As an online business owner, having a great product or service is just half the job. If people do not know your business exists, sales will not follow. That is why most online businesses invest in advertising. In the U.S., ads are closely regulated to protect consumers from being misled. If you advertise online, whether through social media, email, influencers, or your website, it is essential to understand the advertising laws that apply. Let’s walk through the top five advertising laws every online business should know.

Disclosures Must Be Unambiguous

The Federal Trade Commission (FTC) is a body that ensures consumers are protected from deceptive advertising. Disclosures in advertising have to be clear and conspicuous. This means that your disclosure must be easily noticeable, easily understandable, and placed close to the claim it explains. You should never attempt to bury important information in tiny font, footnotes, or separate links.

Truth in Advertising is Non-Negotiable

Truth-in-advertising laws require that ads be truthful and supported by evidence. Under Section 5 of the Federal Trade Commission Act, businesses are prohibited from engaging in unfair or deceptive practices in commerce. You cannot run an ad that misleads a reasonable consumer, or omit any facts that would alter how someone perceives your product. In some industries, the FTC shares oversight with other federal agencies. For instance, the Food and Drug Administration (FDA) also regulates advertising for products like food, drugs, dietary supplements, medical devices, and cosmetics, meaning businesses in these sectors must comply with both FTC and FDA rules.

Claim Substantiation

According to the FTC’s substantiation doctrine, any advertising claim must be supported by evidence before the ad goes live and while it is running. This applies to both express claims, which are the direct statements, and implied claims, which consumers are likely to infer from context, visuals, or wording. Because implied claims do not require intent, they often create significant legal risk. This can put your business at risk if consumers infer a particular meaning you didn’t even realize you were communicating.

Material Connections Have to Be Disclosed

If someone is endorsing your product, and there is a material connection, such as payment, free products, commissions, or other benefits, that connection must be disclosed. Even expert endorsements or independent testing claims require disclosure if there is compensation involved. The goal here is transparency, so consumers understand when an endorsement is not purely organic.

The Lanham Act

While the FTC protects consumers, the Lanham Act empowers competitors to sue for false advertising. So, if your ad contains false or misleading claims that harm another business, you could face a lawsuit.

For a business to successfully sue under the Lanham Act, it must establish the following:

Claims made in your ad are actually false

The advertisement could or did deceive a large number of the targeted population

The product shown in the ad was sold across state lines

The deceptive part of the ad was significant

The competitor was going to be harmed by the deception.

When making an advertisement, always ensure you are not violating any of these laws.

Contact the Internet Law and Social Media Attorneys at Revision Legal

For more information, contact the experienced Internet Law and Social Media Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.

The Lanham Act: Competitor Claims and False Advertising

While the FTC protects consumers, the Lanham Act, 15 U.S.C. §1125(a), gives your competitors the right to sue you directly for false advertising. A Lanham Act false advertising claim requires proof that a statement in a commercial advertisement is literally false or likely to mislead consumers, that the statement is material, and that it caused or is likely to cause competitive injury. Unlike FTC enforcement, a successful Lanham Act plaintiff can recover the defendant’s profits, actual damages, enhanced damages, and attorney’s fees. Comparative advertising—ads that explicitly name a competitor—is legal under U.S. law but carries heightened Lanham Act risk if the comparison is inaccurate or misleading.

Children’s Advertising: COPPA and CARU Standards

If your products or services are directed toward children, you face an additional layer of regulation. The Children’s Online Privacy Protection Act (COPPA), 15 U.S.C. §6501 et seq., restricts collection of personal data from children under 13. Beyond COPPA, the Children’s Advertising Review Unit (CARU) of BBB National Programs publishes self-regulatory guidelines covering advertising to children under 13. The FTC enforces COPPA, and violations can result in civil penalties exceeding $50,000 per violation.

State Consumer Protection Laws and Deceptive Trade Practices Acts

Every U.S. state has its own consumer protection statute that prohibits deceptive trade practices. California’s Unfair Competition Law (Cal. Bus. & Prof. Code §17200) and False Advertising Law (§17500) allow private plaintiffs and the Attorney General to seek injunctions and restitution. New York General Business Law §349 provides a private right of action for consumer-directed deceptive practices with statutory damages of $50 per violation. Because online advertising reaches consumers across all 50 states, multi-state compliance is essential regardless of where your business is incorporated.

Price Advertising and Reference Price Claims

E-commerce businesses frequently use reference pricing—showing a crossed-out was price next to a now price—to convey value. This practice is heavily regulated. Under FTC guidelines and state price comparison statutes, a reference price must represent a price at which the product was actually sold in good faith and in reasonable quantities for a reasonable period. Fabricated reference prices used to inflate the apparent discount are deceptive per se. California, Illinois, and New York have brought enforcement actions against major retailers for fake reference prices, resulting in multi-million dollar settlements.

Contact an Advertising Law Attorney

Advertising law is complex, and the consequences of non-compliance extend beyond regulatory fines to competitor lawsuits and class actions. Revision Legal advises online businesses on FTC compliance, Lanham Act risk, endorsement disclosures, and state consumer protection requirements. Contact us to speak with an attorney, or visit our internet law practice page.

Testimonials, Reviews, and the FTC’s Updated Endorsement Rules

The FTC’s 2023 updates to the Endorsement Guides placed particular emphasis on consumer reviews and testimonials, which are a critical trust-building tool for online businesses. Under the updated rules, businesses may not use fake reviews, suppress or hide negative reviews selectively, or create systems that produce only positive reviews through incentive structures that discourage negative feedback. Purchasing fake reviews violates both the FTC Act and, increasingly, state consumer protection statutes. The FTC has proposed a rule specifically targeting fake reviews and testimonials with civil penalties.

Typical testimonials and case studies used in advertising present their own compliance challenges. The FTC requires that testimonials reflect the typical results a consumer can expect, or be accompanied by a clear and conspicuous disclaimer about the results shown (such as “results not typical”). Atypical success stories—the dramatic before-and-after transformation or the exceptional ROI case study—are particularly high-risk without substantive disclosures, even if the testimonial itself is genuine. For any business that uses customer testimonials, case studies, or endorsements in its advertising, a legal review is a low-cost way to identify and correct compliance gaps before they become enforcement problems.

Advertising law compliance is not a one-time project—it is an ongoing commitment that must be revisited each time you launch a new campaign, enter a new market, or introduce a new product category. The regulatory framework is actively enforced, and the consequences of non-compliance—civil penalties, competitor litigation, class actions, and platform suspension—can each individually cause serious harm to your business. Treating advertising compliance as a core operational function, rather than a legal formality, is the approach that best protects your ability to grow sustainably and maintain consumer trust over the long term.