Federal Advertising Laws/Truth-in-Advertising

The FTC cites three major rules in truth-in-advertising:

1. Advertising must be truthful and non-deceptive. Advertisements must tell the “whole truth, not a half-truth or a slighted version to make an ad look more appealing.” When trigger terms are used in ads about leasing and financing, certain disclaimers must be made.
2. Advertisers must have evidence to back up their claims. For both express and implied claims, the burden of proof of those claims lies on the dealer.
3. Advertisements cannot be unfair. For an advertisement to be considered unfair, it must substantially injure customers, violate established public policy, and be unethical or unscrupulous.

Penalties for non-compliance: Civil penalties can range from thousands of dollars to millions of dollars, depending on the nature of the violation. The FTC can also impose cease-and-desist orders for the deceptive ads and require corrective advertising to correct the deceit communicated in the original ad. [1]

Helpful link(s)/Source(s):
1. http://www.autodealermonthly.com/68/2326/ARTICLE/The-Truth-Of-Advertising-Compliance.aspx
http://www.ftc.gov/bcp/edu/pubs/business/adv/bus35.pdf

Please note: This is not legal advice and dealers should always seek the assistance of qualified legal counsel.

From "19 Laws, Rules and Regulations That Can Cost You More Than Money" in the September 2010 issue of Auto Dealer Monthly.