Whether it's a "big" company or a small or family-owned business like the one you're thinking of starting, there's one thing in common: The goal is to make money. Once you've decided on the form of your small business and have financing, your immediate concern is to make the business successful. How do you do that?
Marketing your small business is how you'll get your products and services known to the public and create sales. But, at least from a legal standpoint, entrepreneurs like you should know that marketing is much more than clever ads and "bargain sales." Know how to keep your marketing from running afoul of various federal and state laws.
Advertising Laws
The Federal Trade Commission (FTC) is the federal agency primarily in charge of enforcing advertising laws. These laws are meant to protect consumers. Advertising is controlled by the Federal Trade Commission Act (FTCA). Under the FTCA, companies advertising products or services for sale must make sure:
- Ads are truthful and not deceptive, that is, they don't contain statements likely to mislead the ordinary, reasonable consumer and or leave out information important to the consumer's decision to buy or use your product or service
- There is evidence to substantiate or "backup" the claims made in the ads, such as actual survey results or independent, objective scientific evidence
- The ads are "fair." Under the FTCA, an ad is "unfair" if it's likely harm or injure a consumer and the injury isn't outweighed by the benefits to the consumer. So, for example, if you advertise that your mouthwash kills germs that cause colds, but you don't tell consumers that their teeth will turn green if they use it, your ad is probably "unfair" under the FTCA
The penalties can be severe if your advertisements violate the FTCA. They include:
- A "cease and desist" order, which requires you to stop running the deceptive ad, to have evidence to back-up your claims in future ads, and pay a fine of $11,000 per day and per ad for future violations of the FTCA
- Civil penalties, which may come to thousands of dollars (or more), and may include forcing you to refund your customers' money
- Corrective advertising that makes certain the public knows about the errors in your prior bad advertising
In addition to the FTCA, ads are also controlled by state and local governments, so be certain to check the laws in your area before beginning an ad campaign. If you have any questions about these laws, talk an experienced business law attorney.