E-commerce businesses must comply with advertising laws and regulations in the same manner as non-e-commerce businesses. The general rule with respect to advertising is that all advertising must be truthful and non-misleading. The rules and regulations apply to all forms of advertising, including types of “advertising” that might not fit the traditional definition. Thus, government regulators consider compensated social media influencers, consumer reviews/ratings, product claims (such as claims that a product is organic), product labeling, and more to be forms of advertising.
E-commerce businesses face some unique challenges with fair advertising compliance. First among these challenges is complying with federal, state, and — potentially — the laws of foreign nations. The internet, of course, “goes” all over the world. This is why e-commerce businesses must assess all three sets of laws. In truth, though, if you are in compliance with federal advertising laws, your e-commerce business is likely to be in compliance with state and foreign laws as well. To be sure, however, it is wise to consult with experienced e-commerce attorneys, like our attorneys here at Revision Legal.
The main federal law is the Federal Trade Commission Act, which is administered by the Federal Trade Commission (“FTC”). Generally, the FTC requires that ecommerce advertising must be truthful and not deceptive or unfair. The FTC has defined “deceptive” as any form of advertising that is likely to
- Mislead consumers and
- Affect consumers’ behavior or decisions about the product or service
Advertising is defined as “unfair” if the advertising causes injury — or is likely to cause injury — that is substantial, not outweighed by other benefits, and not reasonably avoidable. Advertising can be deemed deceptive, unfair, or both by the FTC. Advertising that is deceptive and/or unfair can involve the omission of relevant information. An example provided by the FTC is an advertisement that promotes “$0 Down” for a product but omits reference to the fact that various undisclosed charges will be due at the time of purchase/lease. Such is likely to be deemed deceptive and unfair. A similar omission occurs sometimes with compensated social media influencers who do not prominently disclose that they are compensated.
Further, any claims made in advertising must be “evidence-based.” That is, scientific reports and substantiation are required for any claim. Examples include claims that a product is “organic,” “safe for human use,” “effective,” etc.
Other federal laws may also apply, including the Consumer Financial Protection Act administered by the Consumer Financial Protection Bureau (“CFPB”). The CFPB also regulates misleading, deceptive, and unfair business practices with a focus on financial and credit transactions. If your e-commerce business offers any type of financing or “buy-now-pay-later” plan, then the CFPB will also have the authority to scrutinize your advertising.
The federal CAN-SPAM Act may also apply if your e-commerce business uses email as a form of advertising. Again, truth-in-advertising is the focus. Thus, your emails must use truthful — and not misleading — routing information, subject line messages, and content. Further, the email must clearly and conspicuously disclose that it is an advertisement and provide a physical postal address for consumers to use.
Contact The E-Commerce Business Attorneys at Revision Legal
For more information, contact the experienced e-commerce business lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.
