Federal Laws Governing Ads

There are many federal laws that regulate advertisements in some way or another.  We’ve listed some of the key provisions below, along with a snapshot of what each law says:

*This page is informational only and does not take the place of legal advice.  If you have a question or concern, please consult with a local attorney.

General

Airlines and Travel
Alcohol
Children
Clothing and Textiles
Energy and the Environment
Food, Drugs, and Cosmetics
Funerals
Jewelry and Art
Mail, e-mail, phone, and fax
Money and Finance
Tobacco products
Work-at-Home Programs

 

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General

Commercial Advertisement Loudness Mitigation Act (H.R. 1084/S. 2847)

Requires the FCC to make sure TV commercials are not any louder than the TV program they accompany.

Federal Trade Commission Act (15 U.S.C.  § 41-58)

• Prohibits unfair acts or practices that cause (or are likely to cause) substantial injury to consumers, but NOT if the consumers could have avoided the injury OR if there are benefits to the consumer that outweigh the injury.

• Prohibits any false advertisement for foods, drugs, devices, services, or cosmetics.

Regulation Regarding Misuse of Names to Indicate Federal Agency (18 U.S.C. § 709)

Makes it illegal to falsely convey in an advertisement (by using words like “Federal” or “United States,” or using symbols) that a business is connected with a federal agency.

Lanham Act (15 U.S.C. §§ 1051-1129)

Among other things, allows companies to sue other companies for false advertising (i.e., if they misrepresent the nature or qualities of their good or service in commercial advertising).

Fair Packaging and Labeling Act (15 U.S.C. §§ 1451-1461)

• Directs the FTC and the FDA to issue regulations requiring that all “consumer commodities” be labeled to disclose net contents, identity of commodity, and name and place of business of the product’s manufacturer, packer, or distributor.

• Authorizes additional regulations where necessary to prevent consumer deception (or to facilitate value comparisons) with respect to descriptions of ingredients, You know when you buy a big bag of chips, and you’re all psyched for a feast, and then it turns out there are like, three chips in the bag? That bag is slack filled. of packages, lower price labeling, or characterization of package sizes.

Violent Crime Control and Law Enforcement Act of 1994 (Pub. L. No. 103-322)

• States that a product with a “Made in America” or “Made in the U.S.A.” label on it must conform with the domestic content requirements for such claims established by the FTC’s decisions and orders.  The current standard for making such a claim is that the product’s parts and the labor must be “all or virtually all” made in the U.S.

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Airlines and Travel

Regulation regarding unfair or deceptive practices of ticket agents (14 CFR § 399.80)

States that it is unfair and/or deceptive for a ticket agent to make certain misrepresentations, such as:

• Misrepresentations as to the quality or kind of service, type or size of aircraft, and points served;

• Misrepresentations as to fares and charges for air transportation or services;

• Misrepresentations that special discounts or reductions are available;

• Misrepresentations as to the requirements that must be met in order to qualify for charter or group fare flights.

Regulation regarding unrealistic or deceptive scheduling (14 CFR § 399.81)

States that it is unfair or deceptive to include information in an airline advertisement purporting to reflect schedule or on-time performance without having detailed information to back it up.

Regulation regarding airline price advertising (14 CFR § 399.84)

States that advertisements for airline fares must include the entire price to be paid by the customer to the air carrier for the air transportation advertised.

Regulation regarding notice of baggage fees and other fees (14 CFR § 399.85)

States that if an air carrier has a website accessible for ticket purchases by the general public in the U.S., the carrier must promptly and prominently disclose any increase in its fee for carry-on or first and second checked bags, and any change in the first and second checked bags or carry-on allowance for a passenger on the homepage of that website.

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Alcohol

Federal Alcohol Administration Act (27 U.S.C. §§ 201-219a)

• Prohibits statements on alcoholic beverage labels and in advertisements that criticize a competitor’s products or are false, misleading, obscene, or indecent.

• Requires that alcoholic beverages contain a specific warning label regarding the impact of drinking on health.

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Children

Children’s Online Privacy Protection Act of 1998 (COPPA) (15 U.S.C. §§6501-6506)

• Prohibits commercial websites from knowingly collecting information from children who are younger than 13 years old.

• Requires websites to provide notice to parents about their collection, use, and disclosure of children’s Data that can be used to identify you, like your name, address, birth date, or Social Security number, and to obtain “verifiable parental consent” before collecting, using, or disclosing the information.

• Prohibits websites from conditioning a child’s participation in a game, the offering of a prize, or another activity on the child disclosing more information than what is needed to participate in the activity.

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Clothing and Textiles

Wool Products Labeling Act (15 U.S.C. §§ 68-68j)

• States that wool product labels must indicate the country in which the product was processed or manufactured.

