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PRODUCTS AND SERVICES

The Federal Trade Commission Act allows the FTC to act in the interest of all consumers to prevent deceptive and unfair acts or practices. In interpreting Section 5 of the Act, the Commission has determined that a representation, omission or practice is deceptive if it is likely to:

• mislead consumers and
• affect consumers' behavior or decisions about the product or service.

In addition, an act or practice is unfair if the injury it causes, or is likely to cause, is:

• substantial
• not outweighed by other benefits and
• not reasonably avoidable.

The FTC Act prohibits unfair or deceptive advertising in any medium.Sellers are responsible for claims they make about their products and services. Third parties - such as advertising agencies or website designers and catalog marketers - also may 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.

PROTECTING CONSUMERS' PRIVACY ONLINE

Under the revised guidelines, the FTC calls for every website to have a clear statement that data is being collected. It says consumers should be allowed to choose whether to have information collected, and when data collection occurs outside the traditional website context, companies should develop alternative methods of disclosure.

The recommendations add that a company that collects data for behavioral advertising should provide security for it. And companies should also retain data only as long as is necessary to fulfill a legitimate business or law enforcement need.

"Put simply, this could be the last clear chance to show that self-regulation can -- and will -- effectively protect consumers' privacy in a dynamic online marketplace," said FTC Commissioner Jon Leibowitz in a statement.

FREE PRODUCTS

A product that's advertised as free if another is purchased - "buy one, get one" - indicates that the consumer will pay nothing for the one item and no more than the regular price for the other. Ads like these should describe all the terms and conditions of the free offer clearly and prominently.

TESTIMONIALS AND ENDORSEMENTS

Testimonials and endorsements must reflect the typical experiences of consumers, unless the ad clearly and conspicuously states otherwise. A statement that not all consumers will get the same results is not enough to qualify a claim. Testimonials and endorsements can't be used to make a claim that the advertiser itself cannot substantiate.

Connections between an endorser and the company that are unclear or unexpected to a customer also must be disclosed, whether they have to do with a financial arrangement for a favorable endorsement, a position with the company, or stock ownership. Expert endorsements must be based on appropriate tests or evaluations performed by people that have mastered the subject matter.

WARRANTIES AND GUARANTEES

Warranties

The Rule on Pre-Sale Availability of Written Warranty Terms requires that warranties be available before purchase for consumer products that cost more than $15. If your ad mentions a warranty on a product that can be purchased by mail, phone or computer, it must tell consumers, how to get a copy of the warranty.

Guarantees

If any ad, on your website, uses phrases like "satisfaction guaranteed" or "money-back guarantee," you must be willing to give full refunds for any reason. You also must tell the consumer the terms of the offer.

OTHER IMPORTANT POINTS

• Disclaimers and disclosures must be clear and conspicuous. That is, consumers must be able to notice, read or hear, and understand the information. Still, a disclaimer or disclosure alone usually is not enough to remedy a false or deceptive claim.
• Demonstrations must show how the product will perform under normal use.
• Refunds must be made to dissatisfied consumers - if you promised to make them.
• Advertising directed to children raises special issues. That's because children may have greater difficulty evaluating advertising claims and understanding the nature of the information you provide. Sellers should take special care not to misrepresent a product or its performance when advertising to children.

We hope this article provides you with insightful information to legally and securely run your online business, for any queries, please contact us at support@prodigylegal.com or visit us at www.prodigylegal.com for more information.