Advertised prices must be clear and accurate.
A variety of laws and rules set the standards for the types of claims you can make about an advertised product or service. Some of the standards apply to claims about price information. Although the laws can be complex, the simple notion of "truth in advertising" offers a good guide for what is permitted.
Federal Trade Commission Oversight
The U.S. Federal Trade Commission, FTC, has oversight for most laws regarding advertising claims. The authority of the FTC stems from the Federal Trade Commission Act and is expanded by other laws, such as the Fair Packaging and Labeling Act and the Telemarketing and Consumer Fraud and Abuse Prevention Act. The FTC's Bureau of Consumer Protection has responsibility for montoring advertising and marketing claims.
Advertising Claims
The general legal guidelines for claims made in advertising are that all claims must be the truth, must be based on demonstrable evidence and cannot be unfair or deceptive. Any caveats or disclaimers about advertised claims must be clear and conspicuous.
Price Claims
FTC guidelines about pricing cover several major categories. Claims about a reduction in price over an advertiser's former selling price must be based on a former price actually offered in the general market. Similarly, comparisons of prices from other merchants must also be based on actual prices offered in the same market area. The FTC cautions against comparisons with a manufacturer's "suggested retail price" if that price is not the actual selling price of a product. Advertising claims based on targeted changes in prices may also be considered deceptive if, for example, a merchant advertises "half price" after sharply raising the price, so there is no real bargain for the consumer.
Use of "Free"
The FTC limits the use of the term "free" in describing advertised goods and services. An item is not really free if the price of an associated item is raised to cover the cost of the "free" item. Any qualifiers, such as a charge for shipping and handling, must be made in a clear and conspicuous fashion.
States
Other consumer protection laws impose additional restrictions on advertised prices in many states. For example, California specifically prohibits advertising the price of an individual item, such as a battery, if the item is only sold in packages of multiple quantities. State laws sometimes impose a time limit on referencing former prices of an advertised item.
