Introduction

Welcome to the Simplifying Legal podcast, brought to you by Businessese. I’m your host, Danielle Liss.

Many years ago, someone told me I was the least lawyer-y lawyer she’d ever met because I helped make legal easier to understand. To this day, it’s one of the best compliments I’ve received in my professional life.

If you’ve ever felt legal was too scary, too overwhelming, too complicated, or just plain incomprehensible, you’re not alone. The Simplifying Legal podcast was created to help. 

In each episode, we’ll do a deep dive into a legal topic and give you concrete next steps so you can apply it to your business. 

My goal is for you to walk away from each episode thinking, oh, that was easier than I thought it would be.

Let’s get started. 

Episode Content

Hey there, I’m Danielle. Welcome to episode 47 of Simplifying Legal for Small Business Owners. Today, I’m talking about marketing and the FTC. 

Disclaimer: As always, before we get into today’s topic, a quick disclaimer. This podcast is meant to provide you with legal information only. It’s not legal advice and does not create any type of attorney-client relationship between us. Please don’t take any action without consulting your lawyer first.

For the past few episodes, I’ve talked a lot about marketing and the legal side of your business. In each of the episodes, I’ve talked about FTC compliance for a couple of areas that come up a lot, primarily testimonials and advertising claims.

In this episode, I want to look at the FTC more broadly. I’ll do a quick review of what the FTC is and why it matters for your marketing. Then, I want to talk about a handful of areas that are important to consider when it comes to FTC compliance and marketing. For each of these areas, I’ll give you a short overview and some of the key things you should know.

I have online business owners in mind for this episode because so many of these things come up in how you market your business. This may also be a good review for certain creative service business owners, especially copywriters and social media managers, who have an active role in helping their clients create marketing messages. If your clients are asking to include these things in their marketing and you think something seems non-compliant, you can bring it to their attention.

FTC Meaning

First, let’s talk briefly about the FTC. I’ve provided a brief overview of the agency in the last couple of episodes, but I want to do a quick overview of the FTC as a refresher.

The Federal Trade Commission is a federal agency with two primary goals: to promote competition and to protect consumers. Under the umbrella of consumer protection, the FTC watches for unfair or deceptive practices in advertising. 

Under the FTC Act, advertisements must: 

1. Be truthful and non-deceptive. 
2. Be fair. 
3. Have evidence to back up any claims. 

As a small business owner, it’s important to know that advertisements aren’t necessarily paid, like a Facebook ad. It’s any type of advertising for your business, which can include your website and social media channels. So these are things to keep in mind for all areas of your marketing. 

Testimonials for Marketing 

Now let’s switch gears and talk about those common marketing topics. Let’s start with testimonials. 

I did a full episode on using testimonials in your marketing, but I want to give a quick overview for today’s episode too since I consider this a quick-reference guide for some of the most important things you need to know for FTC compliance in your marketing. 

When you use testimonials, make sure you consider the following: 

1. First, the testimonial needs to reflect the honest opinions, findings, beliefs, or experiences of the person giving the testimonial. 
2. The person giving the testimonial needs to be a bona fide user of the product or service if it is mentioned in the testimonial. 
3. The testimonial can’t make a claim that you, as the advertiser, can’t make. 
4. Last, you need to ensure that you disclose atypical results featured in a testimonial.

If you want a deeper dive into testimonials, check out Episode 45 linked here. 

Advertising Claims (Including Income Claims)

Next, let’s consider advertising claims, which include income claims. If you want an in-depth discussion, I recommend Episode 46, where I discussed income claims. 

An advertising claim is a direct or implied promise of a benefit or value of a product or service that can be objectively measured, evaluated, and proven. When you include claims in your advertising, you need to have a reasonable basis for any reasonable interpretation of the claim you’ve included. 

This means that you need substantiation for the claims. In other words, you need to be able to prove it. 

In the last episode, I gave the following main criteria for evaluating your advertising claims. 

• First, you need to be truthful, not misleading. 
• Next, you need evidence to substantiate any claims you are making. Do you have a reasonable basis for making the claim? What can you prove? And, remember, it isn’t just proving that one person had the result. Does the product or service usually yield the same result?  
• Next, your claims must be fair. 
• And, finally, if there is a possibility that your claim may be misleading, including if it is unsubstantiated, you need a clear and conspicuous disclosure near the claim. 

I’ll give a short review on disclosure at the end of the episode. 

Expert Endorsements

While testimonials and advertising claims are both topics I’ve covered in recent episodes, there are a number of other common areas that come up in marketing. 

First, let’s talk about expert endorsements. The rules about testimonials still apply when it’s an expert endorsement. But, there are some other things to keep in mind. 

1. When you are providing an expert endorsement, the endorser must be an expert in the field that they are endorsing. If someone wanted to use me as an expert on something legal, it could work, for example, on something related to the types of clauses that are important to service business owners in their client agreements. If they came to me and wanted an opinion on family law, that is not my area of practice and they shouldn’t then take something I’ve said and try to make it seem evaluated by an expert by claiming it was reviewed by Danielle Liss, Esq.
2. Next, If the expert is offering an endorsement on a product or service, the expert needs to do an examination of the product or service using their expertise and it needs to be relevant to the ordinary consumer and how they would use the product. If I was doing an expert endorsement, I would need to dive into the product or service and examine it using my expertise. 

Like other types of testimonials, if you feature expert endorsements, it’s critical to be truthful and doesn’t deceive the general public regarding the expert. 

