Briefly: prohibited and managed promoting in USA
Prohibited and controlled advertising
Prohibited products and services
What products and services may not be advertised?
Illegal products and services may not be advertised. There are additional restrictions or disclosure requirements for advertising certain legal products. For example, alcohol advertising cannot be targeted to anyone under 21 (the legal drinking age in the United States) and tobacco products cannot be advertised on television and many social media platforms. Many other restrictions on tobacco ads also apply. Broadcasters, publishers and media platforms have their own advertising policies and standards that identify specific products and services that may not be advertised.
Prohibited advertising methods
Are certain advertising methods prohibited?
Deceptive advertising is prohibited. In its Advertising FAQ’s: A Guide for Small Business the Federal Trade Commission (FTC) has stated ‘it would be deceptive for marketers to embed ads with subliminal messages that could affect consumer behavior. However, most consumer behavior experts have concluded that such methods aren’t effective’. Although subliminal advertising is considered ineffective, it would be prohibited as deceptive.
Unsolicited commercial electronic messages (including SMS) are prohibited under the Telephone Consumer Protection Act (TCPA). Further, the CAN-SPAM Act imposes certain restrictions on unsolicited email messages.
The TCPA requires express written consent that the consumer opts in to the SMS marketing campaign. The TCPA requires a business to provide certain information to the consumer in the text:
- a description of the campaign;
- the approximate number of messages the consumer will receive (such as once per day or twice a month);
- instructions on how to opt out from the campaign;
- instructions on how to get help information; and
The CAN-SPAM Act regulates all commercial emails, defined as ‘any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service’, and includes email that promotes content on commercial websites. It restricts businesses from using false information to open multiple email accounts, transmitting unsolicited commercial emails through open relays, falsifying header information, using deceptive subject lines and harvesting email addresses. Additionally, a business must provide the following information in the commercial email:
- accurate header information and subject lines;
- notice of the right to opt out;
- a functional opt-out procedure;
- the business’s physical address;
- notice that the message is an advertisement; and
- warning labels for sexually explicit content.
Opt-out requests made by consumers must be honoured.
Protection of minors
What are the rules for advertising as regards minors and their protection?
The FTC works with consumer advocates, academics and the industry to create effective self-regulatory initiatives regarding advertising to minors, although those guidelines are not binding as law. In particular, the Children’s Advertising Review Unit of the Better Business Bureau established voluntary guidelines for advertising to children that were recently revised to go into effect on 1 January 2022. The guidelines suggest that advertisers not exploit children’s credulity nor advertise inappropriate products or content. Advertisers should consider any lesson affecting health or wellbeing that is being conveyed in the advertising, and should ‘contribute to the parent-child relationship in a constructive manner’ and ‘support positive and beneficial social behavior’. The advertising should not portray or encourage negative social stereotyping, prejudice or discrimination. Hosts of children’s programmes may not advertise products, and additional disclosures may be required for advertising directed at minors. Adult product advertising should not be directed at minors.
The Children’s Online Privacy Protection Act (COPPA) is enforced by the FTC and regulates the collection of personal information from children under 13. COPPA requires businesses to include certain information in their privacy policies and to obtain parental consent before collecting information from children online.
Credit and financial products
Are there special rules for advertising credit or financial products?
Answer in progress.
Therapeutic goods and services
Are there special rules for claims made about therapeutic goods and services?
The Food and Drug Administration (FDA) regulates advertising for food, drugs and devices. Only FDA-approved drugs may be advertised; off-label use (use of drugs other than as approved by the FDA) may not be advertised. Any advertisement must be fair and balanced, including a description of any risks or side-effects associated with the drug. Advertisements must include certain material facts and must be submitted to the FDA. Two well-controlled clinical studies are required to substantiate comparative claims. Advertisements for drugs and certain classes of devices must be pre-cleared by the FDA.
Print advertising is required to include a ‘brief summary’ relating to side-effects, contraindications and effectiveness similar to the FDA-approved label. Broadcast advertisements are required to include a ‘major statement’ that discloses the product’s major risks in either the audio or audio and visual parts of the presentation. The broadcast advertisement must also include the ‘brief summary’ or ‘adequate provision’ of the approved or permitted package labelling. The FDA outlines ways to make an ‘adequate provision’ of the labelling information in its Consumer-Directed Broadcast Advertisements Guidance for Industry.
Food and health
Are there special rules for claims about foodstuffs regarding health and nutrition, and weight control?
The FDA regulates food and beverage labelling (and advertisements that comprise ‘labelling’), and the FTC regulates food and beverage advertising. The FTC gives deference to the FDA’s definitions and regulations regarding health claims. Both the FDA and FTC can and will send warning letters relating to statements in advertising about health or weight control if they believe the statements violate the applicable regulations, are misleading or are unsubstantiated.
The FDA definition of a health claim includes an express or implied statement that characterise the relationship of any substance to a disease or health-related condition (21 CFR 101.14(a)(1)). Certain products are prohibited from making health claims (21 CFR 101.14(a)(4)). The FDA also regulates when nutrient content claims can be made, and under what circumstances. A nutrient content claim is an express or implied statement that characterises the level of a nutrient in the product (21 CFR 101.13(b)).
The FTC requires scientific studies to substantiate advertising claims related to health-related claims.
What are the rules for advertising alcoholic beverages?