• States that mail order promotional materials for wool must clearly and conspicuously state whether a wool product was processed or manufactured in the U.S., was imported, or both.

Fur Products Labeling Act (15 U.S.C. §§ 69-69j)

States that labels on fur clothing, as well as invoices and advertisements for fur products, must specify, among other things, the true English name of the animal from which the fur was taken, where the fur is from, and whether the fur is dyed or used.

Textile Fiber Products Identification Act (15 U.S.C. §§ 70-70k)

• Makes it illegal to misbrand or to falsely or deceptively label or advertise textile fiber products.

• States that any textile fiber product processed or manufactured in the United States must be so identified.
• States that any imported textile fiber product must identify the country where it was processed or manufactured.

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Environment

Guides for the use of environmental marketing claims (16 CFR Part 260)

Among other things, states that an environmental marketing claim should not be presented in a manner that overstates the environmental benefit and that each claim should be supported by a reasonable basis (which often requires competent and reliable scientific evidence).

Regulations regarding pesticide labeling (40 CFR § 156.10)

• Contains numerous detailed provisions regarding pesticide labels.

• Lists several items that must be included in pesticide product labels, including:
  • Net contents of the pesticide;
  • Certain hazard and precautionary statements; and
  • Directions for use.
•   Prohibits the use of false and misleading statements in labels.

The Dolphin Protection Consumer Protection Act (16 USC § 1385)

Among other things, states that “dolphin safe” labels on tuna products represent that no dolphins were killed or seriously injured by the fishing methods used to catch tuna and requires companies using “dolphin safe” labels to perform audits and spot checks of tuna products

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Food, Drugs, and Cosmetics

Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 301-399a)

• Bans false and misleading statements from the labeling of foods, drugs, medical devices, cosmetics, and tobacco.

• Defines the term “drug” to include, among other things, “articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease,” as well as “articles (other than food) intended to affect the structure or any function of the body.”

Prescription drug advertising regulation (21 CFR § 202.1)

Contains various rules that prescription drug advertisers need to follow.  For example:

• The order of listing ingredients and the amount of each listed in the ad has to be the same as the order of listing ingredients and amounts on the product label;

• Ads must include information regarding the side effects, risks, and contraindications of the advertised drug, and must contain a fair balance between the benefits and risks; and

• In most circumstances, a company may only advertise a drug for the specific use for which it was approved.

Nutrition Labeling and Education Act of 1990 (Public Law 101-535)

Amends the Food, Drug and Cosmetic Act;

• States that food is “misbranded” unless it bears a nutrition label stating the:
  • Serving size or other common household unit;
  • Number of servings per container;
  • Number of calories per serving and amount derived from total fat and saturated fat;
  • Amount of total fat, saturated fat, cholesterol, sodium, total carbohydrates, complex carbohydrates, sugars, total protein, and dietary fiber per serving or other unit; and
  • Vitamins, minerals, or other nutrients, subject to certain conditions.

Dietary Supplement Health and Education Act of 1994 (Public Law 103-417)

Amends the Food, Drug and Cosmetic Act to require supplement manufacturers to:

• Have substantiation for any statements of nutritional support and to notify the FDA within 30 days after first marketing a product with such a claim.
• Include nutrition information regarding the dietary ingredients in all labels.
• Include in any statements of nutritional support a prominent disclaimer that states: “This statement has not been evaluated by the Food and Drug Administration.  This product is not intended to diagnose, treat, cure, or prevent any disease.”

Regulations regarding organic foods (7 CFR Part 205)

Among other things, restricts when the term “organic” may be used in labels for agricultural products.

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Funerals

The Funeral Rule (16 CFR Part 453)

• Among other things, states that you have a right to choose the funeral goods and services you want (with some exceptions), and that the funeral provider must state this right in writing on the general price list.

• States that if state or local law requires you to buy any particular item, the funeral provider must disclose it on the price list, with a reference to the specific law.

• States that the funeral provider may not refuse, or charge a fee, to handle a casket you bought elsewhere.

• Requires a funeral provider that offers cremations to make alternative containers available.

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Jewelry, Precious Metals, and Pewter

Guides for the Jewelry, Precious Metals, and Pewter Industries (16 CFR Part 23)

List several acts that are deemed to be unfair or deceptive.  For example, these guides state that it is unfair or deceptive to misrepresent any material aspect (including type, grade, quality, size, weight, cut, and color) of gemstones, pearls, and metallic watch bands, among other things.

Indian Arts and Crafts Act of 1990 (P.L. 101-644)

• Prohibits artisans from claiming their work as “Indian Made” unless they are a member of a federally or state recognized Indian tribe or certified by a tribe as an Indian artisan.
• Requires that all “Indian Made” products be marketed truthfully regarding their specific Indian heritage and the maker’s tribal affiliation.

