Advertising content is widely used in the business world, and there are various types of advertisements, such as online advertising and billboard advertising. These advertising campaigns can be carried out for new products, services, or public messages. Advertisers need to be cautious about misleading or illegal advertising. An organization and advertising agency can benefit from having an advertising agreement to prevent misunderstandings, financial losses, and other undesirable outcomes. Here is what you should know about advertising agreements, internet law, and how an advertising lawyer from Greenberg & Lieberman, LLC in Washington, DC, can help protect you from undesirable outcomes.
What Is an Advertising Agreement?
An advertising agreement is a contract between an advertiser (a company or a freelancer) and a host (any organization). Through this contract, the advertiser is responsible for running marketing campaigns or handling other marketing-related activities for the organization.
Advertising agreements can have various forms, depending on the nature of the advertising campaigns. However, most agreements have some standard terms and conditions. For instance, advertising or sponsorship agreements include a title and an introduction to state the agreement’s purpose.
Additional terms and conditions could include the medium where the advertisement would run, what the advertising material would highlight, how long it would stay active on said mediums and any special requirements such as advance payments. It can also include how the advertiser would protect any third-party intellectual property rights and the territorial scope of the advertisement.
It is critical to include any information both parties have a mutual agreement on before progressing with the advertising campaign because it lets both companies protect their interests in case of an issue.
Why Would You Need an Advertising Agreement?
While it is possible to pursue an advertising campaign without a formal agreement with the other party, certain issues might arise if you don’t have an advertising agreement.
In addition, enforcing the agreed-upon terms with the other party can be intractable because the other party may suddenly decide not to fulfill their duty in the deal or claim a change in the terms of the agreement.
The lack of a formal written or recorded advertising agreement can make a dispute unsolvable because there might be no legal grounds to hold any party accountable for a breach of the terms. For example, a formal advertising agreement would include the date of termination; without this agreement, either party could back out of the deal whenever desired.
Whether you are the company acquiring or providing services, it is critical to have a written marketing or sponsorship agreement that protects the rights of all parties.
How are Advertising Agreements Used?
The primary purpose of an advertising agreement is to ensure all parties involved understand their legal obligations to each other. The agreement specifies the roles and responsibilities of each party and lets them keep their business dealings fair; it should include payment cycles, taxes, and terms of termination. The agreement can help companies protect themselves from deceptive or misleading advertisements.
In addition, If either party fails to fulfill their obligations according to the contract, they can be held liable. For instance, suppose the advertiser made a misleading claim or did not have sufficient evidence to support the advertising claim that resulted in your business losing customers, or your brand losing value. In that case, you can pursue litigation against them.
What Is Advertising Law?
Advertising law protects customers from fraudulent, misleading, and deceptive advertising claims and statements.Advertising law also includes how a business can promote its products without using misleading or deceptive practices to convince consumers to purchase them. This law covers marketing strategy across all mediums. For example, a business must comply with certain social media laws to conduct social media marketing.
The FTC (Federal Trade Commission) and the FCC (Federal Communications Commission) govern advertising law. The FTC is a regulatory agency that monitors trade practices, including advertising. It also monitors competition in the marketing industry and targets unfair trade practices that can harm consumers. The FTC conducts regular reviews of its regulations to keep up with changes in the marketplace.
Source: https://www.ftc.gov/reports/annual-highlights-2019/stats-and-data
These laws help minimize false claims in advertisements and help prevent companies from stealing another entity’s trademark. For example, if a company claims a product is recycled when it is not, it can be considered an unfair trade practice and a violation of the FTC regulations. Legal consequences of violation of advertising law can include payment of damages to clients and customers who suffer losses, cancellation of the marketing contract, and other penalties.
Why Do You Need an Advertising Agreement Lawyer?
While hiring a lawyer when signing an advertising agreement is not always necessary, consulting with one can benefit you before you sign an advertising agreement. An advertising attorney can review the terms of your contract and ensure that it has no unfair terms or clauses.
