Advertising and Marketing 

on the Internet 

Rules of the Road 

Federal Trade Commission 

Bureau of Consumer Protection 
Inside 

General Offers and Claims 

Protecting Consumers Privacy Online 

Laws Enforced by the Federal Trade Commission 

Business Opportunities 

Credit and Financial Issues 

Environmental Claims 

Free Products 

Jewelry 

Mail and Telephone Orders 

Negative Option Offers 

900 Numbers 

Telemarketing 

Testimonials and Endorsements 

Warranties and Guarantees 

Wool and Textile Products 

Made in the U.S.A. 

Non-Compliance 

For More Information 

Your Opportunity to Comment 
 

 

 

 

 

Rules of the Road 

WHO'S REACHING A GLOBAL MARKET? 

ADVERTISERS ON THE INTERNET. 

T

he Internet is connecting advertisers and marketers to customers from Boston to Bali with text,

interactive graphics, video and audio. If youTMre thinking about advertising on the Internet, 

remember that many of the same rules that apply to other forms of advertising apply to 

electronic marketing. These rules and guidelines protect businesses and consumers Š and help 

maintain the credibility of the Internet as an advertising medium. The Federal Trade 

Commission (FTC) has prepared this guide to give you an overview of some of the laws it 

enforces. 

ADVERTISING MUST TELL 

THE TRUTH AND NOT 

MISLEAD CONSUMERS. 

IN ADDITION, CLAIMS 

MUST BE SUBSTANTIATED. 

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Rules of the Road 

GENERAL OFFERS AND CLAIMS Š PRODUCTS AND SERVICES 

T

l mislead consumers and

l affect consumersTM 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: 

l substantial

l not outweighed by other benefits and

l not reasonably avoidable.

The FTC Act prohibits unfair or deceptive advertising in any medium. 

That is, advertising must tell the truth and not mislead consumers. 

A claim can be misleading if relevant information is left 

out or if the claim implies something thatTMs not 

true. For example, a lease advertisement 

for an automobile that promotes f$0 

Downf may be misleading if significant 

and undisclosed charges are due at 

lease signing. 

In addition, claims must be substantiated, 

especially when they concern health, safety, or 

performance. The type of evidence may depend on the 

product, the claims, and what experts believe necessary. If your 

ad specifies a certain level of support for a claim Š ftests show Xf 

Š you must have at least that level of support. 

Sellers are responsible for claims they make about their products and services. Third 

parties Š such as advertising agencies or website designers and catalog marketers Š 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. 

l Advertising agencies or website designers are responsible for reviewing the

information used to substantiate ad claims. They may not simply rely on an

advertiserTMs assurance that the claims are substantiated. In determining whether an ad

agency should be held liable, the FTC looks at the extent of the agencyTMs participation

in the preparation of the challenged ad, and whether the agency knew or should have

known that the ad included false or deceptive claims.

he 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: 

2 
Rules of the Road 

l To protect themselves, catalog marketers should ask for material to back up claims

rather than repeat what the manufacturer says about the product. If the manufacturer

doesnTMt come forward with proof or turns over proof that looks questionable, the

catalog marketer should see a yellow fcaution lightf and proceed appropriately,

especially when it comes to extravagant performance claims, health or weight loss

promises, or earnings guarantees. In writing ad copy, catalogers should stick to claims

that can be supported. Most important, catalog marketers should trust their instincts

when a product sounds too good to be true.

Other points to consider:

l 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.

l Demonstrations must show how the product will perform under normal use.

l Refunds must be made to dissatisfied consumers Š if you promised to make

them.

l Advertising directed to children raises special issues. ThatTMs 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. The ChildrenTMs Advertising Review Unit 

(CARU) of the Council of Better Business Bureaus has published 

specific guidelines for childrenTMs advertising that you may find helpful. 

Dot Com Disclosures: Information About Online Advertising, an FTC 

staff paper, provides additional information for online advertisers. 

