False advertising is defined as the act of publishing, transmitting, or otherwise publicly circulating an advertisement containing a false, misleading, or deceptive statement, made intentionally or recklessly to promote the sale of property, goods, or services. A false advertisement can further be classified as deceptive if the advertiser deliberately misleads the consumer, as opposed to making an unintentional mistake. Many governments use regulations to control false advertising.
False advertising can take one of two broad forms: either the advertisement is factually wrong or intentionally misleading. Both types of false advertising can be presented in a variety of ways.
Main article: Photograph manipulation
Photo manipulation is a technique often used in the cosmetics field and for weight loss commercials to advertise false or non-typical results and give consumers a false impression of the product's true capabilities. Photo manipulation can alter the audience's perception of the product's effectiveness. For example, makeup advertisements may feature airbrushed photos.
Hidden fees can be a way for companies to trick the unwary consumer into paying more for a product that was advertised at a specific price to increase profits without raising the price of the actual item.
"Fine print" is a common form of hidden fees and surcharges in advertising. Another way to hide fees is to exclude "shipping fees" when tabulating the price of goods online. This makes an item look cheaper than it is once the shipping cost is added. Further, many hotels charge mandatory "resort fees" that are not typically included in the advertised base price of the room.
Some products are sold with fillers, which increase the legal weight of the product with something that costs the producer very little compared to what the consumer thinks that he or she is buying. Some food advertisements, for instance, incorporate this deceptive technique in products like meat, which can be injected with broth or brine (up to 15%), or TV dinners filled with gravy or other sauce instead of meat. Malt and ham have been used as filler in peanut butter. There are also non-meat fillers which may look starchy in their makeup, yet are high in carbohydrates and low in nutritional value. One example is cereal binder, which usually contains some combination of flours and oatmeal.
Some products may have a large container that is mostly empty, leading the consumer to believe that the total amount of food is greater than it actually is.
Another form of deceptive advertising is when the advertisement falsely portrays the quality or origin of a product. If the advertiser shows a product with a certain quality but knows the product has defects or is not of the same quality, they are falsely advertising the product. Producers may lie about where the product is manufactured; for example, one might say it was produced in the United States, while in reality it was produced in a different country.
The words "diet," "low fat," "sugar-free," "healthy," and/or "good for you" are labels often associated with products that claim to improve health. Advertisers may be aware of consumers' desire to live healthier and longer, so they adapt their products accordingly. It is suggested that food advertising influences consumer preferences and shopping habits. Highlighting certain contents or ingredients may mislead consumers into thinking they are buying healthy products when in fact they are not. Dannon's Activia yogurt was advertised as clinically and scientifically proven to boost the immune system and was being sold at a much higher price because of the claim. The company was ordered to pay $45 million in damages to the consumers after a lawsuit was filed against it.
Food companies may end up in court after using misleading tactics such as:
Many advertisements for supplements or medicine include, "This product is not intended to diagnose, treat, cure, or prevent any disease," as any product that is intended to diagnose, treat, cure, or prevent any disease must undergo FDA testing and approval, which is usually very expensive.
In the world of advertising, companies employ a gamut of marketing techniques in order to assert that their products as the best available on the market. One of the most common marketing tactics in this space is known as "comparative advertising," wherein "the advertised brand is explicitly compared with one or more competing brands and the comparison is obvious to the audience." The laws surrounding comparative advertising have changed immensely over the history of law in the United States, with perhaps the most drastic change occurring with the creation of the Lanham Act in 1946. The Lanham Act has served as the backbone and official canon for all cases that reference or involve false advertisement. Over the years, marketing strategies have become progressively more aggressive, and the limitations of the Lanham Act became outdated.
In 2012, USCA §1125 was passed as an addition to the Lanham Act and clarified questions about comparative advertising. Under §1125, anyone who, in commerce, uses words, symbols, or misleading descriptions of fact that are either likely to cause confusion within consumers about their own product, or in commercial advertising misrepresents the nature, characteristics, or qualities of their own or another's product is liable under a civil action by anyone who is damaged by the act. USCA §1125 addresses some of the gaps in the Lanham Act, but it is not a perfect remedy for every case that may arise. For now, advertisements that present false descriptions of fact are considered deceptive with no additional evidence required. When an advertisement makes a factual but misleading claim, further evidence of the actual confusion of an average consumer is needed.
Main article: Puffery
Puffing or puffery is the act of exaggerating a product's worth through the use of meaningless or unsubstantiated terms, language based on opinion rather than fact, or the manipulation of data. Examples of this include many superlatives and statements such as "greatest of all time," "best in town," and "out of this world," or a restaurant claiming it had "the world's best tasting food."
