Saturday, July 28, 2012

What Are Your Online Ads "Up To"?

What does it mean if an advertisement says that you’ll receive “up to” a certain percentage off normal prices?  Would it surprise you to learn that almost half of the people reading that probably don't know the answer?  It's true...there's even a report to prove it.

In late June, the FTC released a report which analyzed how consumers interpret the words “up to” in advertisements.  You can check out the report here

Not surprisingly, the FTC's report concluded that about half of all people surveyed thought that an ad containing the words “up to” (such as “up to 47% savings”) meant that they would receive the maximum savings (i.e., 47% savings), and not something less than that (like, for instance, 25% savings).

Does this mean that online merchants must sell everything at the maximum discount listed in their promotions or else risk violating an FTC mandate?  No.  Companies can still take advantage of the “up to” language to discount their products and services for less than the maximum promoted discounted rate.  But tread carefully: the FTC’s report reminds us that there are many other issues that your business needs to consider when advertising discounts for its products or services.  Among them are:

1. Wording establishes customer expectation.  Although it's not “deceptive” to say that consumers will receive “up to” a certain amount of savings, the FTC’s report illustrates that approximately half of your consumers expect to receive the maximum level of savings when the words “up to” are included in your ad.  (And you know what happens when consumer expectations are not met, right?  You end up with customer service complaints.  Or charge backs.  Or class action lawsuits.) 

2. Under federal and state consumer sales laws, if your company promotes discounts of “up to” a certain amount, then there must be a way—a commercially reasonable way—for your customers to receive that maximum discount.  For example, if you say, “We’ll sell you a car for up to 25% off if you buy it through our website”, but in reality the full discount would apply only to sales occurring during certain hours and apply only to a limited number of cars, then you’ve likely violated both federal and state consumer protection laws—unless you clarify the limitations using clear and unambiguous language.  

3. State Attorneys General and the FTC scrutinize businesses that use the “up to” language in their advertisements.  If you use “up to” in your online promotions, you’d better be prepared to demonstrate (i) how the maximum promoted discount could be achieved reasonably under normal commercial terms and in light of reasonable consumer expectations, and (ii) examples where your customers actually qualified for, and received, the your company's maximum advertised discount.  

Any questions about whether your online advertisements meet or exceed legal standards?  Drop me an email and I’ll send you my whitepaper, “Promises, Promises: Current Standards in Online Advertisements.”

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