In advertising, many companies cross the line between telling the truth and making false claims. They may claim that a product is “scientifically proven” and “results are guaranteed,” but is this true?
Deceptive advertising is prevalent in the marketing world, and most of us have been the victims of false advertising. Is there anything that protects the consumer from these types of misleading advertisements?
Companies Sued for False Advertising
Jamie Lee Curtis used to be the main spokesperson for Activitia yogurt. Their advertisements claimed Activia had more health benefits than the average yogurt. In actuality, it pretty much has the same nutritional value as every other kind of yogurt. A class action settlement from 2010 forced Dannon, the makers of Activia, to pay up to $45 million in damages to the consumers that filed the lawsuit and others who said they were fooled by the advertisement.
In 2010, Kellogg’s Rice Krispies cereal was accused of misleading consumers about its immunity boosting capabilities. The FTC ordered Kellogg to halt all advertising that claimed that the cereal improved a child’s immunity with “25 percent Daily Value of Antioxidants and Nutrients – Vitamins A, B, C and E,” stating the claims were “dubious.”
Penzoil was ordered to pull ads that claimed their oil performed better than their competitors. A New Jersey judge called these claims “false and misleading” and “repugnant,” because, in actuality, their oil performs no better than others.
Eclipse gum claimed that its new ingredient, magnolia bar extract, had germ-killing properties. In fact, it did not. As part of the settlement, its maker paid $6 to $7 million to a fund that will reimburse consumers up to $10 each for the product and cover other costs of the settlement.
Truth in Advertising
When consumers see or hear an advertisement, federal law dictates that the ad must be truthful. In other words, it must not be misleading and, when appropriate, must be backed by scientific evidence. The Federal Trade Commission (FTC) enforces these truth-in-advertising laws. The laws apply the same standards no matter what the medium, whether it’s a newspaper, magazine, online, in the mail, on billboards or on buses.
The FTC particularly scrutinizes advertising claims that impact consumers’ health or pocketbooks, such as claims about food, dietary supplements, over-the-counter drugs, tobacco, alcohol, or information related to high-tech products and the Internet. The FTC also monitors and writes reports about ad industry practices regarding the marketing of alcohol and tobacco.
How Do Consumers Prove False Advertising?
Once a consumer believes he has been duped by false advertisement and files suit, he must prove five things. First, a false “statement of fact” has been made about the advertiser’s own or another person’s goods, services, or commercial activity. Second, the statement deceives or has the potential to deceive a substantial portion of its target audience. Third, the deception is likely to affect the audience’s purchasing decisions. Fourth, the advertising involves good or services in interstate commerce. Finally, the deception has either resulted in, or is likely to result in, injury to the plaintiff. The fact weighed most heavily is the advertisement’s potential to injure the customer.
Types of False Advertising
There are three main acts that constitute false advertising: failure to disclose, flawed and insignificant research, and product disparagement.
With failure to disclose, a court of law can find a company guilty of false advertising if the company makes statements which are misleading because they do not disclose something that the consumer should know. For example, a drug company can be liable for false advertising if it fails to disclose certain side effects to taking the drug.
Flawed and insignificant research occurs when research is unsupported by accepted authority or which is contradicted by prevailing authority. Product disparagement involves discrediting a competitor’s product.
Authored by Erin Chan-Adams, Legal Match Legal Writer and Attorney at Law