The paper discusses the factors used to evaluate the clarity and 

conspicuousness of required disclosures in online ads. It also 

discusses how certain FTC rules and guides that use terms 

like fwritingf or fprintedf apply to Internet activities and 

how technologies such as email may be used to comply 

with certain rules and guides. 

Click on Dot Com Disclosures: Information About Online Advertising. 

3 
Rules of the Road 

PROTECTING CONSUMERSTM PRIVACY ONLINE 

he Internet provides unprecedented opportunities for the collection and sharing of information 

from and about consumers. But studies show that consumers have very strong concerns about 

the security and confidentiality of their personal information in the online marketplace. Many 

consumers also report being wary of engaging in online commerce, in part 

because they fear that their personal information can be misused. 

These consumer concerns present an opportunity for you to 

build on consumer trust by implementing effective 

voluntary industry-wide practices to protect consumersTM 

information privacy. The FTC has held a number of 

workshops for industry, consumer groups and privacy 

advocates to explore industry guidelines to protect 

consumersTM privacy online. 

In June 1998, the FTC issued Online Privacy: A Report 

to Congress. The Report noted that while over 85 percent 

of all websites collected personal information from 

consumers, only 14 percent of the sites in the FTCTMs 

random sample of commercial websites provided any 

notice to consumers of the personal information they 

collect or how they use it. In May 2000, the FTC issued 

a follow-up report, Privacy Online: Fair Information 

Practices in the Electronic Marketplace. While the 2000 

survey showed significant improvement in the percent of 

websites that post at least some privacy disclosures, only 20 

percent of the random sample sites were found to have implemented four fair information 

practices: notice, choice, access and security. Even when the survey looked at the percentage of 

sites implementing the two critical practices of notice and choice, only 41 percent of the random 

sample provided such privacy disclosures. You can access the FTCTMs privacy report at 

www.ftc.gov. 

The ChildrenTMs Online Privacy Protection Act (COPPA) and the FTCTMs implementing Rule took 

effect April 21, 2000. Commercial websites directed to children under 13 years old or general 

audience sites that have actual knowledge that they are collecting information from a child must 

obtain parental permission before collecting such information. 

The FTC also launched a special site at www.ftc.gov/kidzprivacy to help children, parents and 

site operators understand the provisions of COPPA and how the law will affect them. 

T

4 
Rules of the Road 

LAWS ENFORCED BY THE FEDERAL TRADE COMMISSION 

L

isted here are some FTC laws about specific marketing practices and the promotion of

products and services in specific industries. For copies of the rules and commentaries relevant 

to your Internet enterprise, contact: Consumer Response Center, Federal Trade Commission, 

Washington, DC 20580; toll-free: 1-877-FTC-HELP (382-4357); TDD: 202-326-2502. Or visit 

the FTC at www.ftc.gov. 

Business Opportunities 

The Franchise and Business Opportunity Rule requires franchise and business opportunity 

sellers to give consumers a detailed disclosure document at least 10 days before the consumer 

pays any money or legally commits to a purchase. The document must include: 

l the names, addresses, and telephone numbers of other purchasers;

l a fully-audited financial statement of the seller;

l the background and experience of the businessTMs key executives;

l the cost of starting and maintaining the business; and

l the responsibilities of the seller and purchaser once the purchase is made.

In addition, companies that make earnings representations must give consumers the written basis 

for their claims, including the number and percentage of owners who have done at least as well 

as claimed. 

Click on Franchise Rule and Business Opportunity Ventures. 

Multi-level marketing (MLM) 

MLM Š also known as fnetworkf or fmatrixf marketing Š is a way of 

selling goods and services through distributors. These plans typically 

promise that people who sign up as distributors will get commissions 

two ways Š on their own sales and on the sales their recruits have 

made. 

Pyramid schemes Š a form of multi-level marketing Š 

involve paying commissions to distributors only for 

recruiting new distributors. Pyramid schemes are illegal 

in most states because the plans inevitably collapse when no new distributors can be recruited. 

