E-commerce businesses must comply with federal and State-level advertising laws and regulations. This is true of any business.

But e-commerce businesses face special challenges because there is a whole array of potential methods of innocently, accidentally, or intentionally violating advertising laws. These include the potential to engage in false and deceptive advertising practices, such as the following:

• Manipulating product reviews and other types of user-created content
• Manipulating claimed forms of engagement like followers, “likes,” and similar
• Use of “dark patterns” to attempt manipulation of consumer behavior
• Disguising endorsements as “real” by failing to disclose paid consideration
• Use fake endorsements, influencers, websites, reviews, etc.
• Not displaying labeling information such as ingredients and “Made in ______” notices
• Collecting consumer personal data without notice or consent — this might be limited to payment-processing information, but might be much more intrusive

Just as a matter of practicality, non-e-commerce businesses — those with brick and mortar stores — cannot engage in some of these types of false and deceptive advertising.

When considering compliance with advertising laws and regulations, there are a couple of basic principles from which the specific rules/regulations flow. These are:

• Be truthful and accurate in what is said and presented
• Do not use manipulative or deceptive practices

Thus, if your e-commerce business makes a claim about the product in the advertising/marketing, that claim should be accurate and substantiated with evidence/studies where applicable. A couple of examples include a claim that a product is “organic” or is “safe for use.” Other claims should also be accurate, such as claims about where the product came from, how quickly the product will ship, the nature of the return policy, fees, and other charges added to the price, etc.

Disclosure is the other major touchstone of fair and non-deceptive advertising. Fair advertising laws assume, in part, that consumers can make up their own minds about things. Thus, the emphasis on full disclosure is embedded in the laws and regulations related to advertising/marketing. Generally, the disclosures must be clear and must be prominent. If your e-commerce business emphasizes proper disclosure, that “takes care of” a large percentage of the potential legal issues that arise with respect to advertising and marketing. Specific examples include:

• Disclose all compensation and relationships with those who are endorsing your product or business
• Label sponsored content
• If your business engages in affiliate marketing, make sure your affiliate is fully disclosing the relationship and the compensation
• If data is being collected, disclose what is being collected, the reasons why, etc. — more specifically, an e-commerce business must comply with applicable consumer data privacy statutes, which specify what must be disclosed and more

Compliance with advertising laws and regulations may seem unimportant. However, there can be severe consequences. From the government sector, there can be administrative and even criminal enforcement investigations and actions. From the private sector, false and manipulative advertising can lead to consumer lawsuits. These can be very expensive to handle, even if your business is able to defeat the claims.

Contact the D2C and E-Commerce Attorneys at Revision Legal

For more information, contact the experienced D2C and e-commerce lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.