hrsbdc logo


Biznik - Business Networkingfacebook

Who We Are

The Small Business Development Center of Hampton Roads, Inc. is the service provider of first choice for the region’s small business community. By offering free, confidential one-on-one business counseling, low-cost training, research through SBDCNet and referrals to top-flight service providers, we assist in maintaining and growing this vitally important segment of the region’s economy.

Getting Started?
smart start
Already In Business?
grow smart

Legal-ese: The Use of the Term Free

Use caution when using the word “FREE”

One of the best words to use to catch a potential prospect’s eye is “free.” “Free” has consistently been one of the three most popular words in advertising. But there are federal regulations, monitored by the Federal Trade Commission, that determine just how you can and can’t use that word. The following is a review of rules that might relate to your advertising:

  • The most detailed regulations deal with the frequency of a free offer. The offer shall not be advertised for more than six months in any given 12-month period, at least 30 days must pass before another such offer can be made, and there can be no more than three such offers in a year. In that period of time, no more than 50% of such free items can be given away (51% of transactions must be transacted for the selling price).
  • If the purchaser must buy another article to receive the free one, he must not be charged more than the regular price for the second article (in other words, the seller can’t try to recoup any costs from the other item).
  • The term “regular” means the price at which the seller has been selling that item during a substantial period of time. If the price fluctuates, then the “regular” price shall be the lowest price during that aforesaid 30-day period (the price cannot be increased for one day to make it look like a bigger bargain).
  • Any conditions and obligations pertaining to the free offer must be in close proximity to the offer (for example, placing an asterisk and a small footnote at the bottom of your ad or brochure is not appropriate).
  • No free offer can be made of a new product introduction unless the seller plans to stop the offer after a limited time and start selling it at the price it was promoted with the free offer (this part of the regulations deals with introductory offers).
  • You cannot get around these regulations by substituting the word “free” with similar words such as “gift” or “bonus”.
  • Not many business owners are aware of the conditions when using the word “free” in a promotion. It is advisable to obtain legal advice prior to running a promotion. Note: these regulations also apply to the following sales promotions: “Buy 1-Get 1 Free,” “2-For-1 Sale”, “50% off with purchase of two.”
  • Check the FTC website (www.ftc.gov/bcp/guides/guides.htm) for federal regulations regarding advertising of all types, including web advertising.

Sources: Federal Trade Commission; Board Report

 

hampton roads chamber of commerce thomas nelson community college small business association george mason university