False advertising is the use of misleading, false, or unproven information to advertise products to consumers. One form of false advertising is to claim that a product has a health benefit or contains vitamins or minerals that it in fact does not. Many governments use regulations to control false advertising. A false advertisement can further be classified as deceptive if the advertiser deliberately misleads the consumer, as opposed to making an honest mistake.
- 1 Types of deception
- 2 Puffing
- 3 Regulation and enforcement
- 4 See also
- 5 References
- 6 External links
Types of deception
Often used in cosmetic and weight loss commercials. These adverts portray false and unobtainable results to the consumer and give a false impression of the product's true capabilities. If retouching is not discovered or fixed a company can be at a competitive advantage with consumers purchasing their seemingly more effective product, thus leaving competitors at a loss.
Advertisers for weight loss products may also employ athletes who are recovering from injuries for "before and after" demonstrations.
An add may omit or skim over important information. The ad's claims may be technically true, but the ad does not include information that a reasonable person would consider relevant. For example, TV advertisements for prescription drugs may technically fulfill a regulatory requirement by displaying side-effects in a small font at the end of the ad, or have a "speed-talker" list them. This practice was prevalent in the United States in the recent past.
Hidden fees and surcharges
Hidden fees can be a way for companies to trick the unwary consumer into paying excess fees (for example tax, shipping fees, insurance etc.) on a product that was advertised at a specific price as a way to increase profit without raising the price on the actual item.
A common form of hidden fees and surcharges is “fine print” in advertising. Another way to hide fees that is commonly used is to not include “shipping fees” into the price of goods online. This makes an item look cheaper than it is once the shipping cost is added.
Manipulation of measurement units and standards
Manipulation of measurement units and standards can be described as a seller deceiving customers by informing them with facts that either are not true or are using a standard or standards that wouldn’t be widely used or understood which results in the customer being misinformed or confused.
Fillers and oversized packaging
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. Food is an example of this, where meat is injected with broth or even brine (up to 15%), or TV dinners are filled with gravy or other sauce instead of meat. Malt and cocoa butter have been used as filler in peanut butter. There are also non-meat fillers which may look starchy in their makeup; they are high in carbohydrate and low in nutritional value. One example is known as a cereal binder and usually contains some combination of flours and oatmeal.
Some products may have a large container where most of the space is empty, leading the consumer to believe that the total amount of food is greater than it actually is.
Puffing is the act of exaggerating a products worth through the use of meaningless unsubstantiated terms, based on opinion rather than fact. 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 grab and 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.
However, it can also be used as a defense for misleading or deceptive advertising. For example, claims like ‘Top Quality’ can have regulatory and legal consequences and can be looked at as illegal misrepresentation, if not supported through the products capabilities.
Manipulation of terms
Many terms have imprecise meanings. Depending on the juristriction, "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.
Tobacco companies, for many years, used terms like "low tar", "light", "ultra-light" or "mild" in order to imply that products with such labels had less detrimental effects on health, but in recent years the United States banned manufacturers from labeling tobacco products with these terms.
When the US United Egg Producers' used a "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 popular Rice Krispies cereal claimed that the cereal can improve a child’s immunity. The company was forced to discontinue all advertising stating such claims. In 2015 the same company advertised their Kashi product as “all natural”, when it contained a variety of synthetic and artificial ingredients. Kashi paid $5 million to resolve the issue.
"Better" means one item is superior to another in some way, while "best" means it is superior to all others in some way. However, advertisers frequently fail to list the way in each they are being compared (price, size, quality, etc.) and, in the case of "better", to what they are comparing (a competitor's product, an earlier version of their own product, or nothing at all). So, without defining how they are using the terms "better" or "best", the terms become meaningless. An ad which claims "Our cold medicine is better" could be just saying it is an improvement over taking nothing at all. Another often-seen example of this ploy is "better than the leading brand" often with some statistic attached, while the leading brand is often left undefined.
In an inconsistent comparison, an item is compared with many others, but only compared with each on the attributes where it wins, leaving the false impression that it is the best of all products, in all ways. One variation on this theme is web sites which also list some competitor prices for any given search, but do not list those competitors which beat their price (or the web site might compare their own sale prices with the regular prices offered by their competitors).
