You are here: Home  FTC Actions FTC Ad FAQ Rules 26 - 30

The Federal Trade Commission publishes a summary of advertising rules.  The rules discussed in this FTC FAQ  apply to web site ads.

Mail Order Advertising

What rules must a company follow if it sells products via mail order?

Truth-in-advertising standards -- including that companies must have proof to back up express and implied claims made about its products -- apply to mail order marketers. In addition, the FTC's Mail or Telephone Order Merchandise Rule ("Mail Order Rule") applies when a consumer places an order by mail, telephone, fax, or computer. Under the Mail Order Rule, a company must have a reasonable basis for believing that it can ship the product within the time period stated in the ad. If the ad doesn't specify a time period, the company must have a reasonable basis for believing that it can ship within 30 days. For more information, see A Business Guide to the Federal Trade Commission's Mail or Telephone Order Merchandise Rule and A Business Checklist for Direct Marketers. In addition, the Direct Marketing Association, a trade group for members of the direct marketing industry, has voluntary guidelines on ethical business practices.

Is it okay for a company to "dry test" a product?

"Dry testing" describes the practice of placing an ad for a product to see if there is sufficient consumer interest before actually going to the expense of manufacturing the item. Although the Mail Order Rule doesn't specifically deal with this situation, the FTC has issued an advisory opinion that such ads must clearly disclose to consumers the fact that the merchandise is only planned and may not ever be shipped. For more information, see A Business Guide to the Federal Trade Commission's Mail or Telephone Order Merchandise Rule.

Negative Option Offers

Are there any rules regarding ads for "negative option" plans?

The FTC's Negative Option Rule applies to sellers of subscription plans who ship merchandise like books or compact discs to consumers who have agreed in advance to become subscribers. The Rule requires that ads clearly and conspicuously disclose material information about the terms of the plan. Further, once consumers agree to enroll, the company must notify them before shipping to allow them to decline the merchandise. Even if an automatic shipment or continuity program doesn't fall within the specifics of the Negative Option Rule, companies should be careful to clearly disclose the terms and conditions of the plan before billing consumers or charging their credit cards. For more information, see the Negative Option Rule.

"New" Claims

The answer depends on how the ad uses the word "new." For example, under the rules governing the identification of textiles, fabric cannot be advertised as "new" if it has been reclaimed or respun. The rules governing advertising claims for tires prohibit the use of the word "new" to describe retreads. However, when no specific regulation applies, each case must be considered within the context of the ad. At least one FTC advisory opinion has suggested a six-month limit on the use of the word when advertising the introduction of a "new" product not previously on the market.

900 Numbers

What information must be included in ads for 900 numbers or "pay-per-call" services?

The FTC's 900 Number Rule requires that ads for these services "clearly and conspicuously" disclose the cost of the call. The law is very specific about what "clear and conspicuous" means, depending on whether the ad appears on radio, TV, or print. The rule also requires that 900 number ads directed at consumers under age 18 disclose that parental permission is required before calling. The rule prohibits 900 number services directed at children under 12, unless it is a "bona fide educational service." In addition, 900 number ads that promote sweepstakes must state the odds of winning or, if the odds cannot be determined, the factors that determine the odds. Ads for 900 number services that provide information on federal programs, but are not affiliated with the government, also must contain certain disclosures. For more information, see Complying with the 900 Number Rule.

Pricing

Are there any standards governing the advertising of prices?

The same standards for truthfulness apply when companies make claims about price comparisons, "sale" prices, and the like. For more information, see the FTC's Guides Against Deceptive Pricing. Since many pricing issues involve local practices, you also may want to contact the attorney general's office in the states where you plan to advertise. The phone numbers are in the Consumer's Resource Handbook.

What responsibility does a company have to make sure that prices are accurate?

In many jurisdictions, companies are legally required to charge no more than the advertised or shelf price for a product, so good pricing practices are important for both customer satisfaction and a company's bottom line. For tips on accurate pricing practices in advertising and in retail stores, see the FTC's Good Pricing Practices? SCAN DO.

This page was last modified on July 22, 2007.

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