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Truth vs. Deception in Advertising

Truth vs. Deception in Advertising

Federal Trade Commission, SalesHQ

Promoting Sales, Prices, and Guarantees

Are there any standards governing the advertising of prices?

The same standards for truthfulness apply when companies make claims about price comparisons, “sale” prices, and the like. For more information, ask the FTC for the Guides Against Deceptive Pricing. Since many pricing issues involve local practices, you also may want to contact the Attorney General’s office in the state(s) where you plan to advertise.


When may a company advertise that a product is “on sale”?

The same standards for truthfulness apply when a company makes advertising claims about sale prices or products being “on sale.” For more information, ask the FTC for the Guides Against Deceptive Pricing. Since this issue often involves local practices, you may also want to contact the Attorney General’s office in the state(s) where you plan to advertise.


How much of an advertised product is a retail store required to stock?

According to the FTC’s Retail Food Store Rule, grocers must offer rainchecks or product substitutes of comparable value when they run out of advertised items. They also can comply by ordering quantities of the item sufficient to meet reasonably anticipated demand or by disclosing in ads that items are available only in limited quantities or only at some stores. Although the specific terms of the Rule apply only to retail food stores, other companies advertising products available in limited quantity or only at some stores may want to make similar disclosures to reduce the risk of deception.


What are the rules on advertising rebates to consumers?

Ads that include rebate promotions should prominently state the before-rebate cost, as well as the amount of the rebate. Only then will consumers know their actual out-of-pocket cost and have the information they need to comparison shop. Rebate promotions also should clearly disclose any additional terms and conditions that consumers need to know, including the key terms of any purchase requirements, additional fees, and when consumers can expect to receive their rebate. T


When a company advertises that products are sold with a guarantee or warranty, what information about the terms and conditions must be included in the ads?

If an ad mentions that a product comes with a guarantee or warranty, the ad should clearly disclose how consumers can get the details. Any conditions or limits on the guarantee or warranty (such as a time limit or a requirement that the consumer return the product) also must be clearly disclosed in the ad. Finally, the law requires companies to make copies of any warranties available to consumers before the sale. This applies to retail sales, sales by phone or mail, and online transactions.


My company offers a money-back guarantee. Very few people have ever asked for their money back. Must we still have proof to support our advertising claims?

Yes. Offering a money-back guarantee is not a substitute for substantiation. Advertisers still must have proof to support their claims.


Are there any rules about ads for contests or sweepstakes?

Sweepstakes-type promotions that require a purchase by participants are illegal in the United States. Other agencies, including the United States Postal Service (USPS) and the Federal Communications Commission (FCC), also enforce federal laws governing contests and prize promotions. And each state has laws that may require promoters to make disclosures, seek licensing, or post a bond. Since state laws vary, check with the Attorney General’s Office in the state(s) in which you plan to advertise. If a contest or promotion involves telephone calls, the FTC’s Telemarketing Sales Rule requires specific disclosures, such as the odds of winning a prize, how to participate without buying anything, and that no purchase or payment is required to win. If pay-per-call services are involved, the FTC’s 900 Number Rule requires certain disclosures.


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