FTC rules for local ads, what US small businesses must disclose

Section 5 : The part of the FTC Act that prohibits deceptive commercial conduct.

Substantiation : Evidence held before an advertisement runs to support its claims.

Material connection : A relationship an audience would not expect an endorser to have, such as payment or a free product.

Clear and conspicuous : A disclosure presented so people can notice and understand it in the medium where the claim appears.

Bona fide former price : A previous price charged recently and in good faith, rather than one invented to make a discount look larger.

Prior express written consent : Recorded permission required before a business sends marketing texts.

CAN-SPAM : The federal requirements for commercial email, including accurate headers and a working opt-out.

Notice of Penalty Offenses : An FTC notice identifying conduct it considers unlawful, with potential consequences for repeat conduct.

Start with the claim and its support

Section 5 of the FTC Act (15 U.S.C. § 45) applies to a business with one location just as it does to a larger advertiser. A promotion must be truthful, not misleading, and supported before publication. Review the impression received by a reasonable buyer, rather than judging each sentence in isolation.

The FTC explains these tests in two policy statements: the 1983 Policy Statement on Deception and the 1984 Policy Statement Regarding Advertising Substantiation. Read both once. They are short, and they are the source of the "reasonable consumer" and "evidence before the ad runs" standards used throughout this guide.

An accurate headline can still create a misleading offer if a material fee or end date is missing. Claims may travel through print, radio, social posts, email, text, and a landing page, so check the full sequence. Local advertising supplies another way to think about where local messages appear.

Substantiation should exist before the ad runs and should support the particular performance or price statement. Keep a copy of the claim, its run dates, and the evidence used. The FTC sets no fixed retention period for ad substantiation, so keep the file for as long as the claim is in use and for a sensible period afterward. Ask a lawyer how long your state allows consumer claims to be filed.

Put the disclosure where the claim appears

Clear and conspicuous means a disclosure can be noticed and understood in each medium carrying a promotion. For online placements the FTC's guidance is ".com Disclosures," now titled "Digital Advertising: How to Make Effective Disclosures." It says a disclosure should sit near the claim, stand out, and not depend on a click or scroll. Put qualifications beside the claim in print, speak radio terms at a pace listeners can follow, and make social disclosures visible without another click.

For endorsements, make an unexpected connection such as payment, a free product, a discount, employment, or a family relationship visible where people encounter the recommendation; the FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR Part 255) say an employee's tie should not be assumed obvious, while a disclosure hidden behind a more link or clipped caption can be missed.

Fake reviews have separate treatment under 16 CFR Part 465, finalized in 2024. The rule prohibits bought reviews, reviews written by the business, undisclosed insider reviews, and review suppression. Penalties per violation are currently above $50,000, so review handling deserves its own check rather than being treated as an ordinary customer endorsement.

A platform label can help only when it remains visible, and the advertiser remains responsible for the disclosure. Check how a caption appears in the actual placement; shortened feeds can hide important information. Use the social media checklist to review placement and sign-off, including any linked page's added conditions.

Set offer terms before promotion

A price comparison should use a bona fide former price charged recently and in good faith. That is the test in the FTC's Guides Against Deceptive Pricing (16 CFR Part 233). A "was $100, now $60" ad fails if the item never sold at $100.

Bait advertising is covered by the Guides Against Bait Advertising (16 CFR Part 238). They bar advertising an item the business does not intend to sell, or stocking one unit for a weekend of demand. Keep stock consistent with the claim, and if supply is limited, say so beside the offer.

Under the FTC's Guide Concerning Use of the Word "Free" (16 CFR Part 251), an offer described as free must disclose any purchase or condition attached to it. A "buy one, get one free" ad should state the purchase terms plainly, and the regular price should not be raised to cover the free item.

If a trial converts into a subscription, explain the price, the billing date, and how to cancel before sign-up. For online sales, the Restore Online Shoppers' Confidence Act (15 U.S.C. §§ 8401-8405) requires clear disclosure of material terms and consent before charging. Some states, including California, add their own renewal rules.

Promotional email must follow the CAN-SPAM Act (15 U.S.C. § 7701 et seq., with the FTC's rule at 16 CFR Part 316): use accurate headers, a non-misleading subject, identify the message as an ad, include a working opt-out, and provide a valid physical postal address. Opt-outs must be honored within 10 business days. Check these elements in the full campaign, not merely in the message's opening lines.

Marketing texts fall under the Telephone Consumer Protection Act, which the FCC enforces. The statute is 47 U.S.C. § 227, and the FCC's rule at 47 CFR § 64.1200 requires prior express written consent before the first marketing text sent with an automatic dialing system. Damages start at $500 per message and may triple for willful conduct. Record consent date, source, and accepted wording; marketing strategy questions can connect permission to campaign planning.

Carry one offer through its placements

Review each placement to confirm that the offer stays accurate as it moves from print to audio, social posts, email, texts, and a landing page. Walking the offer through each format in turn catches changed dates, missing conditions, and terms that appear in only one version.

For example, a Denver bike shop might advertise 20 percent off in-stock helmets through October 15. Its print placement puts the discount, stock limit, and end date together, and the radio script repeats the date. A paid local rider names the partnership and discloses receiving a free helmet.

The shop's email includes its postal address, an opt-out link, and the same end date. Texts go only to customers who signed a consent form. An A-frame sign raises a separate local sign question; Denver signage rules address that issue.

Distinguish an agency notice from a legal outcome

An FTC warning letter is public notice of a suspect claim or industry scrutiny, not a lawsuit or automatic penalty; Notices of Penalty Offenses identify conduct the agency considers unlawful and can support civil penalties for repeat conduct in a later case.

Review the campaign with this local advertising review framework, correct any problem, and preserve a record of the correction and the claims checked. State attorneys general enforce separate consumer-protection rules in their jurisdictions. What small businesses ask about local advertising collects the practical questions owners raise first.

California Business and Professions Code section 17500 allows the state to seek penalties for false advertising, while its automatic renewal law requires consent before a subscription charge. A campaign spanning states should account for each state's rules.