Your product does what? The dangers of deceptive advertising

The Federal Trade Commission (FTC) recently announced that it sent refund checks totaling $9.3 million to nearly 200,000 consumers who bought a device called the “Ab Circle Pro.”  The company claimed that exercising on the device for only three minutes a day would cause consumers to lose 10 pounds in two weeks. The day beforethat, the FTC issued a press release about cactus juice marketers having to pay $3.5 million in refunds to consumers after making deceptive claims that the juice treated diseases.

Not all instances of deceptive advertising are as obvious as the ones identified by the FTC. Advertising often focuses on ways in which a company’s product or service is “the best.” For some companies, this can lead to overreaching with legal consequences.  Companies might also use outrageous claims as an advertising tactic to get attention – not realizing that their actions could carry a big price tag (even a frivolous lawsuit costs money to defend).

So, what is deceptive advertising? Advertising is considered deceptive if it is likely to mislead consumers (acting reasonably under the circumstances) and is “material” – that is, important to a consumer’s decision to buy or use the product.  Under the Federal Trade Commission Act, advertising must be truthful and non-deceptive, advertisers must have evidence to back up their claims, and advertisements cannot be unfair.

This begs the question, does all advertising have to be “true”?  Not necessarily.  There’s a fine line between false advertising and puffery. Puffery is a legally permitted exaggeration that would not be taken literally by a reasonable person. The distinction between puffery and false advertising is that puffery is subjective while false advertising consists of objective statements. Objective statements are statements that can be verified. The line between subjective and objective is not always an easy one to draw.

For example, the FTC is in the process of settling a claim that it brought against L’Oréal. Products in the Lancôme Génifique line sold for as much as $132 at upscale department stores. According to the FTC, the ads went beyond subjective beauty claims, emphasizing instead the supposed science behind the products: “Genes produce specific proteins. With age, their presence diminishes. Now, boost genes’ activity and stimulate the production of youth proteins.”  The product promises “visibly younger skin in just 7 days.” In analyzing the issue, Lesley Fair of the FTC warns:

“Ads that focus on users’ dewy visage or angelic glow are probably just puffery. But once companies make objective product representations, long-standing substantiation principles apply.”

Although this article focuses on lawsuits recently filed by the FTC, there are other potential plaintiffs.  Competitors and consumers can also file “deceptive advertising” lawsuits against companies. The Supreme Court recently sided with juice maker Pom Wonderful in its long-running false advertising dispute with Coca-Cola. Back in 2011, a mom brought a lawsuit against Ferrero USA, Inc., the makers of Nutella, challenging the marketing of Nutella as “healthy, balanced nutrition.”  She pursued a class action suit and the suit settled for $3.05 million in 2012.

What does this mean for you as a business owner? Give your advertising copy a critical review.  Look for statements that you make about the performance of your product (or quality of your services) that are measurable.  Are the statements truthful and non-deceptive?  Can you back up your claims?  Marketing, branding and advertising professionals might also want to keep these rules in mind while constructing copy on behalf of their clients.

This article is for informational purposes only and is not intended to constitute or be used as general legal advice, or as a solicitation of any type. 

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