Advertisers often make claims in promotions about their products and services. In many such cases, surveys are the natural tool to investigate and provide evidence for such statements. For example, a marketer wishing to make a claim about the percentage of individuals who enjoy the taste of brand “x” may do so by first commissioning a survey. Importantly, using such survey results in advertisements there are relevant laws and regulations to be aware of when making claims in advertising.
Legal Issues & Background
The Federal Trade Commission (FTC) enforces advertising standards under the Federal Trade Commission Act which mandates that advertisements be fair, non-deceptive and that advertisers back-up their claims. However, local and state authorities, as well as other agencies may also be involved in advertising regulation and enforcement. Additional information regarding specific advertising requirements can be found on the FTC Web site.
Before a company runs an ad, the FTC requires the company to have a “reasonable basis” for the claims: objective evidence that supports the claim- that is at minimum based on the type of evidence that the advertiser says that it has. Several principles are listed for ad substantiation on the Federal Trade Commission Web site (FTC):
- Substantiation of claims before dissemination.
- Responsibility for all interpretations of advertisement by “reasonable” individuals.
- Substantiation of all express and implied claims.
- Use of external information (e.g., surveys) to understand how individuals perceive meaning of advertisements and how much evidence they believe is behind claim.
- Claims must be substantiated appropriately. For example, a statement such as “x% of customers feel y” should be substantiated by a projectable survey, not simply anecdotal evidence.
- “Reasonable basis” - if advertisement does not make an explicit reference to how claim was substantiated (e.g., by a survey), then it is assumed that the advertiser had a reasonable basis for making the claim.
- “Competent and reliable” scientific evidence. Scientific evidence is considered “tests, analyses, research, studies, or other evidence based upon the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.”
Comparative Advertising & Ad Substantiation
Additionally, FTC developed the Statement of Policy Regarding Comparative Advertising (comparing a product to another company’s product in an advertisement) which provides: comparative advertising is appropriate where the comparisons are clearly identified, truthful, and non-deceptive.
The National Advertising Division of the Better Business Bureau applies a different standard to comparative advertising and requires that “claims that expressly or implicitly disparage a competing product should be held to the highest level of scrutiny in order to ensure that they are truthful, accurate, and narrowly drawn.”
The Lanham Act (The U.S. Trademark Act) also applies to bringing claims of false advertising. Under the Act, the plaintiff is required to show irreparable harm (harm that cannot be repaired through monetary damages) which can be shown by the likelihood of consumer deception. Cases of comparative advertising that explicitly mention the competitor often result in a presumption of irreparable injury.
Under the Lanham Act, liability arises for an advertiser if the commercial message or statement is either literally false or literally true or ambiguous, but has the tendency to deceive consumers because of an implied message. For a survey researcher, as an agent of the client, data accuracy and full disclosure is critical to protect businesses from liability. Therefore, survey researcher professionals must make sure that all survey research is accurate and representative.
Standards for Conducting Research for Advertising Claims
Advertising Standards Canada, has published a set of guidelines for advertisement substantiation that may be helpful to researchers for informational purposes. Several of the guidelines include the following:
- Research should sufficiently represent real scenarios
- Taste tests should be conducted blind
- Measurements and instruments should be crafted to avoid bias
- Survey instruments should include “don’t know/no opinion” options (explicit or vol.)
- A representative & random sample should be drawn based on target population
- Sample size may be selected by expertise of practitioner, but at a minimum:
- A sample size of 300 is required, 100 for subgroups, 100 for control groups
- Finite populations may have smaller sample sizes, though should produce a sampling margin of error of no greater than +/- 6.5% at 95% at the confidence level.
- A 95% confidence level is recommended
- Data weighting should follow industry convention
- Data should be sufficiently recent
Though the guidelines are geared towards the Canadian landscape, the majority of proposals are generally applicable to the United States. Researchers should consult with the full document for the comprehensive list of guidelines, some of which may be applicable specifically to research done in Canada.
Projectible surveys may serve as advertising substantiation evidence for various kinds of promotional claims. However, in order to ensure that your liability is minimized, research must be done at a level that other experts in field would find appropriate and acceptable for the task and must be accurate and reliable.
The information provided in this document is not intended and should not be construed as or substituted for legal advice. It is provided for informational purposes only. It is advisable to consult with private counsel on the precise scope and interpretation of any given laws/legislation and their impact on your particular business.