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 all included.
In some advertised images of hamburgers every ingredient is visible from the side being depicted 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 include trailers that are essentially CGI short-films - with graphics of a much higher caliber than the actual game.
“The color of food packaging is considered to be extremely important in the marketing world” (Blackbird, Fox & Tornetta, 2013) as people see colour before they absorb anything else. Consumers buy items based on the colour they’ve seen it on the advertisement and they have a perception of what the packaging colours should also look like. However, when it comes to buying food, usually consumers can only judge the product based on the packaging and usually consumers judge products based on colour.
When used to make people think food is riper, fresher, or otherwise healthier 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, implying that it is fresh, while it would quickly oxidize and brown, showing its true age, if left unstirred.
Angel dusting is a process where an ingredient which would be beneficial, in a reasonable quantity, is instead added in an insignificant quantity which will have no consumer benefit, so they can make the claim that it contains that ingredient, and mislead 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.
Many products come with some form of the statement "chemical free!" or "no chemicals!". As everything on Earth, save a few elementary particles formed by radioactive decay or present in minute quantities from solar wind and sunlight, is made of chemicals, it is in-fact impossible to have a chemical free product. The intention of this message is often to indicate the product contains no exceptionally harmful chemicals, but as the word chemical itself has a stigma, it is often used without clarification.
Bait and switch is a deceptive form of advertising or marketing tactic generally used to lure in customers into the store. A company will advertise their product at a very cheap and enticing price which will attract the customers. Once they do, the store/company will then try to sell something that is more expensive and valuable than what they originally advertised. Regardless of the fact that only a small percentage of the shoppers will actually buy the more expensive product, the advertiser using the bait remains to gain profit.
Bait advertising is also commonly used in other contexts. For example, in online job advertisements by deceiving the potential candidate about working conditions, pay, or different variables. Airlines may be guilty of "baiting" their potential clients with a bargains, then increase the cost or change the notice to be that of a considerably more costly flight.
Businesses are asked to remember a few guidelines to avoid charges of misleading or deceptive conduct:
- Reasonable timeframe, reasonable quantities - Businesses must supply publicized merchandise or services at the promoted cost for a sensible or expressed timeframe and in sensible or expressed amounts. There is no exact meaning of what is implied by a 'sensible timeframe' or 'sensible amounts'.
- Qualifying statements - General qualifying statements, for example, 'in store and online now' could at present still leave a business open to charges of bait advertising if sensible amounts of the publicized item are not accessible.
- Advertising deadlines - Companies need to have good grounds to trust that the merchandise will be accessible
- Rain checks - When, through no shortcoming of its own, a business can't supply merchandise or services as promoted companies ought to have a framework set up to supply or acquire the supply of the merchandise or benefits at the promoted cost as quickly as time permits.
- Online claims - If a company is an online-based company, it is essential for them to keep everything on their website updated to avoid misleading customers.
In some countries bait advertising can result in severe penalties.
Guarantee without a remedy specified
If a company does not say what they will do if the product fails to meet expectations, then they are free to do very little. 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.
Advertisers frequently claim there is no risk to trying their product, when clearly there is. 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 are numerous. Customers may not get 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 the return shipping.
Similarly, a ‘free trial’ is an advertising manoeuvre to have consumers become hands-on with the products or services before purchase, without any money spent but a free trial in exchange for credit cards details cannot be stated as a free trial, as there is a component of expenditure.
Acceptance by default
This refers to a contract or agreement where no response is interpreted as a positive response in favor of the business. An example of this is where a customer must explicitly "opt-out" of a particular feature or service, or be charged for that feature or service. Another example is where a subscription automatically renews unless the customer explicitly requests it to stop.
Regulation and enforcement
In the United States, the federal government regulates advertising through the Federal Trade Commission (FTC), and additionally 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 avoid the chance of deception. Corrective advertising may be mandated, but there are no fines or prison time except for the infrequent instances when an advertiser refuses to stop despite being ordered to do so.
In 2013 and 2014, the United States Supreme Court reviewed two false advertising cases: Static Control v. Lexmark (who has standing to sue under the Lanham Act for false advertising) and POM Wonderful LLC v. Coca-Cola Co..
