5 Ad Gaffes & How Savvy Companies Avoid Them

90 views
0

By Lesley Fair, Attorney, Federal Trade Commission Bureau of Consumer Protection

Whoever said there’s no such thing as bad publicity didn’t consider the effect that legal action by federal or state law enforcers can have on a company’s reputation for truth and trustworthiness.

Every case announced by the Federal Trade Commission (FTC) includes consequences for the company in question and important compliance advice for trusted businesses that want to remain on the right side of the law.

Derived from recent FTC cases, here are five key truth-in-advertising principles for all companies to consider.

1. Evaluate ad claims from the consumer’s point of view.

Advertisers are responsible for all claims, express and implied, that reasonable consumers take from their ads. What’s the difference between an express claim and an implied one? In an FTC action against a major food company, a federal court described it this way:

Suppose a certain automobile gets poor gas mileage, say, 10 miles per gallon. One advertisement boasts that it gets 30 miles per gallon, while another identifies the car as the “Miser,” depicts it rolling through the countryside past one gas station after another, and proclaims that the car is inexpensive to operate. Both ads make deceptive claims: the first does so expressly, the second does so impliedly.

The claims a company intends to convey are relevant, of course, but what really matters to the FTC is the net impression left with consumers. And as advertisers know, ad copy is just one part of that net impression. Visuals, sounds, product demonstrations, disclosures, testimonials, and even the information an advertiser doesn’t reveal may be relevant, too.

The FTC’s experience in recent cases suggests that some marketers attempt to backpedal on bold promises by relying too heavily on subtle wordsmithing. “But we didn’t say it eliminated arthritis pain,” some marketers have argued. “We said it would help eliminate arthritis pain.” Consumers, however, may not grasp that nuance, especially when the rest of the ad makes a hard-sell pitch.

2. Have sound science to back up objective product claims.

As a starting point, advertisers must have at least the level of support they claim to have. For example, if a company says that “two studies at a leading medical center” support its product promises, the company must have that evidence in hand before running the ad.

What if an ad doesn’t refer to a specific level of support? In that case, FTC law requires that companies have a reasonable basis for both express and implied claims. A number of factors determine the appropriate amount and type of substantiation required, but one critical criterion is the kind of substantiation experts in the field believe is reasonable.

If a representation relates to health, safety, or product efficacy, companies must have competent and reliable scientific evidence, defined in recent FTC cases as “tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.” And as a recent litigated action against a national juice brand makes clear, if a company makes a disease-related claim or a claim about a serious medical condition, randomized clinical testing may
be necessary.

Having proof in hand is just one step on a company’s predissemination checklist. It’s also important to evaluate the underlying methodology. Does the testing follow established standards in the field? Was the tested product the same as what’s being sold? Is it used in the same way? (For example, the effect of an active ingredient taken in pill form will be different from the same ingredient when topically applied.) Are the reported results statistically significant?

What’s more, studies can’t be evaluated in isolation. Advertisers should consider all relevant research relating to the claimed benefit. It’s unwise to focus only on evidence that tends to support a result while ignoring data that raises red flags.

In addition, make sure the science fits the advertised claim. In one FTC case, for instance, some scientific evidence suggested that a product could reduce the severity of the common cold. However, consumers were told, “If you take these on a preventative basis, you might not ever get a cold at all.” Somewhere between the scientific research and the ad claim “reduce the severity” turned into “prevent” — an example of the kind of overreach that can land advertisers in legal hot water.

Another compliance tip: Exercise caution before jumping on the marketing bandwagon. A few years ago, advertisers began to tout green tea as the weight loss ingredient du jour. The science, however, didn’t measure up to the hype, resulting in FTC cases against multiple parties in the distribution chain. Recently, more companies have been offering products promising improved cognition for kids, older consumers, and everyone in between. But as a half dozen FTC settlements suggest, some advertisers rushed to market without having their scientific houses in order.

3. Don’t use endorsements to convey claims you can’t otherwise prove.

Most companies understand that endorsements must reflect the honest opinion of the endorser. But an advertiser’s obligation doesn’t end there. According to the FTC’s Guides on the Use of Endorsements and Testimonials, “an endorsement may not convey any express or implied representation that would be deceptive if made directly by the advertiser.” In other words, endorsements from satisfied customers aren’t a substitute for objective proof.

It’s also unwise for advertisers to focus only on endorsements that reflect best-case scenarios. Under FTC law, testimonials claiming specific results usually will be interpreted to mean that the endorsers’ experience reflects what others can expect to achieve. Disclaimers like “results not typical” or “individual results may vary” won’t change that interpretation. That leaves advertisers with two choices: have adequate proof to back up the claim that the results shown in the ad are typical, or clearly disclose the generally expected performance consumers can expect.

In addition, if there’s a connection between an endorser and a marketer that consumers wouldn’t expect and it would affect how consumers evaluate the endorsement, that connection should be disclosed. For example, the FTC took action when an advertiser failed to disclose that “satisfied customers” featured in ads actually worked for the company. The same disclosure requirements apply if an endorser has been paid or given something of value to tout a product. The FTC also has settled cases when companies didn’t disclose that experts who endorsed a product were married to corporate officers.

4. If a disclosure is necessary to prevent deception, it must be clear and conspicuous.

To be effective, disclosures should reach out and grab consumers’ attention. In general, a disclosure should be in an easy-to-read font, in a shade that stands out against the background, and close to the claim it modifies. Consumers are more likely to notice a disclosure made in both audio and video, especially if the spoken component is read at a cadence that’s easy to understand and the print is big enough to notice and read.

Decades of FTC cases establish that fine-print footnotes, dense blocks of text, fleeting superscripts, and obscure hyperlinks all fail the clear and conspicuous standard. In a recent settlement, for example, a company prominently advertised online a “30-Day Money-Back Guarantee” but buried key limitations behind a tiny hyperlink that consumers had to scroll down to see. The FTC said it was a deceptive practice for the company to “disclose” material information in that inadequate fashion.

As marketing migrates to smartphones, advertisers are faced with the additional challenge of designing disclosures for smaller screens. But even as the technology changes, the underlying truth-in-advertising principle remains the same: Disclosures must be clear and conspicuous. If advertisers can’t effectively disclose necessary information on a particular platform, they shouldn’t use that platform to disseminate ads that require disclosures.

5. Consider the claims you convey via social media.

Generally speaking, objective product claims made on social media are subject to the same truth-in-advertising standards that apply in print, on TV, or on the radio. “But it was just a tweet” or “We only said it on Facebook” aren’t persuasive defenses to FTC allegations of deception.

Advertisers who use bloggers and other social media influencers to promote their products should have programs in place to train and monitor what others are doing on their behalf. Although bloggers and endorsers may be personally liable for deception, the buck ultimately stops with the advertiser. Social media savvy marketers explain to network members what they can — and can’t — say about how a product performs. Marketers also follow up to make sure members are complying with those standards and take decisive actions if affiliates refuse to toe the legal line.

The failure to disclose material connections between advertisers and social media endorsers is an area of increasing law enforcement focus. In one case, the FTC alleged that in connection with a product launch, an ad agency directed its employees to post favorable tweets from their personal accounts without requiring disclosures that the tweeters worked for the agency hired to promote the product. In another action, the FTC charged that a national retailer paid substantial sums to 50 online influencers to post Instagram photos of themselves wearing a dress from the company’s latest fashion line without disclosing the connection to consumers. 

Lesley Fair is an attorney with the Federal Trade Commission’s (FTC) Bureau of Consumer Protection. After 20 years as a litigator, she now specializes in industry outreach and serves as the FTC’s primary business blogger at business.ftc.gov.