"Facebook, bloggers, e-mail — it's all advertising,'' said Miller, a partner at Arnold & Porter LLP. "There's no question that all of that stuff is potentially actionable.''
Whatever form of communication they use, business owners can avoid trouble by following the same basic principles that would apply to a full-page ad in the local newspaper, said Mary Engle, associate director of advertising practices at the FTC.
“The ad needs to be truthful and not misleading," Engle said. “They need to have support or a valid basis for anything they have in the ad.’’
That core requirement for proof of advertising claims is called "substantiation.'' For example, marketers of weight-loss products must back up their ads with valid studies. It's not enough to gather testimonials or endorsements by satisfied customers. In fact, testimonials included in an ad can put a company on the wrong side of the law. Even if the company itself makes no claim that its product causes weight loss, a testimonial by a happy customer who dropped 20 pounds could be seen as deceptive.
“It’s considered a claim that other people will get that result, too,’’ Engle said.
But what about a fan who boasts about lost pounds on the company Facebook page? Some courts have indicated that businesses may be held responsible for the content of testimonials if they've encouraged customers to post about their experiences, Miller said.
Such thorny questions can be challenging for big corporations with expert attorneys. For small business owners, many advertising strictures can come as unwelcome surprises.
Engle said the FTC recognized back in 2001 that small businesses needed some detailed guidance about advertising compliance as the changing Web created inexpensive new ways for them to communicate with consumers. In 2009, the FTC revised its guidelines on endorsements, warning companies that consumers have a right to know if online reviewers have received commissions or free products.
Without admitting violations of that policy, Legacy Learning agreed to pay $250,000 to settle the FTC's 2011 complaint, and now requires its marketing affiliates to post prominent disclosures about their financial ties to the company near each review.
The FTC is now considering a further set of guidelines for the burgeoning environment of online social media and mobile devices.
In the meantime, Miller advises small businesses to keep files containing the evidence for each statement made in every ad or online claim. That way, they won’t need to scramble for proof if they’re later sued. Substantiation is particularly important when a small company compares its product with a competitor’s, said Miller. The rival is very likely to challenge the ad in court, he said.
Advertisers must guard against misleading the public, even when making statements that are literally true, Miller said. They can be accused of making an implied claim. For example, dental floss makers sued a manufacturer for saying that clinical studies showed its mouthwash reduced the risk of gum disease as effectively as flossing. The floss manufacturers said this statement implied that consumers could forego flossing, and use the mouthwash only, Miller said.