Under the law, claims in advertisements, including over-the-counter (OTC) medicine advertisements, must be truthful and cannot be misleading or unfair. The Federal Trade Commission (FTC) enforces OTC advertising by three basic standards.
- First, an advertiser needs to have prior substantiation that an objective claim in an ad is true before they run the advertisement.
- Second, under its deception policy, the FTC looks to real life situations and how consumers would interpret an ad. Even if the individual parts of an ad were technically “true,” if the overall ad seeks to mislead informed choice through misrepresentations or omissions, the FTC can act against the advertiser.
- Third, under its unfairness policy, FTC may act against ads that cause substantial consumer harm that are not outweighed by a consumer or competitive benefit or where a consumer could not reasonably avoid the harm.
Beyond government regulation of advertising, self-regulation plays an important role. The National Advertising Division (NAD) of the Council of Better Business Bureaus reviews advertising complaints, hears cases in a court-like process, and issues a decision on the case. NAD refers cases to the FTC or other authorities where appropriate, including when an advertiser does not respond to a decision.