An advertising or marketing attorney can be hired by government agencies, individuals, or companies by helping them negotiate the terms of their contract and ensuring they have a thorough understanding of it. They can also fight against breach of the agreement with a lawsuit.
The best way to ensure you are not committing consumer fraud or won’t get a warning letter from the FTC is to consult a qualified advertising agreement attorney. Lawyers can use their skills and resources to ensure that none of the advertising agreements violates any applicable laws. If there are any violations, an attorney can make sure that changes are made to ensure the advertising campaign does not violate any federal or state advertising laws.
The attorney can also provide legal exposure if the company hosting the marketing rights defrauds you. For instance, your attorney can file a complaint on your behalf against the defendant who failed to fulfill their responsibility in the agreement, and gather evidence to ensure you get a just verdict from the court.
False Advertising vs. Misleading Advertising
False advertising is when a company claims something about its products or services that is false; misleading advertising refers to any published claim or statement that creates an incorrect impression of the product or service offered by a company.
False or misleading claims are a violation of the FTC rules and regulations. In addition, such inaccurate or misleading claims can lead to consumers and clients facing potential damages. For instance, making a false health claim in online advertising for a diet pill could result in consumers suffering health problems.
The FTC investigates false advertising and can use its legal authority to send warnings and use civil enforcement or criminal prosecution to prosecute consumer fraud in the industry.
Misleading or false advertisement significantly impacts consumers’ buying behavior, affecting competition. For example, if a business advertises similar products to another business, customers can get confused and fail to differentiate between authentic and inauthentic products.
Suppose a consumer suffers an injury or loss due to a misleading advertisement. In that case, they have the legal authority to file a claim against the business employing unfair trade tactics. The compensation available for consumers can include monetary damages, a court statement ordering the business to stop running false advertising, or a court order requiring the business to add a disclosure statement to its advertisement.
If a consumer did not suffer a financial loss from a product, they would not be compensated for any monetary compensation. However, If a large majority of consumers suffer similar losses, they can initiate a class-action lawsuit against the company with the help of an advertising attorney.
Types of False and Misleading Advertisement Tactics
Typically, an advertising claim becomes illegal when it makes consumers believe something that is not true. Still, there is a distinction between exaggerating and making a deceptive advertising claim.
For example, a business claiming its products are the best in the market can be termed as mere exaggeration, which is not illegal. Still, a company claiming its product has certain qualities it does not possess can be recognized as a misleading or false advertisement. The following are the types of misleading and false advertisement tactics companies should not use in marketing.
- Bait-and-Switch Advertising: When a company tries to lure consumers by promising to sell a product or provide certain rates for a product but does not intend to keep that promise. For instance, a company develops a customer’s interest by offering a product at a discounted price. Once the consumer is in the store to buy said product, the company tries to sell it to them at a higher price. This is bait-and-switch advertising.
- Deceptive Form Contracts: These contracts include fine print, ambiguous clauses, or false promises that the consumers need help finding or understanding.
- Failure to Make Disclosure Statements: When the company or business does not inform end-users about an item being unavailable or the expiration date of an offer.
- Artificial Inflation of Prices: Giving consumers the illusion that a great deal is available on specific products or services using fabricated prices. For example, a company offers a product at a sale price, and once the customer goes to buy said product, they charge a higher fee for it.
- High-Pressure Sales Tactics: Trying to convince consumers with false or misleading advertising tactics to purchase certain services or products they do not want, such as using unfair comparisons to get a consumer’s attention.
You are welcome to schedule a consultation session with us at Greenberg & Lieberman, LLC in Washington, DC. At our intellectual property law firm, we offer legal services for a broad range of categories, including advertising, intellectual property rights, and internet law. Our attorneys are well-versed in laws regarding new technologies, business relationships, regulatory compliance, and more.