When businesses think about false advertising, they usually think of the consequences.
Businesses with misleading ads can face government action, lose the trust of consumers, become an easy target of competitor attacks — or all three.
To most business owners, false advertising and its consequences sound easy to avoid — just don’t lie. Unfortunately, that thought process leads many businesses astray. Most businesses who publish misleading ads don’t even know they did so.
The BBB of Greater Kansas City has challenged the accuracy or truthfulness of 126 advertising claims in the past three years. In the BBB’s estimation, just nine were intentionally misleading.
In 93 percent of cases, the BBB challenged advertising claims not because the business plotted to mislead their customers but because they didn’t know there were rules against what they said. Nearly as often, they don’t understand why some of these rules exist or even what constitutes “false advertising.”
Business owners are busy. They don’t keep up to date on regulations because they’re trying to pay bills, pay suppliers, sell products, sign paychecks, maintain equipment and so on and so on.
It takes dedication to know the minutia of honest advertising. In order for the BBB to know what claims should be challenged, it must stay abreast of several thousand pages of law, case law and regulations, both state and federal.
Business owners should make the sacrifice of their time to achieve a basic understanding of advertising rules. There are benefits.
It Builds Trust with Consumers.
You want them to believe what you say, now and forever. You don’t want to say something about your product that ends up being untrue, breaking that trust. Not only do customers feel like their trust was violated, they tell their family and friends — or worse, contradict your advertising claims in an online review.
The BBB developed a program called the 5 Gestures of Trust based on consumer data that asked what builds better customer relationships, better experience, garners trust and respect.
The No. 1, most essential gesture that consumers indicated is honesty. If your business demonstrates the willingness to go above and beyond from the very first point of contact — the advertisement — the chances of a consumer trusting your business increases.
It Builds Your Reputation.
Most businesses try their best to be honest and give the best information they think the customer needs. However, some businesses still fall short, and it damages their reputation.
In addition to the 126 challenged advertising claims, the Kansas City BBB received 487 complaints in the last year that mention advertising problems. Of those, 162 consumers claimed the business had “false advertising,” and 95 identified misleading advertising as the primary reason they filed a complaint.
Don’t be these businesses. Familiarize yourself with basic advertising principles, and you’ll learn that when your business is known to be honest and you share your most impressive product benefits, it appears that much more powerful.
Anyone can claim to have a superior product, but if customers trust you to back up your claims, they’re more likely to continue buying your products in the future.
You’ll Avoid Government Action.
This is not a “benefit.” However, it is a necessary point to make.
Government agencies take great strides to avoid filing suit against businesses. They have websites and resources dedicated to helping businesses advertise honestly. They visit with businesses, accept feedback about industry difficulties, and practice outreach to business owners. They even rely on the BBB to help businesses understand the importance of honest advertising, in hopes that businesses will self-regulate.
But eventually, if a problem grows enough in a single industry, the hammer comes down. You don’t want to be under it.
For example, the FTC reevaluated and published updates to its jewelry guide in July 2018. If history is any indication (based on follow-ups to FTC guides on testimonial ads and warnings to the window installment industry), lawsuits are soon to follow.
It’s a good idea for business owners to take some time to learn the laws that govern their industry. With advertising, it’s nice to know that learning the laws can help build business.
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