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advertising substantiation business definition
The Federal Trade Commission requirement that advertisers and advertising agencies have a reasonable basis (objective evidence) for advertising claims before the claims are disseminated. For example, a company that advertises that “four out of five individuals who tried the new product preferred it over their regular brand" must be able to provide the results of a reliable survey that support the claim.
Case Study The Federal Trade Commission announced in early 2007 that it would levy a $25 million fine against the marketers of four weight-loss pills including Xenadrine EFX, One A Day Weight Smart, CortiSlim, and TrimSpa. The FTC charged the marketers of these pills with making false advertising claims relating to weight loss and health benefits. The marketers had made a variety of health claims including reductions in the risk of Alzheimer's and cancer. According to the FTC, the firms did not have advertising substantiation for the claims, and in one case actually possessed a study indicating that individuals taking a placebo lost more weight than individuals taking their product. The FTC chairman stated that although the firms would be required to quit making the false claims, the pills would remain available for sale. The chairman also indicated a portion of the fines would be returned to consumers.