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Online Shopping is Here to Stay:
Statutory and Regulatory Requirements for Online Advertising and Promotion
In 2020, over two billion people purchased goods and services online. This growth in online sales — which spiked during the pandemic — is expected to continue. As more customers rely on the internet to purchase goods and services, businesses will need to maintain an online presence to remain competitive. Businesses should be aware of statutory and regulatory require- ments for running an online advertising campaign and promoting a business online.
The Federal Trade Commission (“FTC”) prohibits unfair or deceptive advertising practices. An advertisement is unfair if it is likely to cause an injury to the consumer that he or she could not avoid (e.g., hidden fees on an item listed as “free” or advertising a warranty where none exists). An advertisement is deceptive if it contains a statement (or leaves out information) that is likely to mislead a reasonable consumer into purchasing the product or service. The FTC’s regulations apply to online advertising and social media marketing.
Terms and Conditions
Promotions must include sufficient information to avoid deceptive advertising. Generally, terms and conditions should include: a specific expiration date (not phrases such as “this week only”); the form of the discount, such as dollars off, percent off, buy-one- get-one-free; the
By Clayton Prickett
discount does not apply to taxes or shipping and handling fees; the discount cannot be combined with another coupon or offer; and if any products purchased under the promotion are returned, the refund will equal the amount the customer paid, subject to applicable refund policies.
Businesses can also incorporate terms and conditions specific to online promotions:
• The promotion can apply only to items purchased in a single order shipped at the same speed to the same address. This can limit shipping costs on products sold at a discount.
• The terms and conditions can limit the promotion to prod- ucts purchased through the business’ website only and do not apply to products purchased through third-party vendors. This can prevent a business from having to contin- ually update its prices on sites like Amazon to reflect current promotional pricing.
• If customers can apply promotion codes to reduced-priced items, then state that any percent-off promotion applies to the reduced price of an item (as opposed to a percent-off the original price). If customers cannot apply promotion codes to reduced-priced items, then state that in the terms and conditions.
Format and Location
The FTC recommends placing disclosures on the same page as the promotion and linking, if necessary, the more complicated information according to the guidelines discussed below. Infor- mation affecting the actual cost of an offer should be disclosed near the advertised price on the same electronic page. This includes, for example, “offer valid through [date],” “while supplies last,” or other information that conveys to the consumer that the price is part of a promotion.
12 l September/October 2021 CBA REPORT
www.CincyBar.org