- December 26, 2010
- Posted by: Seth Heyman
- Categories: Business Law, Marketing & Advertising Law
Any company that advertises a product or service using e-mail, Internet, telemarketing, print, TV or radio should have at least some familiarity with the most important advertising statutes, many of which are enforced by the Federal Trade Commission (FTC). The FTC is the primary agency in charge of federal advertising law. The FTC (and to a lesser extent, the FCC) creates and enforces various rules that advertisers have to follow in order to comply with the law. Taking the time to understand how these statutes and rules may affect your business will help avoid costly mistakes. Rest assured, regulatory authorities will not hesitate to impose hefty fines (up to $16,000.00 per violation) for violations.
1. Section 5 of the Federal Trade Commission Act: Section 5 of the FTC Act prohibits advertisers from engaging in unfair or deceptive acts or practices in interstate commerce. Basically, advertising must be truthful, fair, and substantiated. According to the FTC, an ad is deceptive if it contains a statement or omits information that: (a) is likely to mislead consumers acting reasonably under the circumstances; and (b) is “material” in that it influenced a consumer’s decision to buy. Please click here for more information on complying with Section 5.
2. The Telephone Consumer Protection Act of 1991: The Telephone Consumer Protection Act of 1991 (“TCPA”) restricts telemarketers from calling residential numbers unless “the telemarketer has instituted written policies and procedures for maintaining a do-not-call list for subscribers who request not to receive further solicitations.” The TCPA also regulates and limits the use of automated dialing equipment and fax broadcast devices. Congress mandated that the Federal Communications Commission (FCC) also develop regulations implementing the TCPA.
3. Telephone Disclosure and Dispute Resolution Act of 1992: The Act requires the Commission to promulgate certain regulations respecting advertising for, operation of, and billing and collection procedures for, pay-per-call or “900 number” telephone services. The regulations must include certain provisions, such as price disclosure requirements, mandatory warnings on services directed to children, and required disclosures in billing statements.
4. Telemarketing and Consumer Fraud and Abuse Prevention Act: The Telemarketing and Consumer Fraud and Abuse Protection Act of 1994 required the FTC to develop additional regulations to prevent telemarketers from employing practices that a reasonable consumer would consider coercive or abusive of their right to privacy, such as restrictions on the hours of the day and night when unsolicited telephone calls can be made to consumers, as well as disclosure requirements.
5. The Telemarketing Sales Rule: The FTC’s Telemarketing Sales Rule (“TSR”) implements the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994. After undergoing several amendments, the TSR (among other things) helped create the FTC’s Do Not Call program; mandates a 3% abandonment rate for predictive dialers; severely restricts the use of prerecorded marketing messages, and mandates that all telemarketers transmit Caller ID information.
6. The Do-Not-Call Registry Act of 2003: The Do-Not-Call Registry Act created the Federal DNC List to better facilitate compliance with the TCPA. Both the FTC and the FCC enforce the Act. Placing one’s number on the National Do Not Call Registry will stop most, but not all, unsolicited calls. The DNC Registry Act was strengthened in 2007 by allowing consumers to register only once to maintain their phone numbers on the Do Not Call Registry indefinitely. At last count, the list XXXXXXX consumer phone numbers are on the list.
7. The CAN-SPAM Act: The CAN-SPAM law that sets the rules for commercial email, establishes requirements for commercial messages, gives recipients the right to have you stop emailing them, and spells out tough penalties for violations. The Act isn’t limited to unsolicited spam e-mails; it applies to all commercial e-mail messages that promote a product or service, including email that promotes content on commercial websites. The law makes no exception for business-to-business email. That means all email- even messages to existing customers – must comply with the law. For additional guidance on complying with CAN-SPAM Act, click here.
The FTC publishes a useful guide for businesses that summarizes these and other advertising laws. If you’re considering any marketing campaign that may cross state lines, you should also consult with an attorney who specializes in advertising law to help fine-tune your campaign before you launch it. After all, what good is a successful marketing campaign if you can’t keep the money you make?