Typically, puffing is not an illegal form of false advertising and can be looked at as a humorous way to attract the attention of the consumer. Puffing may be able to be used as a defense against charges of deceptive advertising when it is formatted as an opinion rather than a fact. Omitted or incomplete information can be characteristics of puffery.
Terms used in advertising may have be used imprecisely. Depending on the jurisdiction, "organic" food may not have a clear legal definition, and "light" food has been variously used to mean low in calories, sugars, carbohydrates, salt, texture, viscosity, or even light in color. Labels such as "all-natural" are frequently used but are essentially meaningless in a legal sense.
Prior to the landmark U.S. case against 'big tobacco,' tobacco companies regularly used terms like low tar, light, ultra-light and mild in order to imply that products with such labels had less detrimental effects on health, but in 2009, the United States banned manufacturers from labeling tobacco products with these terms.
When the U.S. United Egg Producers used an "Animal Care Certified" logo on egg cartons, the Better Business Bureau argued that it misled consumers by conveying a higher sense of animal care than was actually the case.
In 2010, Kellogg's Rice Krispies cereal claimed that the cereal can improve a child's immunity. The company was forced to discontinue all such claims. In 2015, the same company advertised their Kashi product as "all natural," when in fact they contained a variety of synthetic and artificial ingredients; Kellogg's paid $5 million to resolve the issue.
Main article: Incomplete comparison
"Better" means one item is superior to another in some way, whereas "best" means it is superior to all others in some way. However, advertisers frequently fail to specify the basis on which the products are being compared (price, size, quality, etc.) and, in the case of "better," what the product is being compared to (a competitor's product, an earlier version of their product, or nothing at all). Without defining how the terms "better" and "best" are being used, the terms become meaningless. An ad that claims "Our cold medicine is better" could be claiming it is an improvement over taking nothing at all. Another often-seen example is "better than the leading brand," often with some statistic attached, while the leading brand is left undefined.
Main article: Inconsistent comparison
In an inconsistent comparison, an item is compared with many others, but only in terms of the attributes where it wins, thus leaving the false impression that it is the best of all products in all ways. One variation of this is websites which list competitors' prices for a particular item but do not list competitors who beat their price.
One common example is that of serving suggestion pictures on food product boxes, which show additional ingredients beyond those included in the package. Although the "serving suggestion" disclaimer is a legal requirement of an illustration which includes items not included in the purchase, if a customer fails to notice or understand this caption, they may incorrectly assume that all depicted items are included.
In some advertised images of hamburgers, every ingredient is visible from the side shown in the advertisement, giving the impression that they are larger than they really are. Products which are sold unassembled or unfinished may also have a picture of the finished product, without a corresponding picture of what the customer is actually buying.
Commercials for certain video games[example needed] include trailers that are essentially CGI short-films with graphics of a much higher caliber than the actual game. This practice has been used more in recent years and has led to major backlash from video gaming communities.
The color of food packaging is considered to be highly important in the marketing world as people generally notice color before anything else. Consumers may buy items based on the color they've seen in the advertisement.
When used to make people think food is riper, fresher, healthier, or otherwise more desirable than it really is, food coloring can be a form of deception. When combined with added sugar or corn syrup, bright colors give the subconscious impression of healthy, ripe fruit, full of antioxidants and phytochemicals.
One variation is packaging which obscures the true color of the foods contained within, such as red mesh bags containing yellow oranges or grapefruit, which then appear to be a ripe orange or red. Regularly stirring minced meat on sale at a deli can also make the meat on the surface stay red, causing it to appear fresh, when it would quickly oxidize and brown, showing its true age if left unstirred. Some sodas are also sold in colored bottles when the actual product is clear.
Not to be confused with Phencyclidine.
Angel dusting is a process wherein an ingredient which would be beneficial in a certain quantity is instead added in an insignificant quantity which will have no consumer benefit. The advertiser then makes the claim that the product contains that ingredient, potentially misleading the consumer into expecting that they will gain the benefit. For example, a cereal may claim it contains "12 essential vitamins and minerals," but the amounts of each may be only 1% or less of the Reference Daily Intake, providing virtually no benefit to nutrition.
Main article: Chemical free
Many products come with some form of the statement "chemical free" or "no chemicals." Because everything on Earth is made of chemicals, save a few elementary particles formed by radioactive decay or present in minute quantities from solar wind and sunlight, it is impossible to have a chemical-free product. The intention of this message is often to indicate the product contains no synthetic or exceptionally harmful chemicals, but because the word "chemical" itself has a stigma, it is often used without clarification.
