6.3 Advertising Standards & Professional Corporations

6.3 Advertising Standards & Professional Corporations

Therapists in California must adhere to strict regulatory guidelines regarding business practices, advertising transparency, corporate formation, and financial transactions. These standards are codified under Business and Professions Code (BPC) Section 17500 (False Advertising Law), BPC Section 650 (Unearned Referral Rebates), BPC Sections 4980.44 and 4980.46 (MFT Advertising Rules), and the Moscone-Knox Professional Corporation Act (California Corporations Code Section 13400 et seq.).

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1. Statutory Advertising Standards & Transparency Rules

Under BPC Section 17500, it is unlawful for any person or entity to make or disseminate any statement in any advertising medium that is untrue, misleading, or deceptive. The Board of Behavioral Sciences (BBS) enforces precise advertising mandates under 16 CCR Section 1811 and BPC Section 4980.46.

Scope of "Advertising"

California law defines advertising broadly. The rules apply to ALL public-facing representations, including:

• Business cards, letterhead, print brochures, and office door signage.
• Websites, blog posts, online directory profiles (e.g., Psychology Today, TherapyDen).
• Social media profiles (Instagram, LinkedIn, Facebook pages), video content, and podcasts.
• Email newsletters, pay-per-click digital ads, and radio or television spots.

Mandatory Display Requirements

Every advertisement published by a licensee or pre-licensed registrant MUST CLEARLY DISPLAY specific credentials:

1. For Licensed Marriage and Family Therapists (LMFTs):

   • Exact professional title or approved abbreviation (e.g., "Licensed Marriage and Family Therapist" or "LMFT").
   • License number (e.g., "LMFT #123456").

2. For Associate Marriage and Family Therapists (AMFTs):

   • Full title or approved abbreviation (e.g., "Associate Marriage and Family Therapist" or "AMFT").
   • Registration number (e.g., "AMFT #987654").
   • Explicit statement that the associate is under clinical supervision.
   • Full name, license type, and license number of the clinical supervisor (e.g., "Supervised by Jane Smith, LMFT #45678").

3. Prohibited & Obsolete Terms:

   • Terms such as "MFT Intern," "Marriage Counselor," or "Psychotherapist" used without specifying pre-licensed associate status are illegal.
   • Registrants cannot represent themselves as independent private practitioners.

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2. Moscone-Knox Professional Corporation Act

When licensed marriage and family therapists choose to incorporate their clinical practice in California, they cannot form a standard general business corporation (C-Corp or S-Corp) or a Limited Liability Company (LLC). Instead, they must form an MFT Professional Corporation under the Moscone-Knox Professional Corporation Act (Corporations Code § 13400 et seq.).

Key Corporate Governance Rules

• Corporate Name: The name of an MFT professional corporation must comply with BBS naming regulations and include wording or abbreviations denoting corporate existence (e.g., "A Marriage and Family Therapy Corporation" or "Inc.").
• Shareholder Eligibility: Ownership of shares in an MFT corporation is strictly restricted to licensed health care professionals specified by statute.
• The 51% / 49% Shareholding Rule:
  • At least 51% of corporate shares MUST be owned by licensed Marriage and Family Therapists.
  • Up to 49% of corporate shares may be owned by other designated licensed health care professionals, specifically: Licensed Clinical Social Workers (LCSWs), Licensed Professional Clinical Counselors (LPCCs), Licensed Psychologists, Physicians and Surgeons (MD/DO), and Registered Nurses (RNs).
• STRICT PROHIBITION of Unlicensed Ownership: Unlicensed individuals (such as non-licensed spouses, office managers, venture capital investors, or business consultants) CANNOT own any shares or serve as officers/directors of an MFT professional corporation.

               MFT Professional Corporation Shareholding
   ┌───────────────────────────────────┬───────────────────────────────────┐
   │      LMFT Share Ownership         │  Other Permissible Allied Care    │
   │        (MINIMUM 51%)              │       Shareholders (MAX 49%)      │
   │                                   │ (LCSW, LPCC, Psychologist, MD, RN)│
   └───────────────────────────────────┴───────────────────────────────────┘
     ❌ ABSOLUTELY 0% UNLICENSED OWNERSHIP ALLOWED (No LLCs / Non-licensed Investors)

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3. Prohibition of Fee Splitting & Referral Kickbacks (BPC 650)

Ethical financial practice in California is strictly enforced under Business and Professions Code Section 650.

Business & Professions Code Section 650 Mandate

BPC 650 makes it a public offense (punishable by fines and potential license revocation or imprisonment) to offer, deliver, receive, or accept any rebate, refund, commission, preference, patronage dividend, discount, or other consideration—whether in the form of money or otherwise—as compensation or inducement for referring patients or clients to any health care professional or service.

Permissible vs. Illegal Financial Arrangements

• ILLEGAL (Fee Splitting / Kickbacks):
  • Paying a physician $50 for every client referred to the therapist's practice.
  • Splitting a percentage of a therapy session fee (e.g., 20% per session) with an online referral directory or matching platform.
  • Receiving a gift card or finder's fee from a psychiatric hospital for referring clients to their intensive outpatient program.
• PERMISSIBLE (Fair Market Value Advertising & Admin Services):
  • Paying a fixed, flat monthly fee to an online directory (e.g., Psychology Today) for advertising space, regardless of how many client inquiries or referrals are generated.
  • Paying fair market value to an administrative management company for billing, reception, or office space rentals, provided the fee is a fixed rate and not based on client referral volume or gross clinical revenue percentages.

Testimonials, Endorsements & Client Solicitation

CAMFT ethics and BBS advertising rules also restrict how services are promoted:

• Do not solicit or publish client testimonials or endorsements that exploit the therapeutic relationship or imply guaranteed outcomes.
• Do not recruit clients through employment relationships or professional associations in ways that coerce or confuse roles.
• Claims must be verifiable; avoid superlatives ("best," "guaranteed cure") and unearned specialty titles.