Small business owners often have to add the title of
Advertising and Marketing Director to their long list of duties and may not be
aware of the various laws regarding common advertising claims. Creating an
effective advertising strategy isn’t just about where and when ads are
placed, but also what claims are
being made, and Better Business Bureau is providing guidance about some advertising
phrases that can be misleading if not used properly.
According to Ad-ology research, 97 percent of small business
owners in the U.S. are concerned about the economy but, regardless, 60 percent
plan to spend the same amount on advertising in 2009 as in 2008 and 26 percent
plan to increase advertising spending. Perhaps these businesses have been doing
their research; a McGraw-Hill study found that during the economic downturn
from 1980 to 1985, firms that advertised aggressively had sales that were 256
percent higher than companies that cut back.
"Small business owners recognize that advertising and overall
marketing are not the ideal categories for budget cuts in a rough economy,"
said Bonnie Bakin, BBB CEO. "Advertising regulation issues though, are not
necessarily something small business owners have time for, but ignorance of
truth in advertising laws is not a defense, and any business owner engaging in
advertising should familiarize themselves with BBB’s guidelines to help avoid
Following are six examples of commonly used phrases and
tactics in advertising that are often misleading when not used properly:
The word "free" may be used in advertising whenever the
advertiser is offering an unconditional gift. If the shopper has to purchase an
item in order to receive the free gift, the advertiser must clearly and
conspicuously disclose the conditions. Also, an advertiser may not increase the
price of the purchased item, nor decrease quantity or quality in conjunction
with the free offer. Additionally, free offers should not be advertised when
the item to be sold is customarily a negotiated-priced item such as an
automobile or home.
"Save up to…"
Price reduction claims that cover a range of products or
services should state both the minimum and maximum savings without a misleading
emphasis on the maximum savings. Also, the number of items available at the
maximum savings should comprise typically 10 percent of the items being sold
unless local or state law requires otherwise.
"Lowest price in
town…," "Our prices can’t be beat…," etc.
Prices for products and services fluctuate regularly and it
can be extremely difficult for an advertiser to claim with certainty that their
prices are lower than their competitors. Such claims should be avoided unless
the advertiser can provide substantiation.
"Best," "Most," "Tops,"
and other superlative claims.
Superlative claims can be objective, based on fact, or
subjective, based on opinion. Objective claims relate to tangible qualities and
performance which can be measured against accepted standards. When making
objective claims, an advertiser must be able to substantiate all claims.
Obvious use of puffery, such as an advertiser stating they
think they offer the best customer service in town, may not be subject to
truth-in-advertising standards. However, advertising is all about trust from
the consumer’s perspective and businesses should be vigilant against making subjective
superlative claims that are misleading.
"Wholesale prices," "Direct from the maker," etc.
Claims such as these imply significant savings from the
actual price being offered by retailers. These claims should not be made unless
the implied savings can be substantiated. Furthermore, claims such as "factory
to you" or "factory direct" should not be used unless the advertiser actually
manufactures the merchandise or owns the factory where the advertised products
are made. Similarly, an advertiser cannot falsely claim to be a wholesaler, nor
can an advertiser claim to offer "wholesale prices" or items "at cost" unless
the items are being sold at the same price as would be purchased by a retailer
*Use of Asterisks
Asterisks can be used in advertising if they offer
additional information about a word or term that is not inherently deceptive.
However, an asterisk or similar reference symbol cannot be used as a means to
contradict or substantially change the meaning of the statement. The
information referenced by the asterisk should also be clearly and prominently
For more guidance on
advertising, see BBB’s Code of Advertising at www.bbb.org/us/code-of-advertising.