Regulating Internet Advertising: Keeping Consumers and Businesses Safe

In today's world such a large amount of Internet Advertising is taking place.  Billions of dollars are being spent by businesses to market their products to you, the consumers, via Internet.  Consumers, as they should be, are very much hesitant about making purchases based on these advertisements because they do not know if the the advertiser is being 100 percent truthful with the information they are presenting to potential buyers.  This is why rules and regulations are needed when advertising on the Internet.  These rules and guidelines protect businesses and consumers - and help maintain the credibility of the Internet as an advertising medium. 


The Federal Trade Commission is in charge of enforcing laws about advertising and marketing on the Internet.  Many of the same rules that apply to other forms of advertising apply to electronic marketing.  Advertising must tell the truth and not mislead consumers.  In addition, claims must be substantiated.  As determined by the commission an ad is deceptive if it likely to affect consumers' behavior or decisions about the product or service.  This means that if important relevant information is missing that would have otherwise affected the consumers decision the ad is not truthful. 

Sellers are responsible for claims they make about their products and services. Third parties such as advertising agencies or website designers and catalog marketers may also be liable for making or disseminating deceptive representations if they participate in the preparation or distribution of the advertising, or know about the deceptive claims.

The ad on the left is an example of false advertising.  Costco has never been an authorized retailer of the up-scale label Michael Kors and they were sued for falsely advertising its handbags at bargain prices without authorization. 

There are three remedies offered for false Internet advertising.  They are as follows:

1) Injunctive Relief - Injunctive relief is granted by the courts upon the satisfaction of two requirements. First, a plaintiff must demonstrate a "likelihood of deception or confusion on the part of the buying public caused by a product's false or misleading description or advertising". Second, a plaintiff must demonstrate that an "irreparable harm" has been inflicted, even if such harm is a decrease in sales that cannot be completely attributed to a defendant's false advertising.

2) Corrective Advertising - Corrective advertising can be ruled in two different ways. First, and most commonly, the court can require a defendant to launch a corrective advertising campaign and to make an affirmative, correcting statement in that campaign.  Second, the courts can award a plaintiff monetary damages so that the plaintiff can conduct a corrective advertising campaign to counter the defendant's false advertisements.

3) Damages - To collect damages, the plaintiff generally has to show either that some consumers were actually deceived or that the defendant used the false advertising in bad faith.

 http://www.business.ftc.gov/documents/bus28-advertising-and-marketing-internet-rules-road
 http://legal-dictionary.thefreedictionary.com/False+Advertising