common traps for the unwary :: advertising

most small businesses advertise their goods or services at some point. the overwhelming majority of owners decide what to say, how to say it, and where to say it without benefit of outside guidance or expertise. this all-too-common approach poses 2 major risks :: 1) the money and effort spent will yield little to no "results;" 2) the business will be exposed to a number of potentially serious liabilities (ranging from dissatisfied consumers and a damaged reputation to illegal practices with serious financial repercussions).

before starting any conversations around the first set of risks, it only makes sense to start with the second. after all, no advertising results are good if they ultimately lead to costly trouble! so here's a brief primer on 3 fundamental legal mistakes many small businesses make in their marketing communications.

improper disclosures

this is about the proverbial fine print. many small businesses create ads that fail to clearly and conspicuously disclose all the information about an offer that's likely to affect a consumer's decision. another common shortcoming is in failing to place the most important information (key terms) close to the advertised price.

perhaps most problematic of all, however, is when a business attempts to hide an offer's real cost or critical terms and conditions by ::

  • putting them in obscure locations (such as the border area of a print ad)
  • burying them in numerous, densely packed lines of fine print
  • including them in small-type footnotes
  • in the case of internet advertising, using pop-up windows or hyperlinks to communicate key terms or cost information
  • consumers should never have to wander through an electronic maze to discover important conditions or limitations of an offer. place all important info at or near the top of the page on which you make your offer.

TIP :: with digital advertising is playing an ever-increasing role in marketing communications, here's one thing to remember that can help with communicating the essentials :: you can use hyperlinks to inform consumers about less critical terms and conditions (especially when the information is extensive, such as terms around subscription cancellations or rebate offers). just be certain your hyperlinked disclosures are clearly labeled to show their importance, nature and relevance (for example, "early cancellation of this service may result in substantial penalties. click here.") vague labels like "terms and conditions" are not enough to direct consumers to important restrictions or qualifications.

lack of prior substantiation

advertisers (and ad agencies) must be able to document their basis for all advertising claims before they are ever published. the federal trade commission (ftc) is pretty serious about this stuff, with violations deemed "unfair and deceptive acts" under the law (in case you harbor any doubt, that's not a good thing).

so, if you're communications make any express claims (think of phrases such as "tests prove", "doctors recommend", and "studies show"), make certain you have the backup in place to prove it before anything is released. if you're claims are implied, be sure your records document a "reasonable basis" for what's been communicated.

TIP :: most small businesses only be make a limited number of claims, if any, so documenting your substantiation is often just a one-time affair (especially if your ad copy is phrased to anticipate future change). this is where expert guidance can be particularly helpful.

endorsements

endorsements and testimonials are an increasingly popular way for businesses to communicate credibility and trust, and there are some pretty concrete rules around their use.

first, your endorsements must always reflect the honest opinions, findings, beliefs, or experience of the endorser. they should never contain representations that are deceptive or that you can't directly substantiate (see "prior substantiation" above). and while the message does not have to be phrased in the endorser's exact words (unless your advertisement represents them as such), you cannot take your endorser's words out of context or distort their opinion or experience in any way. this all essentially boils down to "no embellishment."

where law & business intersect

just like reckless drivers don't always get pulled over by the cops when they're weaving in and out of traffic, businesses don't always get called to task when they play fast and loose with their advertising.

bear in mind, however, there are even more undesirable outcomes than a ticket (like causing an accident). the business risk associated with "bad" advertising lies in causing damage to your reputation -- a risk that's highly amplified in today's world of social media and other on-line platforms).

so if you're a ZENLegal client, here's our reminder :: engage your attorney and have him or her review your marketing communications before they head out the door. and if you're not a ZENLegal client... well, why not?

jack speranza is an attorney, small business owner and principal of main street ventures. for 15 years he has helped his companies and his clients strike the right balance between risk and reward by weaving good business, good technology and good law into new services and operations.

lunchtime office hours

whether you're a member of the bungalow or just a local business owner, we encourage you to check out the lunchtime office hours we're hosting next friday, november 19. attorney john koenig of the indigo venture law offices will share a few words of legal wisdom over lunch, then meet individually with small business owners to assist them with specific issues they may currently be facing.

this event is being organized by our "zen master," main street ventures. participation is limited to 12 business owners, and will only set you back the princely sum of $10. not a bad deal if we say so ourselves. sign up now to reserve your spot!

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