1. How far can you stretch the truth about your product? Federal law flatly mandates that you must tell the truth in ads you create for products or services. Section 5 of the Federal Trade Commission Act (passed in 1914) says it's illegal to deceive or mislead consumers. You cannot make fraudulent claims or insincere offers. The FTC also specifically highlights claims that mislead by omission. If you leave out relevant information or facts, or if your advertising claim hints at results that you can not deliver, you're looking for trouble. One story goes that an auto dealer advertised a car deal for "1,000 bananas," meaning, of course, dollars. An enterprising shopper showed up to buy the car with 1,000 pieces of fruit. He ended up winning in a court case.

If your inaccurate claims influence a customer's decisions, behavior or wallet, you could be in violation of FTC guidelines. Penalties range from "cease and desist" orders to corrective advertising to significant fines (up to several hundred thousand dollars) to jail time. Situations that aren't covered by the FTC could be policed by your state's attorney general office.

What is "misleading" and "deceptive" is always open to interpretation, though. Advertising a borderline claim is a risk you may decide to take. Legally, that risk rides on who defines "deceptive." Getting advice from a media lawyer can help you make the call.But remember that consumers are sophisticated. "One of the reasons not to push the boundaries is that most people can intuitively detect when someone is lying to them," says sales trainer Jacques Werth of Media, Pa.-based High Probability Selling. "It's not so much a matter of ethics as of what works best."

2. When is it sales pitch and when is it lying? You must be able to back up any advertising claim you make with tangible or quantifiable proof. The law calls this a "substantiated" claim, and the FTC gets particularly fussy when it comes to claims about health, safety or performance.

Credible substantiation obviously depends on your product or service. Let's say you run an ad saying, "Seven out of every 10 American soccer players buy our soccer ball." You'd better be able to show a reputable survey that yielded those results. If you commissioned the survey yourself, you must show it was mounted in good faith, conducted by an impartial third party and that it truly represents the universe of American soccer players.

All such rules about substantiated claims also apply to anyone who works for you, including advertising agencies, Web masters, employees and the like. If your representatives inaccurately tout your product, you're on the hook.

Interestingly, however, you get a complete pass when it's clear you're off the charts. That's called "puffery." For example, Snapple has long claimed its products are "made from the best stuff on earth." Nobody actually believes that. But if Snapple said its juices were "made only from fresh ingredients," that becomes a provable claim. Snapple would need to substantiate it.

When any "reasonable" person would assume that your ad or promise is so over the top that it is mere "puffery," you're no longer required to substantiate it. "We often advise clients that if they take an edge, they should go all the way with it — to the absurd," says lawyer Darwell.

3. How far can you go to slam the competition? Comparative ads are a relatively new phenomenon, first surfacing in the 1970s. Such ads have turned increasingly blatant and nasty. Part of the reason is today's fiercely competitive battle for market share, according to Mark Sneider, general manager of AcuPOLL, a Cincinnati market researcher. "Products are launched willy-nilly and don't necessarily meet meaningful consumer needs," he says. "Bigger opportunities are far and fewer in between."

As a result, ads often dwell on some tiny innovation that offers a tad better advantage than the competition: a flavor extension, easier to swallow, more convenient to open, five seconds faster and so on. But you raise the bar on scrutiny with comparative advertising, competitors may decide your claim is unfair or inaccurate and force you to prove it. Having a competitor register a complaint with the FTC and possibly haul you into court doesn't add up to advertising ROI. If you claim your product performs or delivers better than another, you must be prepared to support that with facts or proof.

In any case, comparative ads are not incredibly effective, according to Sneider. "Me-too products advertise only minor points of difference." Customers won't be that impressed. By contrast, he says, "small businesses should step back and figure out what makes them different."