Main article: Bait-and-switch
Bait-and-switch is a deceptive advertising or marketing tactic generally used to lure customers into the store. A company will advertise their product in a very attractive way (as bait). However, the product the customer seeks is not available for various reasons, such as it being sold out. The company will then try to sell something more expensive than what they originally advertised (the switch). Even though only a small percentage of shoppers will buy the more expensive product, the advertiser may still profit.
Bait advertising is also commonly used in other contexts. For example, in online job advertisements, the potential candidate may be deceived about working conditions, pay, or other variables. Airlines may be guilty of "baiting" their potential clients with bargains, then increasing the cost or redirecting the customer to a more expensive flight.
Businesses can try to avoid charges of misleading or deceptive conduct by following a few guidelines:
In some countries, bait advertising can result in severe legal penalties.
If a company does not say what they will do if the product fails to meet expectations, then they are generally free to do little or nothing. This is due to a legal technicality that states that a contract cannot be enforced unless it provides a basis not only for determining a breach but also for giving a remedy in the event of a breach.
This is a common practice used within crowdfunding communities like Indiegogo and Kickstarter.
Advertisers often falsely claim there is no risk to trying their product. For example, they may charge the customer's credit card for the product, offering a full refund if not satisfied. However, the risks of such an offer may be numerous. Customers may not receive the product at all, they may be billed for things they did not want, they may need to call the company to authorize a return and be unable to do so, they may not be refunded the shipping and handling costs, or they may be responsible for return shipping.
This refers to a contract or agreement wherein a customer's lack of response is interpreted as a positive response in favor of the business. For example, a customer must explicitly "opt out" of a particular feature or service or be charged for it. Subscriptions that automatically renew unless canceled may also constitute acceptance by default.
Mirror neurons are neurons found within the macaque cortex of our brain. They are responsible for our actions of corresponding a behavior or movement that we notice from others. In marketing, mirror neurons have been used stimulate consumers to do actions that the people featured in the advertisements do. The feeling that specific product gives will be shown by the subjects of the advertisement which results in creating a similar action by consumer's brains imitating what they see is done and a feeling they will incorrectly believe it will give them.
Subliminal advertising is a form of advertising where the specific products or ideas are advertised to consumers without their knowledge. Its purpose is to create a response by the consumers to buy the items that they are advertised by making consumers unaware that they are being influenced into making those purchases. This form of advertising takes advantage of the psychology state consumers have which is below the level of consciousness, or limen from the word subliminal which indicated consciousness
In the United States, the federal government regulates advertising through the Federal Trade Commission (FTC) with truth-in-advertising laws and enables private litigation through various statutes, most significantly the Lanham Act (trademark and unfair competition).
The goal is prevention rather than punishment, reflecting the purpose of civil law in setting things right rather than that of criminal law. The typical sanction is to order the advertiser to stop its illegal acts, or to include disclosure of additional information that serves to eliminate potentially deceptive material. Corrective advertising may be mandated, but there are no fines or prison time except for the infrequent instances wherein an advertiser refuses to stop despite being ordered to do so.
In 1905, Samuel Hopkins Adams released a series of papers detailing the misleading claims of the patent medicine industry. The public outcry sparked from the articles led to the creation of the Food and Drug Administration in 1906.
In 1941, the United States Supreme Court reviewed the Federal Trade Commission v. Bunte Bros LLC, under Section 5, with regard to Unfair or Deceptive Acts or Practices.
In 2013 and 2014, the United States Supreme Court reviewed three false advertising cases: Static Control v. Lexmark (concerning who has standing to sue under the Lanham Act for false advertising); ONY, Inc. v. Cornerstone Therapeutics, Inc.; and POM Wonderful LLC v. Coca-Cola Co.
State governments have a variety of unfair competition laws that regulate false advertising, trademarks, and related issues. Many are very similar to those of the FTC; in many cases they are copied so closely that they are known as "Little FTC Acts." These laws also go by the terminology "Unfair, Deceptive, or Abusive Acts and Practices" Laws (UDAAP or UDAP Laws) and can vary widely in the degree of protection they provide to consumers, according to the National Consumer Law Center.
In California, one such statute is the Unfair Competition Law (UCL). The UCL "borrows heavily from section 5 of the Federal Trade Commission Act" but has developed its own body of case law.
The rules for advertisers are that the advertisement must be truthful and non-deceptive, have proof to show that what they are advertising is true, and to make sure that the advertisement is not "unfair." An ad is misleading when it is likely meant to deceive the consumer. A company may face one of a few penalties if it falsely advertises a product:
Possible civil penalties range from thousands of dollars to millions of dollars. Advertisers have sometimes been ordered to provide all customers who purchased the product with partial or complete refunds. Corrective advertising, disclosures, and other informational remedies may also be ordered. In order to correct misinformation expressed in the original ad, advertisers may be forced to take out new advertising, to warn buyers of false statements in advertisements, to make clear disclosures in future advertisements, or to provide customers with other information.