When a plan collapses, most people Š except those at the top of the pyramid Š lose their 

money. 

MLMs should pay commissions for the retail sales of goods or services, not for recruiting new 

distributors. MLMs that involve the sale of business opportunities or franchises, as defined by 

5 
Rules of the Road 

the Franchise Rule, must comply with the RuleTMs requirements about disclosing the number and 

percentage of existing franchisees who have achieved the claimed results, as well as cautionary 

language. 

Click on Franchise Rule and Business Opportunity Ventures. 

Credit and Financial Issues 

The Truth in Lending Act requires creditors who deal with 

consumers to disclose information in writing about finance charges 

and related aspects of credit transactions, including finance charges 

expressed as an annual percentage rate. In addition, the Act 

establishes a three-day right of rescission in certain transactions 

involving the establishment of a security interest in the consumerTMs principal dwelling (with 

certain exclusions, such as interests taken in connection with the purchase or initial construction 

of a dwelling). The Act also establishes certain requirements for advertisers of credit terms. 

Click on Truth in Lending Act. 

The Fair Credit Billing Act is important if you are a creditor billing customers for goods or 

services. The Act requires you to acknowledge consumer billing complaints promptly in writing 

and to investigate billing errors. The Act prohibits creditors from taking actions that adversely 

affect the consumerTMs credit standing until the investigation is completed, and affords other 

consumer protections during disputes. The Act also requires that creditors promptly post 

payments to the consumerTMs account, and either refund overpayments or credit them to the 

consumerTMs account. 

Click on Fair Credit Billing Act. 

The Fair Credit Reporting Act requires that consumer reporting agencies (CRAs) Š such as 

credit bureaus and resellers of consumer reports Š that provide information to creditors, 

insurers, employers, and others, do so with due regard for the confidentiality, accuracy, and 

legitimate use of such data. When those parties take adverse action on the basis of information in 

a credit report, they must identify the CRA that provided the report so that the consumer can 

learn how to get a copy to verify or contest its accuracy and completeness. Creditors and others 

may not knowingly provide false information to CRAs, which are required to maintain 

reasonable procedures to ensure the maximum possible accuracy of their data. 

Click on Fair Credit Reporting Act, Credit Reports: What Information Providers Need to 

Know, Using Consumer Reports: What Employers Need to Know, and Credit Reports: 

What Insurers Need to Know. 

The Equal Credit Opportunity Act prohibits lenders from discriminating on the basis of race, 

color, religion, national origin, sex, marital status, age, receipt of public assistance income, or 

an applicantTMs good faith exercise of any rights under the Consumer Credit Protection Act. The 

6 
Rules of the Road 

ECOA requires creditors to provide applicants with the reasons credit was denied if the applicant 

asks. 

Click on Equal Credit Opportunity Act. 

The Electronic Fund Transfer Act establishes the rights, liabilities, and responsibilities of 

participants in electronic fund transfer systems. The EFTA requires participants to adopt certain 

practices when they deal with transaction accounting and preauthorized transfers and error 

resolution, and sets liability limits for losses caused by unauthorized transfers. 

Click on Electronic Fund Transfer Act. 

The Consumer Leasing Act regulates personal property leases that exceed four months and are 

made to consumers for personal, family, or household purposes. The statute requires that certain 

lease costs and terms be disclosed, imposes limitations on the size of penalties for delinquency or 

default and on the size of residual liabilities, and in some instances, requires certain disclosures 

in lease advertising. 

Click on Advertising Consumer Leases and How to Advertise Consumer Credit. 

Environmental Claims 

ItTMs deceptive to misrepresent Š directly or indirectly Š that a product offers a general 

environmental benefit. Your ads should qualify broad environmental claims Š or avoid 

them altogether Š to prevent deception about the specific nature of the benefit. In 

addition, your ads shouldnTMt imply significant environmental benefits if 

the benefit isnTMt significant. Say a trash bag is labeled 

frecyclablef without qualification. Because trash bags 

ordinarily are not separated from other trash for 

recycling at a landfill or incinerator, it is 

unlikely that they will be used again. 

