Marketing Law
By Raymond Hughes
Undergraduate Student In Agricultural Economics 333, W96
And
By Deanne Hackman
Research Associate and Adjunct Instructor
Social Science Unit, College of Agriculture, Food, and Natural Resources
University of Missouri - Columbia
May 9, 1996
CAUTION: Do not rely upon this information for legal advice.
See an attorney for legal counseling tailored to your
specific situation and needs.
Under to the first Amendment to the Constitution, authors cannot
be subject to legal liability for claims that are made in a book or other
publication, even if the claims cannot be supported by an "expert" in the
field. The reason why the Federal Trade Commission protects publications is
to try and protect the information and the ideas. So how does the FTC
decide what is protected and what is not?
The Federal Trade Commission has used a policy called, "mirror
image doctrine." The doctrine states that the FTC will not rid the market
of advertising claims which promote the sale of books or other publications
provided that certain requirements can be met.
First, the advertising claims may express only the opinions of the
author or quote from the contents of the publication. Second, the ads must
include the source of the statements derived or quoted from the
publication. Last, the advertisement must include whether the author is the
source of the opinions printed in the publication(mirror image doctrine).
We often times see on television, promotions and claims that a
product will produce some level of result. Whether it be medical,
cosmetic, or safety claims, the Federal Trade Commission often looks for
nine things.
The First is Substantiation. Each claim made for a product or
service must be reasonably supported. They can be supported by doctors,
scientific reports, medical studies, etc.
Second is Testimonials and Endorsements. Anyone endorsing a
product must have an honest opinion. In fact the endorser must be a user
of the product at the time of the endorsement and must remain a user as
long as the ad is run.
Third is Product Demonstrations. Demonstration must take place as
they are happening and if it is not occurring in real time the ad must be
depicted by visually displaying the words, "dramatization" or "simulation."
A camera cannot be used to manipulate, magnify, or in any other way alter
the products results.
Fourth is money back guarantees. Good Business sense makes this
policy worth having. Almost all direct response advertisement offers a
money back guarantee.
Fifth is price. All price statements must be truthful and any
other costs must be included in the advertisement. In the cases of reduced
pricing, any claims of a reduced price must be actually lower than a price
of the identical product and was on the market for at least 30 days.
The sixth thing the Federal Trade Commission looks at is Free
Goods. Many companies offer additional products when a product is bought.
The FTC has decided that no "free" product" offer can be offered for more
than six months in any twelve month period.
The seventh is Warranties and Guarantees. If a warranty is
included with a product or service, it must be clear before sale. Although
there is no requirement to advertise a warranty or guarantee.
The eighth is Order Fulfillment. The FTC has claimed that
merchandise must be shipped within 30 days from the time the credit card
order is received, not when the actual credit card account is charged.
The ninth and last thing the Federal Trade Commission looks for is
Credit Card Refunds. The business has seven working days to credit the
consumers credit card account if a product is returned.
The results of the Federal Trade Commissions monitoring marketing
and advertising is the protection of the consumer. The FTC also helps keep
the legitimate companies in business and tries to rid the market of the
companies trying to rip off the consumer.