In March 2014, the FTC issued its report regarding Self-Regulation in the Alcohol Industry, which recommended the continued use of voluntary industry guidelines to reduce alcoholic beverage advertising and marketing to an underage audience. The guidelines are published by the Distilled Spirits Council of the United States, the Beer Institute and the Wine Institute. Under the voluntary self-regulatory codes, 71.6 per cent of the audience for each advertisement should consist of people 21 or older. Websites and social media that advertise alcohol are encouraged to be ‘age gated’ so that a consumer must enter a date of birth to show legal age. Models and actors in alcohol advertising should be at least 25 years old, substantiated by proper identification, and should appear to be over 21. State and local laws impose licensing requirements for producers, distributors and retailers of alcohol and additional restrictions on the advertising of alcohol including certain promotions and outdoor advertising.
What are the rules for advertising tobacco products?
Answer in progress.
Are there special rules for advertising gambling?
The Communications Act of 1934 (18 USC section 1304) prohibited gambling advertising over broadcast media until the Supreme Court ruled it was unconstitutional under the First Amendment in 1999 (Greater New Orleans Broadcasting Assn v US, 527 US 173 (1999)). The Department of Justice noted in 2011 that advertising for illegal or online offshore gambling could be aiding and abetting prohibited gambling under the Wire Act (31 USC sections 5361–5367). The Federal Communications Commission permits in-state and out-of-state broadcast advertisements for lawful casino gambling. States have individual gambling advertising restrictions, and base their advertising regulations on what is legal within the state; for example, New York State allows broadcast advertising for physical casinos legal in the state, but not for online sports wagering when illegal. Many states also prohibit depicting those under 21 gambling, and require listing limiting factors and a gambling help hotline number (eg, Tennessee Sports Gaming Act HB00001 (2019)). The American Gaming Association, representing casinos in 43 states, assists members with compliance in the advertising of sports wagering in print and broadcast media.
What are the rules for advertising lotteries?
Broadcast media advertising for lotteries must conform to the Federal Communications Commission’s regulations. Federal law generally prohibits broadcast media advertising for or about lotteries unless the advertiser fully and accurately discloses rules and terms of the lottery; the lottery is conducted substantially as advertised; and falls under one of the following categories of exceptions:
- the advertisement is broadcasted for a station licensed in a state for that state’s lottery;
- the advertisement is for legal Indian tribe gaming;
- the advertisement is for lawful casino gambling in any state;
- the advertisement is for not-for-profit fishing contests; or
- the advertisement is for a lottery authorised or not otherwise prohibited by the state the ad is broadcasting in, if they are conducted by a not-for-profit governmental organisation or a promotional activity by a commercial organisation when lotteries are not the primary business of that organisation.
Print advertisements of lotteries are permitted for legal gambling within the state, including mailed advertisements (8 USC section 1302; 3001; 3005).
What are the requirements for advertising and offering promotional contests?
Generally, ‘promotional contests’ are defined as an event where a participant can win a prize based on skill, differentiating them from lotteries, gambling or sweepstakes where chance determines prize award. The contest must be based on skill and not chance. Examples of contests include a half-court basketball shot, a crossword puzzle tournament or a magazine photography competition. The skill challenged must be a legitimate objective skill. Consideration can be required from an entrant for a contest and solicited through an advertisement, though states may restrict the amount or kind of consideration. The Federal Trade Commission and states generally require a clear and conspicuous disclosure in advertisements on terms, rules, prizes, length, sponsors and location of a contest (15 USC sections 41–58).
Sweepstakes are promotions in which participants have the chance to win a prize based on chance, including by random drawing. Purchase requirements or other forms of consideration are prohibited under state lottery and gambling laws. Sweepstakes involving prize values of more than $5,000 must be registered in New York and Florida.
Are there any restrictions on indirect marketing, such as commercial sponsorship of programmes and product placement?
The Federal Trade Commission and the US Postal Service have authority to restrict and prosecute indirect marketing, promotions and advertising (15 USC section 41; 39 USC sections 3001). All individual states also have similar laws restricting deceptive advertising. A civil action can also be brought under the Lanham Act if a deceptive, indirect sponsorship harms a brand by causing confusion of the origin, sponsorship or association of a brand in an advertisement (15 USC section 1125).
Product placements are regulated on broadcast media by the FCC under Section 317 of the Communications Act of 1934. The Act allows ‘embedded advertising’, or production sponsorship, provided the audience of the broadcast is clearly disclosed regarding the paid sponsorship and sponsor at the time of the broadcast. The FCC requires broadcast television to include disclosures of product placements in television shows. The FTC does not require a disclosure of whether a product or brand appearing in the broadcast is sponsored unless there is an endorsement by a show host that is not ‘obviously an advertisement’.
Other advertising rules
Briefly give details of any other notable special advertising regimes.
The Federal Election Commission requires any public communication by a political committee or candidate on broadcast or print media to display a disclaimer – including an audible disclaimer by a candidate for broadcast advertisements authorised by the campaign.
Though First Amendment free speech considerations underly all advertising forms in the United States as commercial speech (Central Hudson Gas & Electric Co v Public Service Commission, 447 US 557 (1980)), some jurisdictions have successfully enacted legislation that bars political, religious or advocacy advertisements on public property.
The United States allows promotion and advertising of new financial formats, such as non-fungible tokens (NFTs) and cryptocurrency, though many online platforms have private restrictions. It is predicted in some quarters that the Securities and Exchange Commission or another Executive Agency will issue more stringent guidelines regarding cryptocurrency and NFTs.