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When marketing your product today, you face greater risk than ever before. Marketers have always taken liberties in describing their products but now the litigious nature of the consumer market means you need to have the right strategies to boost your brand image without misleading your audience. Here is what you need to know:
According to Sherrie Scott, the FTC defines a deceptive claim as a statement that is likely to mislead a consumer who is acting reasonably under the circumstances. In a federal lawsuit the FTC can seek injunctive relief or civil penalties of up to 16000 per violation of FTC regulations as well as restitution. The FTC Act (15 USC §45) is the main statute that they enforce. They can prevent business practices that are deemed to be deceptive, not fair to the customer, or even harmful to them. This should be enough to concern every business out there that they need to take their marketing claims seriously. But what does it mean to have unfair or deceptive advertising and how does the FTC know about it?
Misleading or unfair information or marketing can be brought to the attention to the FTC in many ways. They don’t always disclose why they are looking into you, but here are common factors you should be aware of:
The first is a direct finding. This means they sought your company out and saw something on their end which constitutes a breach of consumer protection laws.
Second, and more commonly, there are consumer complaint. When a consumer files a complaint with the FTC, the agency takes them very seriously. They will look into your practices to see if you are making claims that are not substantiated or are outright misleading (such as claiming a free gift and actually charging for it).
News articles are another source of injustices that they make find about your company. If someone breaks a story about bad business practices and mentions you, you need to prepare yourself legally for questions about your marketing claims, your statements, and your disclaimers that you offer.
They can bring a federal court suit or initiate an administrative action against your company, which could have the following outcomes:
The first is restitution. If your gains are seen to be ill gotten, they can force you to pay the customers for damages. They can also file restraining orders against you keeping you from communicating with the accusers.
Another concerning element of their enforcement is freezing your corporate or personal assets. This can be bank accounts, vehicles, and entire office buildings. According to Hinch Newman, they can also enter your business at any time to conduct more investigations or freeze your physical assets and apply penalties up of to $16,000 per violation.
If you want to get the most out of your marketing, you need the right tools and tactics. This is not only for better sales and conversion but also to avoid legal pitfalls that many companies have fallen into recently. Avoid lawsuits and FTC rulings by using the information above to protect your company while marketing effectively.