11/ 06/ 2006
by Vicki Gerson
Remember that Alltel commercial that poked fun at the mascots of the major cell phone companies? Catherine Zeta-Jones, representing T-Mobile, hangs out with Cingular's little orange guy and that man in the trench coat from Verizon, and they are all amazed at Alltel's new service, My Circle. A lawsuit was sure to ensue, you thought. After all, Alltel appeared to be claiming that its competitors were endorsing its new service. But nothing ever came of it. That's because they weren't the real characters you generally associate with Cingular, T-Mobile and Verizon; they were merely look-alikes, albeit believable ones. Alltel was careful, which is exactly how your business needs to be when it comes to your advertising campaigns.
Advertising is regulated both by the Federal Trade Commission and at the state level, and non-compliance can be costly. Before you release any advertisement, it pays to check out the state and federal rules to make sure you are in compliance.
Here's a look at some of the most common advertising mistakes small businesses make that could get them in trouble:
Deceptive pricing: Be sure to compare the actual price, not the inflated one. For example, if you are selling a snow blower for $199, and its original price was $177, you can't advertise the item as a percent savings. This item is not a bargain, especially if your competitors are selling it for $177.
Bait-and-switch advertising: Bait-and-switch advertising is unfortunately quite common. It refers to the advertisement of a product that the store doesn't actually carry. This occurs when the storeowner doesn't want the customer to purchase this particular product and, in fact, may have never even had the product in stock. The owner attempts to convince the customer to purchase another product.
Misleading language: Too many times, terms like "free" or "half-off" are misleading. Business owners mislead the public when the regular price is marked up to cover the cost of the free item. In addition, the federal government says the storeowner must, within a reasonable time, plan to sell the product without the free item.
Endorsements: Although you do not have to use the exact words of the person doing the endorsing, the endorsement can't be misleading. For example, you get a sports star to endorse your car repair business, AAA Repairs. He says: "I always receive prompt and courteous service." You can't take his words and turn them into: "I believe AAA Repairs is the best auto repair shop around because I always receive prompt and courteous service." This is not what was said. He did not claim you were the best around, and you can't make his quote say that.
Substantiating claims: As a small-business owner, it is also expected that when you advertise you can substantiate your claims, Fro examples, if you claim to offer the only milk shake that uses milk with no hormones in it, you may have to prove that statement.
This article is intended to provide general information for reference only and should not be considered legal advice. For more complete information on advertising regulations, visit www.ftc.gov or check with your attorney about laws in your state.