The FTC mostly focuses on false advertising claims that have to do with health.
Advertising in the UK is regulated under the Consumer Protection from Unfair Trading Regulations 2008 (CPR), effectively the successor to the Trade Descriptions Act 1968. It is designed to implement the Unfair Commercial Practices Directive, part of a common set of European minimum standards for consumer protection that legally bind advertisers in England, Scotland, Wales, and parts of Ireland. These regulations focus on business to consumer (B2C) interactions. These are modeled by a table meant to assess unfairness, evaluations being made against four tests expressed in the regulations that indicate deceptive advertising:
These factors of deceptive advertising are critically analyzed as they may crucially impair a consumer's ability to make an informed decision, thereby limiting their freedom of choice.
This system resembles American practice as reflected by the FTC in terms of disallowing false and deceptive messaging, prohibition of unfair and unethical commercial practices, and omitting important information, but it differs in monitoring aggressive sales practices (regulation seven), which includes high-pressure sales practices that go beyond persuasion. Harassment and coercion are not defined but rather interpreted as any undue physical and psychological pressure (in advertising).
Even if proven cases of false advertising do not inevitably result in civil or criminal repercussions, the Office of Fair Trading states that, "in the instance of false advertising, companies are not always faced with civil and criminal repercussions, it is based on the seriousness of the infringement." Each case is analyzed individually, allowing the standards authority to promote compliance with regard to its enforcement policies, priorities, and available resources. Another area of departure from American practice relates to a "general prohibition on the use of competitors' logotypes, trademarks or similar copy to that used in a competitor's own advertising by another, particularly when making a comparison."
Under CPR legislation, there are different standards authorities for each country:
In Australia, the Australian Competition and Consumer Commission (also known as the ACCC) is responsible for ensuring all businesses and consumers act in accordance with the Australian Competition & Consumer Act 2010, as well as fair trade and consumer protection laws (ACCC, 2016).
Each state and territory has its own consumer protection agency or consumer affairs agency (ACCC 2016).
The ACCC is designed to assist consumers, businesses, industries, and infrastructure within the country. The ACCC assists the consumer by making available the rights, regulations, obligations, and procedures for refunds and returns, complaints, faulty products, and guarantees of products and services. They also develop laws and guidelines in relation to unfair practices and misleading or deceptive conduct.
There are many similarities in the laws and regulation between the Australian ACCC, New Zealand's FTA, the American FTC, and the United Kingdom's CPR. The goals of these policies are to support fair trade and competition and to reduce deceptive and false practices in advertising. Most countries have agreements with the International Consumer Protection and Enforcement Network or ICPEN.
Main article: Fair Trading Act 1986
In New Zealand, the Fair Trading Act 1986 aims to promote fair competition and trading in the country. The act prohibits certain conduct in trade, provides for the disclosure of information available to the consumer relating to the supply of goods and services, and regulates product safety. Although the Act does not require businesses to provide all information to consumers in every circumstance, businesses are obliged to ensure the information they do provide is accurate and that important information is not kept from consumers.
A range of selling methods intended to mislead consumers are illegal under the Fair Trading Act. The Act also applies to certain activities whether or not the parties are "in trade," such as employment advertising, pyramid selling, and the supply of products covered by product safety and consumer information standards.
Both consumers and businesses alike can rely on and take their own legal action under the Act. Consumers may contact the trader and utilize their rights stated in the Act to make headway with the trader. If the issues are not resolved, the consumer or anyone else can take legal actions under the Act. The Commerce Commission is also empowered to take enforcement action and will do so when allegations are sufficiently serious to meet its enforcement criteria.
Additionally, there are currently four consumer information standards:
In India, there is no government agency or legislation regulating false advertisements or the advertising industry in general. It is entirely monitored by a group of volunteers called the Advertising Standards Council of India (ASCI). ASCI was established in 1985 with the goal of evaluating the truthfulness and fairness of advertisements. ASCI also aims to ensure that ads are respectful to widely accepted public decency principles. The ASCI has many codes that apply to advertisements all over India that are read, heard, and viewed there. A few examples of such codes are: The Press Council Act of 1978, the Code of Conduct of the News Broadcasters Association, the Young Persons Act of 1956, Consumer Protection Act of 1986, the Drugs and Cosmetic Act of 1940, and the Food Safety and Standards Act of 2006.
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