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Advertising, Sweepstakes Law and Regulation

Advertising law includes state and federal laws and regulations that govern product advertising, including the content of advertisements and when and how they reach consumers. Advertising law includes antitrust, consumer information, communications, technology and intellectual property law, particularly the use of trademarks and copyrights.


Sellers are legally responsible for claims made about products and services in advertisements. Third parties, such as advertising agencies, may also be liable for providing or distributing misleading information if they are involved in creating or distributing the advertisement or are aware of the fraudulent claims. Advertisements containing disclaimers and notices must be clear and prominent: buyers must be able to see, read or hear and understand the information. However, a disclaimer does not usually accept a fraud claim.

First Amendment Protection

The First Amendment to the United States Constitution protects advertising or commercial speech, although the Constitution gives commercial speech less protection than other forms of speech and is subject to government regulations, including federal and state regulations that prohibit “deceptive” commercial speech. “

Regarding Central Hudson Gas and Electric Corp. vs. Public Service Commission of New York, U.S. 557 (1980), the United States Supreme Court held that a state must justify a restriction on true and unmistakable commercial speech by showing that its activity directly and substantially advances an important state interest and in no more extensive manner than is necessary to serve it. Interest Courts now apply this standard to determine whether state advertising restrictions are permissible.

Federal Regulation of Advertising

Certain federal laws regulate the advertising of certain products or categories. The federal Cigarette Labeling and Advertising Act of 1965, which requires health warnings to be affixed to sold tobacco products, was amended in 1986 to prohibit radio and television advertising of cigarettes and smokeless tobacco products. Advertisements for prescription drugs under section 502(n) of the Food, Drug, and Cosmetic Act, 21 U.S.C. 301 et seq., must include the established name, the brand, if any, a formula showing the amount of each ingredient, and a brief summary of side effects, contraindications and effectiveness.

The Federal Trade Commission Act, signed by President Woodrow Wilson on September 26, 191, authorizes the Federal Trade Commission (FTC) to act in the interests of consumers to prevent deceptive and unfair acts or practices: advertising must tell the truth, not deceive consumers.

A representation, omission or act is misleading under the law if it is likely to mislead the consumer and influence the consumer’s behavior or decisions regarding the product or service. An act or practice is inappropriate if the harm it causes or is likely to cause is significant, is not outweighed by other interests, and cannot reasonably be avoided. An advertising claim can be misleading if relevant information is omitted or if the claim refers to something that is not true. Claims must be substantiated or substantiated by some form of evidence, especially if they relate to health, safety or performance. For example, an advertisement may not claim that it has significant environmental benefits unless it can be proven. Vague terms such as “eco-friendly” can mislead or mislead consumers.

Content of Ads

Advertising is subject to several FTC rules, although the FTC focuses on targeting false advertising and ads that make health and safety claims. Specific FTC regulations govern advertisements promoting free products: 900 numbers and other paid services; textiles; and jewelry, including gold, silver, platinum, pewter, diamonds, gems, and pearls. 

If the advertisement presents a product or service, the presentation must show how the product works in normal use. Similarly, endorsements and recommendations in advertising must reflect the typical experiences of consumers, unless the advertising clearly and prominently states otherwise. A disclaimer that not all consumers will get the same results is not sufficient to substantiate a claim, and an advertiser may not use testimonials or endorsements to make a claim that the advertiser cannot prove.

If the advertisement relates to a warranty for a product purchased by mail, telephone or computer, the advertisement must explain to the consumer how to obtain a copy of the warranty. In ads offering refunds, including words like “satisfaction guaranteed” or “money back guarantee,” companies must tell consumers the terms of the offer and pay a full refund for any reason.


Consumers can file complaints with their local Better Business Bureau, which is not a government agency but a national organization that acts as a mediator between consumers and businesses to resolve disputes, facilitate communication and provide ethical business practices. If advertising does not comply with applicable laws or FTC rules, the Company may be subject to state or federal enforcement or civil action. Advertisers subject to FTC jurisdiction may be subject to cease and desist orders and fines of up to $11,000 per violation. federal district court subpoenas; a civil penalty of up to $11,000 for violating certain rules; and to compensate consumers for actual damages in civil litigation.

The Lanham Act

Only the FTC can enforce the FTC’s rules, but private parties, including consumers or businesses, can sue for deceptive advertising under the Lanham Act. To establish a violation of section 3(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), competitors or consumers must prove: 

(1) the advertiser misrepresented itself or another’s product; 

(2) the false advertising actually deceived or tended to deceive a large part of the public; 

(3) the fraud was substantial; 

(4) the advertiser caused a misrepresentation in interstate commerce; and 

(5) the party bringing the action has been or is likely to be injured as a result of the fraud.

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