Health Claims in Marketing

Next, let’s look at health claims. I have a lot of experience working in the health and wellness industry. From weight loss to educational programs, I’ve been on the inside of a lot of businesses that use health claims. 

The health and wellness space, without even touching pharmaceuticals, is a multi-billion dollar industry. From supplements to programs, you need to be careful. This is a highly scrutinized area of marketing.

In the past two years, the FTC has looked very closely at products and services that make claims regarding a product’s ability to treat or prevent Covid. Another very prominent that has received a lot of recent FTC scrutiny is CBD oils. And, of course, two of the most evergreen topics related to health claims are weight loss and supplements. 

The golden rule for health claims: if you are using a claim to support your product, you need solid proof. Unfortunately, what often happens is that companies use claims that false or unproven. 

If you are in the health and wellness space, the first step is simple: identify the claims you are making in your advertising. Remember, these can be direct statements, like something you state on your website. For example, you’ll lose ten pounds in ten days using my program. Or, this program will help you lose fat and build muscle. Health claims can also be implied or they appear in testimonials from past users.

Once you’ve identified your claims, determine if you can objectively prove the content of the claim. Is it true? How can you prove it? If you can’t, then it might be false or misleading. 

If you don’t have substantiation for the claims and you can’t prove that they are typical, you need disclosures. Don’t cherry-pick the best results from your past clients and assume that because it happened to a handful of clients that it will happen for everyone. 

In this realm, your disclosures will often state the results are one person’s experience and may not be typical of every user. 

So, remember, don’t make promises that you can’t prove. You can talk about the possibilities and use testimonials, but be sure to disclose. 

And, please, never say that something is a cure unless you have the substantiation of double-blind peer-reviewed scientific studies. This means, all of those claims for whatever new ingredient or superfood is being praised as the cure for heart disease, cancer, and more. 

Puffery

Next, let’s talk about puffery. This lesson comes straight to you from the world’s best legal podcast for small business owners, hosted by the world’s nicest and most understanding lawyer ever. Yup, that sentence was puffery. 

Besides being kind of fun to say, what is puffery? Puffery is a subjective claim that is typically exaggerated. These are things that are considered to “puff up” a brand. Think of those claims that say things are the best, the greatest, the most delicious, or our customers’ favorite. 

Puffery is something that can’t be verified. So, this gets confusing since an advertising claim needs to be real. However, because the claims are exaggerated, the FTC considers these to be things that are opinions that wouldn’t need to be verified. In other words, the average person would recognize that these broad claims may not be true. 

So puffery doesn’t typically fall under the umbrella of false claims for FTC purposes, BUT, if it has a specific representation or a fraudulent statement, it may be a false claim, rather than puffery. False advertising is typically going to include a fraudulent statement of some kind, whereas puffery is meant to be a subjective exaggeration. 

Be cautious with puffery and consider what you’re including in the claim. 

Brand Comparisons

The last area I want to review is brand comparisons. This is typically referred to by the FTC as comparative advertising.

First, let’s do an example. This might say, Pringles are 33% more potato-y than Lay’s. Now, for the record, I’m making this up. I don’t think it’s true, but it illustrates the point. It’s one brand comparing itself to another in its ads.

The big question I usually get is: can I compare my brand to another? The answer is, like usual, maybe. Yes, you can compare brands, but you still have rules to follow. 

First, like any of your advertising claims, it needs to be truthful and non-deceptive. In other words, you need substantiation. 

Additionally, you also need to ensure that the ad doesn’t disparage the brand you are comparing your brand with. 

If you keep the comparisons to substantiate claims, you can make comparisons. For example, claiming a lower price is something that can be easily substantiated. 

Disclosure

I’ve mentioned disclosure a few times and I want to do a review of disclosure to wrap up the episode. I’ve reviewed this a bit in a couple of recent episodes too. 

Disclosure is a tool to potentially prevent an advertisement from being deceptive or misleading. 

First, will the disclosure contradict the claim you are making? If you answer yes to that, you probably need to remove the claim from your marketing because it will be misleading or deceptive. Using a disclosure isn’t a pass to say whatever you want. 

Next, look at the form of your disclosure. It must be clear and conspicuous, which means you should: 

• Use clear and unambiguous language. It may be that results aren’t typical or you haven’t done studies and you are using endorsements from past clients.
• You need to place the disclosure near the claim. 
• And don’t try to hide it with lots of links or using small type. 

Remember that including this disclosure in a link in the footer of your site is good to provide supplemental information, but it doesn’t replace a clear and conspicuous disclosure near the claim. 

Action Steps

This wraps up my tips on the FTC and marketing. Here are today’s action steps: 

1. Does your marketing use any content that falls into the categories I discussed? If it does, are you following the general guidelines for compliance? If you aren’t, you should consider revising the marketing. 
2. Next, remember, for so many of these areas, if you aren’t sure how to proceed, consider if you should omit the content from your marketing or if it can be remedied with a disclosure. When you are disclosing, make sure the disclosure is clear and conspicuous. It should also appear near the claim and not be hidden in another place on your site. 
3. Last, as always, if you have questions about your marketing, please talk to your lawyer. If this isn’t an area that your lawyer typically handles, look for someone with experience in advertising and marketing review. I regularly work with clients on marketing review through my law firm, Liss Legal, and I’d be happy to discuss to see if we would be a good fit to work together. If you’d like to learn more, visit LissLegal.com.  

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Thanks for listening and we’ll continue Simplifying Legal on next week’s episode.