How to conduct an advertising campaign for your business without problems and fines?
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As your business grows and scales, so does the need for promotion and advertising. You want as many potential customers of your products or services as possible to learn about them, the benefits or the way and conditions of making a purchase. One of the tools is advertising.
You can advertise your products and services using a variety of sources:
- television advertising;
- contextual advertising in the browser;
- advertising on billboards;
- advertising sign in front of the entrance to your establishment.
These are the advertising tools.
Like other areas of social relations, advertising relations are also regulated by Ukrainian legislation. In practice, violations of advertising laws often occur, although business owners often do not even realize that the “very cool ads” created by the marketing department against a competitor or, banally, a sign for a coffee shop without the proper documents can lead to unexpected consequences and penalties.
This can be avoided.
We were contacted by a Client who is conducting advertising campaigns for a large foreign company, operating in the banking sector and planning to release advertising of a new banking product on the Internet and on television.
The advertisement is planned to involve bloggers, Ukrainian stars, trademarks, etc. Our lawyers analyzed the advertisement, found and corrected its “weaknesses”, namely:
- lack of some of the necessary documents and permits;
- lack of clarity in the advertising materials, which could mislead the consumer;
- lack of legally required information for advertising banking services.
As a result, the Client managed to run the advertisement, to get the desired benefit without any fines or lawsuits.
Often, however, lawyers deal with the opposite situation. First, the business launches an advertisement, receives instructions from the controlling authorities, and then seeks lawyers to rectify the situation. We help in this situation as well. But it is always easier and cheaper to prevent problems than to deal with their consequences.
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The algorithm for checking promotional materials: The TOP 5 criteria that you need to pay attention to
1. Advertising Content.
When developing an idea, perhaps a layout or video material to be used in an advertisement, attention should be paid to the content of the advertisement and its components. Advertising content and information in the advertisement should not violate the law, discredit competitors or violate the rights of others. Advertising materials such as videos, photos, and videos must be created in compliance with legal requirements, and the advertiser must have the necessary amount of rights to use such advertising materials.
The easiest way to get a fine from the regulatory authorities is to violate one of the requirements for the content of advertising, which are established in Article 8 of the Law of Ukraine “On Advertising”. For example, when advertising the discount, you must specify the start and end date of the discount, the place and the ratio of the discount to the previous price of sales of goods or services. If the discount period is not specified – be ready for inspection by regulatory authorities.
The information in the advertisement must be clear and accurate. Otherwise consumers may complain that the advertisement is misleading or the advertisement did not contain clear information. Therefore, the lawyer in the analysis of advertising materials checks whether the advertising materials contain ambiguous wording, incomplete information or information that could mislead the consumer, etc.
2. Intellectual Property.
Use of trademarks, copyrights, or other intellectual property used in advertising must be properly documented. For example, in order to use a trademark belonging to your counterparty or another person, you must first obtain a permit (a license) or enter into a license agreement.
We do not recommend downloading music from the Internet without the right to use it in advertising. In addition, copyrights for the use of video clips or graphics created must also be observed. If the above requirements are not met, there is a threat of lawsuits from persons whose rights have been infringed.
3. Person Images.
According to the law of Ukraine, the use of images or videos with individuals (close-ups) is subject to the permission of such persons. Permission may be granted “on camera”, in writing, but in any case it is mandatory for use in advertising.
In the case of use of a photo or video of a person without his/her permission, such a person may apply to the court, to request the removal of his/her photo or image and compensation for damages, which adversely affects the advertising campaign.
In addition, paragraph 8 of Article 8 of the Law of Ukraine “On Advertising” prohibits the use of a person’s image or name without his/her permission. Also, the law establishes certain peculiarities of children's images in advertising. For example, it is prohibited to use images of children consuming products that are prohibited for minors or intended only for consumption by adults (alcohol, tobacco products, medicines, etc.) in advertising. Violation of the abovementioned requirements may lead to inspections by controlling authorities and, as a consequence, to penalties.
4. Special requirements for advertising of certain goods and services.
Certain categories of goods and services, such as advertising of medicines, financial services, gambling, tobacco products or alcoholic beverages, require compliance with special requirements of the legislation. For example, advertising of consumer loans must contain information about the maximum amount of the loan, the term for which the loan is granted, the real annual interest rate, the amount of the first installment (in the case of installments), etc.
Advertising of alcoholic beverages on radio or television is prohibited from 6 a.m. to 11 p.m. and must contain a warning text (at least 15% of the advertising area/volume). Therefore, it is often the case that producers or sellers of alcoholic beverages sponsor sports radio and television programs using their trademarks.
In any case, before advertising any product or service, you should learn whether there are special requirements for the content or presentation of the advertisement.
5. Compliance with the rules of competition in advertising.
Advertising must not violate the rules of competition established by the legislation of Ukraine. It is prohibited to boycott a competitor’s goods, use trademarks to demonstrate one’s own preferences, copy the appearance of goods or use such competitor’s goods under one’s own brand name. For such actions the Antimonopoly Committee may impose a fine of up to 5% of the company’s income (revenue) for the previous calendar year.
However, this checking algorithm is conditional and applies to the most common cases. Depending on the type of advertising and its content, the checking algorithm may involve quite a different set of criteria. Our lawyers have relevant competence and are ready to help in different cases.
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Liability and settlement of disputes related to advertising in Ukraine
If you got a warning or injunction from the regulatory authorities or lawsuits from others whose rights (in their opinion) have been violated by your advertising, you must act quickly and professionally.
Penalties for violating advertising laws are set at 5 times the cost of producing or distributing the advertisement. If the cost of advertising cannot be established, a fine of UAH 5,100 for each violation is applied.
According to Article 21 of the Law of Ukraine “On protection from unfair competition”, liability for committing actions (including advertising) that constitute unfair competition may entail a fine of up to 5% of income (proceeds) from sale of goods or services by a business entity in the previous calendar year. In addition, the Code of Ukraine on Administrative Offenses provides for additional penalties for certain violations of the legislation on advertising.
If you do not agree with the decision of the regulatory authorities and are ready to appeal, we recommend taking the following steps in sequence.
1. Pre-trial settlement of advertising disputes.
In this case, you can provide explanations or other documents for the regulatory authorities and take part in the discussion of the violation.
Some violations can be corrected at this stage and you can avoid penalties. This stage is important even if the dispute cannot be resolved in pre-trial proceedings, as the explanations and documents provided can be used in preparation for trial.
2. Appealing against decisions of regulatory authorities on advertising.
If a dispute cannot be resolved under a pre-trial procedure, the only option is to appeal the decisions of state authorities in court.
In order to avoid any disputes, fines or other negative consequences that can affect both business costs and reputation, we recommend that you carefully and professionally check all the advertising materials you use. Our lawyers will eagerly help you with this issue.
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