Technically, the bag may be frecyclable,f 

but the claim is deceptive because it asserts an 

environmental benefit where there is no significant or meaningful benefit. 

Click on Environmental Advertising and Marketing Practices Guide, and Complying with 

the Green Guides. 

Free Products 

A product thatTMs advertised as free if another is purchased Š fbuy one, get onef Š 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. 

Click on Guide Concerning the Use of the Word Free and Similar Representations. 

7 
 

 

 

 

Rules of the Road 

Jewelry 

The FTCTMs Jewelry Guides tell you how to make accurate and truthful claims about jewelry you 

offer for sale. 

The Guides cover claims made for gold, silver, platinum, pewter, diamonds, gemstones, and 

pearls and define how certain common terms may be used in ads. For example, the 

Guides explain when a product can be called fgold platedf or when a diamond can 

be called fflawless.f 

The Guides also describe information that sellers should disclose in their ads so that 

consumers are not misled. For example, if you sell synthetic or imitation gemstones, you 

must tell the consumer that the gemstone is not natural. In addition, you should tell consumers if 

the pearls that you are selling are cultured or imitation, so that consumers are not misled about 

the type of pearl being offered. 

Click on Guides for the Jewelry, Precious Metals and Pewter Industries. 

Mail and Telephone Orders 

According to the Mail or Telephone Order Merchandise Rule, you must have a reasonable basis 

for stating or implying that a product can be shipped within a certain time. If your ad doesnTMt 

include a shipping statement, you must have a 

reasonable basis to believe you can ship within 30 days. 

If you canTMt ship when promised, you must notify the 

customer of the delay and the right to cancel. For 

definite delays of up to 30 days, you may treat the 

customerTMs silence as agreement to the delay. For 

longer or indefinite delays, and second and 

subsequent delays, you must get the customerTMs 

consent. If you donTMt, you must promptly refund all 

the money the customer paid you without being 

asked. 

YOU MUST HAVE A REASONABLE 

BASIS FOR STATING OR IMPLYING 

THAT A PRODUCT CAN BE 

SHIPPED WITHIN A CERTAIN TIME. 

You can give updated shipping information over the 

phone if your Internet ad prompts customers to call to 

place an order. This information may differ from what you said or implied about the shipping 

time in your ad. The updated phone information supersedes any shipping representation made in 

your ad, but you still must have a reasonable basis for the update. 

Click on Complying with the FTCTMs Mail or Telephone Order Merchandise Rule. 

8 
Rules of the Road 

Negative Option Offers 

The 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 ads to 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 doesnTMt fall within the specifics of the Rule, companies should be careful to clearly 

disclose the terms and conditions of the plan before billing consumers or charging their credit 

cards. 

Click on Negative Option Rule. 

900 Numbers 

The 900-Number Rule requires that ads for pay-per-call services disclose the cost of the call. 

Ads for services that promote sweepstakes or games of chance, provide information about a 

federal program (but are not sponsored by a federal agency), or target individuals under 18 years 

of age require additional disclosures. Ads for 900-numbers cannot be directed to children under 

12 unless the ads deal with a bona fide education service, as defined by the Rule. 

Click on Telephone Disclosure and Dispute Resolution Act and Complying with the 900-

Number Rule. 

Telemarketing 

Credit Repair, Advance Fee Loans, & Investment Opportunities 

Advertisements promoting credit repair, promising loans for a fee in advance, or touting 

investment opportunities may trigger application of the FTCTMs Telemarketing Sales Rule if the 

ad allows consumers to order goods or services by telephone. In 

general, this Rule does not apply to general media 

advertisements. If youTMre advertising credit repair, advance fee 

loans, or investment opportunities, or offering to recover 

money paid in previous telemarketing transactions, however, 

the Rule likely applies to you. Among other things, the 

Rule requires that certain disclosures be made before a 

customer pays for the goods or services. The Rule also 

prohibits material misrepresentations. 