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Mail, e-mail, fax, phone, and fax

Regulation regarding the prohibition of pandering advertisements (39 U.S.C. § 3008)

• Tells you that if you receive any pandering advertisement in the mail for something that you believe is erotically arousing or sexually provocative, you can ask the Postal Service to order the sender to stop.

• If the unwanted advertisements continue, the Postal Service can request the Attorney General to file a civil action with a court to request compliance.

Regulation regarding the mailing of unordered merchandise (39 U.S.C. § 3009)

Tells you that you can treat unordered merchandise sent through the mail as a gift, and the sender cannot bill you for it.

Deceptive Mail Prevention and Enforcement Act (Pub. L. 106-168, 113 Stat. 1806-1821)

Contains restrictions and requires disclosures with respect to mailed sweepstake promotions.  At a minimum, a mailed promotion must clearly disclose that the sweepstake is a game and must include the specific rules, regulations, terms, and conditions of the game.

Regulation regarding mail or telephone order merchandise (16 C.F.R. Part 435)

Requires, among other things, that sellers who solicit buyers to order merchandise through the mail or by telephone ship the merchandise within the time the seller states.  If no time is stated, the seller must ship the merchandise within 30 days after receipt of the order.  If the seller is unable to ship within the required time period, it must offer the buyer the option to cancel the order and receive a prompt refund.

Telephone Consumer Protection Act of 1991 (47 U.S.C. § 227)

• Makes it illegal to call a residential telephone line using an artificial or prerecorded voice to deliver a message if the called party does not provide “prior express consent;”
• Makes it illegal to call any emergency numbers, hospitals or medical care offices, hospital patient rooms, or cellular telephone services where the called party is charged for the call;
• Makes it illegal to send unsolicited ads to a fax machine; and

• Gives individuals the right to sue violators directly in state court.

Junk Fax Prevention Act of 2005 (Pub L. No. 109-21, 119 Stat. 359)

Amends the Telephone Consumer Protection Act of 1991 to include two exceptions that allow senders to send unsolicited fax advertisements to a recipient if:

• There is an established business relationship with the recipient;
• The recipient has voluntarily communicated such number to the sender or included such number in a directory advertisement or website which voluntarily made available their fax number for public distribution.

Also requires senders of fax advertisements to place a clear and conspicuous notice on the first page of every fax informing the recipient of how to opt out of future faxes.

Telemarketing and Consumer Fraud and Abuse Prevention Act (15 U.S.C. §§ 6101-6108)

Requires the FTC to prescribe rules banning deceptive and abusive telemarketing acts or practices, including restrictions on the time of day telemarketers can call your house and requiring disclosure of the nature of the call at the start of an unsolicited call made to sell goods or services.

Telemarketing Sales Rule (16 CFR 310)

Sets forth many restrictions applicable to telemarketing.  For example,

• Before a customer pays for goods or services offered, the caller must disclose, among other things, the total cost to purchase the goods or services, any significant limitations or conditions of the purchase, and the seller’s cancellation/refund/return policy.

• Telemarketers cannot call someone who has previously stated that he/she does not want to receive calls made by or on behalf of that particular seller or charitable organization;

• Telemarketers can only call a person’s residence between 8:00 a.m. and 9:00 p.m.

• Telemarketers seeking charitable contributions must disclose truthfully, promptly, and in a clear and conspicuous manner (1) the identify of the charity, and (2) that the purpose of the call is to solicit a charitable contribution.

Telephone Disclosure and Dispute Resolution Act of 1992 (15 U.S.C. §§ 5701-5724)

Requires the FTC to set out rules prohibiting unfair and deceptive acts and practices in any advertisement for pay-per-call services (i.e., 900 numbers).  Such rules must state, among other things, that:

• The person offering such services clearly and conspicuously disclose (1) the cost of the use of such telephone number, and (2) the odds of being able to receive a prize, award, service, or product offered at no cost or reduced cost;
• Such advertisements cannot be directed at children under the age of 12 unless the service is a bona fide educational service;
• If such advertisements are directed primarily to individuals under the age of 18, then the ads must clearly and conspicuously state that consent of a parent or legal guardian is required.
• Providers of pay-per-call services are prohibited from providing such services through an 800 number or other number widely advertised/understood as being toll free.

The CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing) Act of 2003(15 U.S.C. §§ 7701-7713)

Sets out requirements for those who send unsolicited commercial e-mail. Among other things, this Act:

• Bans false or misleading header information and prohibits deceptive subject lines.

• Requires that unsolicited commercial e-mail provide recipients with a method for opting out of receiving such e-mail and must be identified as an advertisement.
• Requires a warning label if the commercial e-mail message includes sexually oriented material, unless there is prior consent.

