Advertisers have legal constraints with their marketing promotion campaigns.
Though it might be lucrative to advertise the availability of free products that don't actually exist to get customers in the door, laws prohibit such false advertising. In fact, many laws prevent companies from running unethical marketing promotions. Thus, small and large businesses alike should heed the regulations governing marketing campaigns.
"Free" Claims
When advertising free merchandise, the Federal Trade Commission states all terms and conditions should be disclosed to avoid any deception. Furthermore, suppliers are not allowed to use the term "free" to engage in illegal price manipulation. For instance, a large box chain is not allowed to have an extended campaign giving out free merchandise with the intention of driving a smaller business out of the industry: This method of predatory pricing of selling goods below their retail value is illegal. Suppliers offering this marketing promotion cannot discriminate which retailers get the offer either. A "free" offer can be made in conjunction with the introduction of a new product, but only with the expectation that at some point in time, the promotion will be discontinued.
Bargain Promotion
When advertising a reduction in price for a good or service, the reduction must be made on the legitimate price previously offered. For instance, if your business normally offers sweaters for $15, you cannot advertise "Price reduced from $20 to $12!" The campaign cannot center around a mere 10-cent decrease either. The FTC states that the claim for a bargain discount must be for a "much greater" price discount and not merely a nominal one. If making claims that your price is lower than a competitor's value, the price must be the competitor's actual price. Likewise, you cannot make up the name of a fictitious retailer.
Endorsements and Testimonials
If you are a blogger, the FTC mandates disclosure of any connection or payment made by a retailer in exchange for promotion of their product. For instance, if a book publisher contacts you to write a review of its new guide on veganism and sends you a free book, you must disclose at the end of your post that you received a free copy from the publisher. Furthermore, if you are a celebrity hired by a company to provide an endorsement, you can be held liable for any damages to the customer deriving from using the product.
Bait Advertising
You cannot promote a product that doesn't exist or one that differs substantially from the actual item for sale. For example, an electronics store cannot claim to offer the latest cell phone at 50 percent off and then claim that the product sold out. The FTC also states that you cannot try discouraging a consumer from purchasing the product on discount and try to up-sell him to a more expensive product instead. Once the purchase is complete, the company must honor delivery of the discounted item instead of "swapping" the product to a more expensive item as well.
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