Click on Complying with the Telemarketing Sales Rule. 

9 
 

 

 

Rules of the Road 

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 canTMt 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. 

Click on FTC Guides Concerning Use of Endorsements and Testimonials in Advertising. 

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. 

Click on Pre-Sale Availability Written Warranties Rule. 

Guarantees 

If your ad uses phrases like fsatisfaction guaranteedf or 

fmoney-back guarantee,f you must be willing to give full 

refunds for any reason. You also must tell the consumer the 

terms of the offer. 

Click on Guides for the Advertising of Warranties and 

Guarantees, A BusinesspersonTMs Guide to Federal 

Warranty Law, and A Legal Supplement to Federal Warranty Law. 

YOU MUST TELL THE

CONSUMER THE TERMS 

OF THE OFFER. 

Wool and Textile Products 

The Textile and Wool Acts require you to disclose country of origin information in catalogs and 

other mail order advertising and in Internet ads that sell textile and wool products. The description 

of each advertised item must include a statement that it was made in the U.S.A., imported or 

both. A general statement in your ads that all products are either made in the U.S.A. or imported 

is not adequate. 

10 
Rules of the Road 

Ads that say or imply anything about fiber content must disclose the generic fiber names (as 

assigned by the FTC) in order of predominance by weight. This requirement applies to all ads, 

whether or not they solicit direct sales. It is not necessary to state the percentage of each fiber, but 

fibers present in an amount less than 5 percent should be listed as fother fiber(s).f (There is an 

exception to the 5 percent requirement for fibers that have a functional significance even in an 

amount less than 5 percent.) 

Click on Threading Your Way Through the Labeling Requirements Under the Textile and 

Wool Acts, Textile Fiber Products Identification Act, Calling It Cotton: Labeling and 

Advertising Cotton Products, and A Direct MarketerTMs Guide to Labeling Requirements 

Under the Textile and Wool Acts. 

Made in the U.S.A. 

A product has to be fall or virtually all made in the United Statesf for it to be advertised or 

labeled as fMade in the U.S.A.f 

Click on Enforcement Policy Statement on U.S. Origin Claims. 

NON-COMPLIANCE 

T

he FTC periodically joins with other law enforcement agencies to monitor the Internet for

potentially false or deceptive online advertising claims. 

If your advertisements donTMt comply with the law, you could face enforcement actions or civil 

lawsuits. For advertisers under the FTCTMs jurisdiction, that could mean: 

l orders to cease and desist, with fines up to $51.744 per violation should they occur.

l injunctions by federal district courts. Violations of some Commission rules also could

result in civil penalties of up to $51,744 per violation. V iolations of court orders could

result in civil or criminal contempt proceedings.

l in some instances, refunds to consumers for actual damages in civil lawsuits.

[Note: Edited February 2023 to reflect Inflation-Adjusted Civil Penalty Maximums.]

11 
Rules of the Road 

FOR MORE INFORMATION 

T

he FTC publishes a series of publications to help businesses understand compliance

requirements no matter where they advertise. Many are available at www.ftc.gov. For print 

copies, contact: Consumer Response Center, Federal Trade Commission, Washington, DC 

20580; toll-free: 1-877-FTC-HELP (382-4357); TDD: 202-326-2502. 

YOUR OPPORTUNITY TO COMMENT 

T

he Small Business and Agriculture Regulatory Enforcement Ombudsman and 10 Regional

Fairness Boards collect comments from small business about federal enforcement actions. 

Each year, the Ombudsman evaluates enforcement activities and rates each agencyTMs 

responsiveness to small business. To comment on FTC actions, call toll-free 1-888-734-3247. 

12 

FEDERAL TRADE COMMISSION -

FOR THE CONSUMER 

TOLL FREE 1-877-FTC-HELP 

WWW.FTC.GOV 

September 2000