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Money and Finance

Truth in Lending Act (15 U.S.C. § 1601-1667f)

• Governs the advertising of consumer credit.

• Requires advertisers to properly disclose credit and lease terms so that consumers can easily compare terms when shopping for credit.

Credit Card Accountability Responsibility and Disclosure Act of 2009 or “CARD” Act (Public Law 111-24)

• Governs the advertising of consumer credit
• Among other things, requires credit card issuers to adequately disclose rates and fees
• Requires any advertisement for a free credit report to prominently disclose that free credit reports are available under federal law at AnnualCreditReport.com

Truth in Savings Act (12 U.S.C. 430 § 4301-4313)

• Prohibits depository institutions and deposit brokers from making advertisements that are inaccurate or misleading or that misrepresent their deposit contracts.
• Requires advertisements related to any demand or interest-bearing account contain certain information, including information about the annual percentage yield, a statement that fees and conditions could reduce the yield, and a statement that an interest penalty is required for early withdrawal.

Credit Repair Organizations Act (15 U.S.C. §§ 1679-1679j)

• Prohibits untrue or misleading representations and requires certain affirmative disclosures in the offering or sale of “credit repair” services.

• Bars “credit repair” companies from demanding advance payment, requires that “credit repair” contracts be in writing, and gives consumers certain contract cancellation rights.
• Requires all contracts to be written, dated, and signed, and that a copy is provided to the consumer.

Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.)

• Regulates credit reporting agencies in order to, among other things, ensure accuracy of consumer credit reports and privacy of consumer credit information.
• Requires that credit reporting agencies provide certain disclosures to consumers upon making offers of credit.

Regulations regarding insured depository institutions (12 U.S.C. § 1828(a)(4))

Prohibits false advertising by using names (such as “Federal Deposit”), abbreviations (such as “FDIC”), or symbols that misleadingly suggest that the entity or service advertised is FDIC-insured when it’s not.

Regulation regarding advertisements by credit unions (12 CFR §740.2)

Prohibits credit unions from using any ad or making any representation that is inaccurate or deceptive in any way.

Rule regarding advertisements by investment advisers (17 CFR § 275.206(4)-1)

Lists certain kinds of ads by investment advisers that are deemed fraudulent, deceptive, or manipulative.  Among those ads are:

• False and misleading ads;

• Ads that refer to any testimonial concerning the investment adviser;

• Ads that contain statements that any report, analysis, or other service will be provided free or without charge, unless the report, analysis, or service actually is or will be provided entirely free and without any condition or obligation.

Rule regarding advertisements by investment companies (17 CFR § 230.482)

Contains several detailed provisions regarding advertisements by investment companies.  Among other things, the provisions require such ads to:

• Include a statement that advises investors “to consider the investment objectives, risks, and charges and expenses of the investment company carefully before investing;”and
• Disclose that any performance data quoted represents past performance, which does not guarantee future results.

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Tobacco products

Federal Cigarette Labeling and Advertising Act (15 U.S.C. §§ 1331-1341)

• Requires manufacturers, packagers, and importers of cigarettes to place one of four statutorily-prescribed health-related warnings on cigarette packages and in advertisements, on a rotating basis.

• Prohibits advertising of cigarettes on TV or radio.

Comprehensive Smokeless Tobacco Health Education Act of 1986 (15 U.S.C. §§ 4401-4408)

• Requires manufacturers, packagers, and importers of smokeless tobacco products to place one of four statutorily-prescribed health-related warnings on product packages and in advertisements, on a rotating basis.

• Prohibits any advertising of smokeless tobacco products on TV or radio.

Regulation regarding lottery features and indecent or immoral material (26 U.S.C. § 5723)

• Prohibits lottery features from being attached to any tobacco product packages.

• Prohibits indecent or immoral pictures, prints, or representations from being attached to any tobacco product packages.

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Work-at-Home Programs

Business Opportunity Rule (16 CFR § 437)

Applies to commercial arrangements in which the seller solicits the buyer to enter the business, the purchaser is required to make a payment, and the seller represents that the seller will provide, among other things, customers or equipment to the buyer.

Requires Too frequently, the term proves to be simply a euphemism for sending your money along to an unknown person or company and then watching your money magically disappear sellers to disclose the following five key items of information:

• The seller’s identifying information;

• Whether the seller makes a claim about the purchaser’s likely earnings (and, if the seller checks the “yes” box, the seller must provide information supporting any such claims);

• Whether the seller, its affiliates or key personnel have been involved in certain legal actions (and, if yes, a separate list of those actions);

• Whether the seller has a cancellation or refund policy (and, if yes, a separate document stating the material terms of such policies);

• A list of persons who bought the business opportunity within the previous three years.