they are in the store they are told the item is no longer available at the advertised low price. Often consumers are steered towards more expensive items. This is illegal. Also, you must make sure that your business has enough inventory in stock to cover an advertised sale. If the item is in high demand, but you quickly run out of it, you can be accused of bait and switch. Be sure to say in the ad that there is limited inventory to protect against accusations.

Endorsements and Testimonials

If a business is lucky enough to get an endorsement from a local or national celebrity, and they are being paid for said endorsement, this must be fully disclosed in advertising. Likewise, anytime a customer or other person provides a business with a testimonial, their statements must be completely truthful. Never fake any type of testimonial under any circumstances. The FTC is cracking down on businesses that do this. This rule also covers the use of photographs. You may not substitute a stock photo image for a real person. You can get into hot water fast if someone complains you’re using their image without their express legal permission. All product photos in advertisements must show it in normal use. Any photo retouching that is out of the ordinary must be fully disclosed.

This article was written on behalf of Zion and Zion. Looking for great advertising agencies in Phoenix? Look no further! Check out Zion and Zion and see how they can help your business.


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