State governments have a variety of unfair competition laws, which regulate false advertising, trademarks, and related issues. Many are very similar to that of the FTC, and in many cases copied so closely that they are known as "Little FTC Acts."
Advertising in the UK is managed 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 and legally bind advertisers in England, Scotland, Wales and parts of Ireland. These regulations focus on business to consumer interactions. These are modelled by a table used for assessing unfairness, evaluations being made against four tests expressed in the regulations that indicate deceptive advertising:
- Contrary to the requirements of professional diligence
- False or deceptive practice in relation to a specific list of key factors
- Omission of material information (unclear or untimely information)
- Aggressive practice by harassment, coercion or undue influence
These factors of deceptive advertising are critically analysed 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 included 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 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 and each case is analysed individually, allowing the standards authority to promote compliance with regards to their 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 England and Wales, standards offences are handled by the Local Authority Trading Standards Services (TSS)
- In Northern Ireland by the Department of Enterprise, Trade and Investment
- In Scotland, offences are evaluated by. and potentially prosecuted through, the Crown Office and the Procurator Fiscal Service on behalf of the Lord Advocate.
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 promotes product safety. Although the Act does not require businesses to provide all information to consumers in every circumstances, businesses are obliged to ensure the information they do provide is accurate, and important information is not kept from consumers.
A range of selling methods that intend to mislead the consumer 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 which have been stated in the Act to make headway with the trader. If the issues are not resolved, the consumer or anyone else can take 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 five consumer information standards:
- Country of Origin (Clothing and Footwear) Labeling – Regulations 1992
- Fibre Content Labeling - Regulations 2000
- Used Motor Vehicles - Regulations 2008
- Water Efficiency - Regulations 2010
- "Deceptive Advertising Definition - Consumer | Laws.com". consumer.laws.com. Retrieved 2016-04-03.
- "Ribena-maker fined $217,500 for misleading vitamin C ads". New Zealand Herald. 2007-03-27. ISSN 1170-0777. Retrieved 2016-04-03.
- "Illegal Price Advertising". Boundless.com. 2015-07-21. Retrieved 2016-03-31.
- "Surcharges And Hidden Fees - Fraud | Laws.com". Fraud.laws.com. Retrieved 2016-03-31.
- "Add-ons and hidden fees | Commerce Commission". Comcom.govt.nz. Retrieved 2016-03-31.
- "Scams, cons and the TRUE cost of your budget flight: How our dreams of a bargain holiday are spoiled by unsavoury added extras".
- Wallechinsky, David (1975). The People's Almanac. Garden City: Doubleday. p. 1010. ISBN 0-385-04060-1.
- "Food Fillers 101".
- "O.C. DA's lawsuit may force Axe hair products to redesign containers".
- Calderwood, James (1998). "False & deceptive advertising". Ceramic Industry.
- Hsieh Hsu Fang, Ching-Sheng Ya-Hui Wen-Chang (2010). "The Relationship Between Deceptive Claims and Ad Effect: The Moderating Role of Humorous Ads". International Journal of Business and Information.
- Chandran, Ravi (2004). "CONSUMER PROTECTION (FAIR TRADING) ACT". Singapore Journal of Legal Studies.
- Lysonski Duffy, Steven Michael F (1992). "The New Zealand Fair Trading ACt of 1986: Deceptive Advertising". The Journal of Consumer Affairs.
- Toncar Fetscherin, Mark Marc (2012). "A study of visual puffery in fragrance advertising". European Journal of Marketing.
- Eighmey, 2014
- Office of Trading, 2008
- U.S. Food and Drug Administration (22 June 2010). "Light, Low, Mild or Similar Descriptors". Retrieved 16 September 2014.
- Barrionuevo, Alexei (2005-10-04). "Egg Producers Relent on Industry Seal". The New York Times. Retrieved 2010-03-27.
- "Kellogg settles Rice Krispies false ad case". Retrieved 2016-04-01.
- NBC Suit Prompts Kellogg's to Drop "Natural" Labels on Kashi Products http://www.nbcnews.com/business/consumer/suit-prompts-kelloggs-drop-natural-labels-kashi-products-n100391 Suit Prompts Kellogg's to Drop "Natural" Labels on Kashi Products Check
|url=value (help). Retrieved 2016-07-25. Missing or empty
- "Bait And Switch Definition". Investopedia. 2014-04-11. Retrieved 2016-03-31.
