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Photo retouching in advertising has raised serious concerns for public health and the general issue of truth in advertising. In response, parties in society, propose that digitally enhanced advertisements should carry a label, informing consumers whether the image has been manipulated. The aim of this study is to increase our knowledge on the effects of photo retouching disclosures and literacy treatments on the processing of digitally manipulated advertisements and persuasion outcomes. The results of two experiments show that 1) photo-retouching literacy treatments attenuate persuasion by advertisements including manipulated images, 2) photo-retouching disclosures are only effective when people have not received a literacy treatment. Theoretically this implies that increasing people’s knowledge of a persuasion technique (i.e., photo retouching) raises their defenses against persuasion. Practically, our results imply that literacy treatments can be used to offset unfair persuasion by photo-retouched images in advertising, but that disclosures can be just as effective.