Before launching ad
campaign, run through
legal checklist
If you’re one of those people who watch the Super Bowl for the commercials rather than the game, you understand the power of a good advertisement.
But when you launch an advertising campaign, your competitors are watching, too. So are government regulators like the Federal Trade Commission and state attorney general and consumer watchdogs like the Better Business Bureau. If you make a mistake in your ads, the damages can be steep, both in financial terms and in the blow to your reputation.
Let’s look at some of the questions you
should ask when reviewing a proposed advertisement:
Is your ad truthful? You must be able to prove that what you say about your product or service is true. If you stick to that principle, you’ll usually steer clear of trouble. Remember, of course, that “truth” isn’t always self-evident. If you run a “true” ad whose intent is to mislead your audience, you can still find yourself in a legal wrangle. For example, it may be “true” that a given cruise line serves only your competitor’s brand of hot dogs, and that half of the people on a recent cruise became sick. But a true statement that implies an effect without a valid cause isn’t really “truthful.”
Ironically, you don’t have to stick to the truth if your advertising is so outlandish that no one is likely to take it seriously. That’s called “puffery.” You probably couldn’t prove that your financial software is “the best home business solution ever to hit the market,” but that kind of generalized, unmeasurable claim would probably be considered an exaggeration that a reasonable consumer wouldn’t consider a statement of fact.
However, competitors may take a less charitable view of puffery than you do. When Pizza Hut challenged Papa John’s ads (“Better Ingredients, Better Pizza”), it put the rival pizza maker in an uncomfortable position: either prove their pizza really was “better,” or admit that they were just making a puff claim that they didn’t expect anyone to believe. (Pizza Hut won the jury trial, but an appeals court threw out the case, labeling the slogan “typical puffery.”)
Can you back up your facts? You’ll need to be able to verify any factual statements in your ad. If you say that four out of five consumers prefer your product, you should have the research in hand to back up your claim before you include it in your ad. In addition, your research must be statistically valid. Simply sending a marketer to a college campus on keg night to ask students if they prefer beer over wine may not produce results you can tout safely in your ads.
Are your price claims accurate? You’ll need to take particular care with prices, because once you advertise a given price, you generally need to honor it. If the price has any strings attached, too, they must also be disclosed in the ad. And avoid using the word “free” when you’ve got other conditions or obligations as part of the offer. Finally, don’t claim a product is “on sale” unless you can substantiate that you’ve recently sold the same product or service at a higher price.
Have you played fair with your competitors? Any advertising that mentions your competition will get especially tough scrutiny, and your competitors won’t hesitate to sue if you make claims that are either erroneous or misleading.
The key is that you must make a substantiated factual comparison between products, based on how consumers actually use them. If you conduct a “taste test” or “performance test,” for example, the test must be conducted properly and accurately, without any tricks to skew the results in your favor. You may want to use an independent third-party research firm to reduce any perception of bias and better support the objectivity of the comparison.
In addition, when citing the competition in your advertising, let the facts speak for themselves. Don’t alter the competitor’s logo or trademark, or use any graphical techniques or loaded words that may be seen as disparaging the competitor or its product.
Are your testimonials legitimate? If your ad quotes Bob as saying he’s never had a minute’s down time with your Internet service, you’ll need to be able to prove that Bob really said it. If you paid Bob to make his endorsement, you need to disclose that fact.
In addition, don’t try to hide behind endorsements that make false claims. Even if your customer really did tell you that your scanner has the best resolution on the market, you can’t use the testimonial if you know the statement isn’t true.
Testimonials also must come from a consumer who used the product in the way it was intended — rather than, say, someone who poured an entire bottle of detergent into one load to get their clothes really clean.
Do you have the goods? A friend of mine tried to order blinds from a major retailer, based on an advertising flier, only to be told the company was no longer selling window treatments. That’s a no-no. You should have the goods or services available when you advertise them. There are also special rules and consumer rights if an item is back-ordered.
Do you have the rights to use photography and graphics? If you don’t own the creative materials in your ad, you will have to negotiate a specific agreement with the artist to transfer all rights to you or get a license to use the work. And make sure the license covers all the uses planned in your campaign. Just because you’ve got an agreement to use a photograph in a specific ad in a specific magazine doesn’t mean you can use it again in your next campaign, or that you can put it on your Web site.
You also need to make sure that you have obtained all the necessary releases for anything or anyone who appears in your advertising. Don’t use someone’s face, for example, unless you have a written authorization to do so. That even includes your employees. The happy receptionist who is delighted to have her photograph in your company annual report may change her mind when she gets a new job next month.
We’ve only scratched the surface, of course, in terms of the legal requirements that go along with your advertising campaign. Make sure that you have a clearance process for your marketing efforts, whether it’s through a formal internal review or your outside counsel. The time to find a problem in your ad is before it runs.
in Minneapolis. She was vice president and chair of the media practice in the NBC law department in New York: 612.766.7000; rbrackman@faegre.com.
