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False Advertising: The role of the FTC

The Federal Trade Commission is tasked with protecting American consumers. It regulates false advertising (newspapers and magazines, online, in the mail, or on billboards or buses), some privacy rights, and endorsements.

Recently they took action against the maker of TurboTax, for widely advertising “free tax filings” that only about 1/3 of tax filers could actually use. They filed a complaint against HomeAdvisor for misleading tradespeople about the quality of leads HomeAdvisor could provide to electricians, plumbers, and handymen who joined their network.

How do you properly advertise your business on social media?

  • Ads must be truthful, not misleading, and, when appropriate, backed by scientific evidence.

  • Especially:

    • food

    • over-the-counter drugs

    • dietary supplements/health claims

    • alcohol and tobacco

    • conduct related to high-tech products and the internet

    • children’s products

  • The FTC can:

    • File actions in federal district court for immediate and permanent orders to stop scams;

    • Prevent fraudsters from perpetrating scams in the future;

    • Freeze their assets; and

    • Get compensation for victims.

The FTC website has a lot of information and guidance, particularly for small businesses.

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