- "Bait Advertising - Department of the Attorney-General and Justice - NT Consumer Affairs". Consumeraffairs.nt.gov.au. 2016-01-06. Retrieved 2016-03-31.
- "Bait advertising | Commerce Commission". Comcom.govt.nz. Retrieved 2016-03-31.
- "Misleading and Deceptive Conduct: Bait Advertising" (PDF). Journal.mtansw.com.au. Retrieved 2016-03-31.
- "Restatement (Second) of Contracts §33". Lexinter.net. Retrieved June 2, 2012.
- Drumwright & Murphy, 2009
- 15 U.S.C. § 45.
- Johar, Gita, "Intended and Unintended Effects of Corrective Advertising on Beliefs and Evaluations: An Exploratory Analysis", Journal of Consumer Psychology, 1996, 5(3), 209-230.
- Johar, Gita Venkataramani and Carolyn J. Simmons, “The Use of Concurrent Disclosures to Correct Invalid Inferences,” Journal of Consumer Research, 2000, 26(4), 307-322.
- Richards, id; Policy Statement on Deception, 103 FTC Decisions 110 (1984), appendix to Cliffdale Associates; originally a letter from FTC Chairman James C. Miller to Rep. John D. Dingell (October 14, 1983). For the history of changing from deception to deceptiveness as the standard, see Preston, Ivan L., The Great American Blow-Up: Puffery in Advertising and Selling, University of Wisconsin Press, revised ed. (1996), at Ch. 8.
- See e.g. N.Y. ISC. Law §§ 2401-2409.
- "California Civil Code - CIV § 1770 - FindLaw". Findlaw.
- California Antitrust & Unfair Competition Law (Third), Volume 2: Unfair Competition (State Bar of California, 2003 Daniel Mogin & Danielle S. Fitzpatrick, eds.) at pg. 9.
- "What is the Fair Trading Act ... | Commerce Commission". www.comcom.govt.nz. Retrieved 2016-04-01.
- "About us | Commerce Commission". www.comcom.govt.nz. Retrieved 2016-04-01.
- "Fair trading act". Consumer NZ. Retrieved 2016-04-01.
- International Chamber of Commerce, Consolidated ICC Code of Advertising and Marketing Communication Practice, 2011.
- Kumar, D., & Raju, C. (2013). The role of advertising in consumer decision making. Journal of Business and Management. Retrieved from http://www.iosrjournals.org/iosr-jbm/papers/Vol14-issue4/F01443745.pdf?id=7380
- Owolabi, A. (2009). Effect of consumers mood on advertising effectiveness. Europes Journal of Psychology. The University of Ado-Ekiti Nigeria. Retrieved from file:///C:/Users/Selena/Downloads/243-226-1-PB%20(1).pdf
- Schwarz,N.(2010). Feelings as information theory. University of Michigan. Retrieved from https://dornsife.usc.edu/assets/sites/780/docs/schwarz_feelings-as-information_7jan10.pdf
- Latour, K., & M (2009). Positive mood and susceptibility to false advertising. The Scholarly Commons. Cornell University School of Hotel Administration. Retrieved from http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1312&context=articles
- Calvert, S. (2008). Children as consumers: Advertising and marketing. Retrieved from https://www.princeton.edu/futureofchildren/publications/docs/18_01_09.pdf
- Blackbird,J., Fox, T., & Tornetta, S. (2013). Color sells: how the psychology of colour influences consumers. Retrieved from http://udel.edu/~rworley/e412/Psyc_of_color_final_paper.pdf
- Meat products with high levels of extenders and fillers. (n.d). Retrieved from []
- ftc.gov - Advertising FAQ for small businesses
- alphaila.com - Fast Food: Ads vs. Reality
- OECD Consumer Policy Toolkit Report
- About Econsumer.gov, a portal for consumers to report complaints concerning online and related transactions with foreign companies
- International Consumer Protection and Enforcement Network (ICPEN)
- Consumers International
- TINA.org (truthinadvertising.org)