6 FTC Advertising Laws You Might be Breaking

As last week’s post on deceptive marketing tactics proved, the FTC doesn’t mess around when it comes to prosecuting marketers and advertisers who break their advertising laws. This week, we’ll take a look at six laws the agency enforces to protect consumer privacy and prevent the scam tactics that have been robbing people of millions of dollars each year. While some apply only to specific industries, others may surprise you with how broad their each is. Read on! You might be in violation of some of these rules without even realizing it. 

The Laws

The FTC’s Division of Marketing Practices maintains a number of rules guiding ethical marketing practices – and they updated them regularly as new technologies and techniques emerge, so be sure to check back on their site often. For convenience, we’ve summarized the six most common – and most strictly enforced – rules below:

1. The Telemarketing Sales Rule Your phone rings and it’s a number you don’t recognize. You answer it, just in case it’s important and what do you hear? A recording of someone promising to pay off all your debt or refinance your home loan. Even worse, your phone rings at 11 o’clock at night and you answer quickly, worried it might be urgent only to hear someone on the other end offering a special deal on cable packages.Thanks to the FTC, consumers have rights and the advertiser placing the calls must be able to prove the consumer consented being contact and also must provide a way for them to opt out of future calls.

2. The CAN-SPAM Rules The CAN-SPAM rules are pretty basic, but most people still don’t use them properly. Overall, it requires that an advertiser clearly identify themselves as the sender of the email, use subject lines and advertisements that accurately describe the offer without overpromising or guaranteeing unreasonable promotions, and provide consumers with two forms (electronic and mail) mechanisms for opting out of future messages. The law also includes abiding by the Adult Labeling Rule, which requires warning labels on commercial email containing sexually oriented material.

3. The Franchise and Business Opportunity Rule Ever see one of those late-night ads that claims you can make an incredible amount of money working from home in just an hour a day? This rule is directly related to those claims. Any organization promoting a business opportunity or selling a franchise must give prospective buyers a disclosure document containing 23 required pieces of information about the business and any earnings claims the seller makes, to help them make an informed (and realistic) decision.
4. The 900-Number Rule When people first started texting on cellphones, advertisers started promoting offers to consumers, asking them to text a code to a certain number. Participants were unknowingly subscribing to a phone list as well as accruing extra fees on their wireless bills. Now, sellers of pay-per-call services must clearly disclose the price of their services, cannot market to children (except in a very few specific stiuations), and have to allow customers a reasonable process for disputing any charges for 900 number services.

5. The Funeral Rule You would think the funeral services industry would be mostly made up of compassionate people trying to help during an already difficult time. Unfortunately, there are exceptions to that rule whose actions have forced the FTC had to come up with a rule requiring funeral directors to fully disclose associated costs and any other information about the services to they provide. Losing someone is hard enough; consumers shouldn’t have to foot a huge bill they unknowingly racked up in the midst of grieving.

6. The Magnuson-Moss Act Have you purchased an electronic device recently? A new car? If the checkout clerk asked if you wanted the warranty that goes along with your new toy, it’s most likely because of this act, which requires that warrant information be available to consumers before they agree to purchase an item. Some retailers even have the warranty package detailed or in a brochure displayed next to the product in store. Consumers want to know that they’ll be treated fairly if they end up paying for a high-dollar item that breaks or malfunctions shortly after.