What is False Advertising? Is False Advertising illegal?
By Sam Nguyen
Drive 20-40% of your revenue with Avada
Advertising is an amazing tool, and it is becoming more and more popular. Within your industry, ads can help you promote sales by giving your customers attractive and adequate information or create more partnerships that make your business grow. However, the drawbacks can also be witnessed if you do not do it right since this is a marketplace, not a game.
There exist a type of advertising that you need to avoid, which is false advertising. Because misleading advertising can cheat and perceptually mislead people into commercial activities that they do not wish to. More seriously, some kind of misleading content might be the reason that makes you be in charge of the local authorities’ law. This article will provide you the definition and answer the big question, “Is false advertising illegal?”. From that, we hope you will come up with appropriate and sustainable content for your advertising campaign.
What is false advertising?
Before we find out is false advertising illegal or not, we need to understand what is false advertising and whether or not your ad making team ever accidentally creates it.
False advertising is actions that sellers try to promote their products to buyers but with inaccurate, confusing, or unverified information. One signature type of false advertising is to insist that a product is healthy or includes some kind of vitamins or minerals, irony it does not.
Many authorities set rules to take over the situation but there’s still a fact that people are confused and don’t get is false advertising illegal or not. The main reason given might be that some ad makers want to make an outstanding and attractive piece of information and the picture or any visual aids is a little over reality. A piece of advertising is assumed as dishonest when advertisers intentionally cheat the consumers without informing them the truth.
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Types of deception in false advertising
Pricing
A typical misleading advertising stereotype involves concealing fees or overcharges (for example, tax, shipping fees, insurance, etc.), which can contribute to buyers’ final price to be much higher than the ad’s price. The Federal Trade Commission (FTC) label these practices as “cramming”.
Deceptive pricing practices can happen when a liquidator raises prices while pretending that they are marked down. However, most of the advertising cases are sophisticated and complicated; we can not point out that false advertising is illegal.
Description
Another common false advertisement may claim that a product has particular characteristics or benefits, or that it is high quality and luxury, but in fact, it does not. This can be known as dishonest product description, which is the way advertisers provide ambiguous information, in specific. For example:
Adding terms
Businesses might add some terms such as “organic,” “natural,” or “sugar-free” to gain more truth about their products then raise the price since these products have a quite high price on the market. However, turn out these products are not guaranteed.
False claims of scientific support or information
To gain people’s belief, these manufacturers state that their products are developing with support from reliable scientific organizations or authorities. This action raises the higher risk we can observe the question “Is false advertising illegal?”.
Misleading illustrations or photographs
This type of deception is extremely common among cosmetics and losing weight products. Since this industry is also called the beauty industry and stunning pictures may attract more attention. These adverts represent unobtainable results to the buyers and give a misleading impression of the true product’s capabilities.
Advertisers for weight loss products may also buy reviews from athletes or gym rats to demonstrate their products’ results, but the experiences might be fake. Cosmetics advertisements often use photo manipulation or computer-generated imagery to promote products, which do not reflect the products’ real effect.
Falsely claiming about the ingredients and formula
Particular ingredients or a secret formula can help brands gain billion dollars, and the crowd chases them. Seeing such potential in selling products, many brands, instead of developing their own in lab, decide to declare that they do have the customers’ craving.
These actions can be doubtful to everyone and even you will ask yourself “Is false advertising illegal in this case?” Actually, if they do tend to do so, they will do it carefully with disclaimers. We see that the seriousness of the issue is not just deception but more than customers’ health, and it is also about copyright.
Measurements or Quantities
E-commerce is more popular but one of the issues from this is the chance to mislead consumers by using a different standard of measurement, making a product totally different from its actual size. Even not on the Internet, the physical display of products is made to trick people about the quantities; for example, packaging material can make a product appear bigger, or filler can increase the weight.
In a recent instance of this behavior, computer hard drive manufacturer Western Digital settled a size lawsuit in 2006 involving claims about hard drive capacity. “The lawsuit charged that Western Digital sold hard drives, specifically their 80GB WD800VE drive and their 120GB WD1200B011 model, with only 79,971,254,272 bytes (74.4GB) and 120,002,150,400 bytes (111GB) of usable storage. All this confusion comes from the binary definition of kilobytes, megabytes, and gigabytes, which are 210 (1024), 220 (1,048,576), and 230 (1,073,741,824) bytes respectively.” This case may provide a clear answer to the question “is false advertising illegal?” since “the size” involved is complicated.
Comparisons
This type of deception even more difficult to determine is false advertising illegal, or not? Competition in the marketplace to win it is no longer something new and comparing one’s product to a competitor’s product is inherently tricky. To make their products more outstanding, advertisers might use comparative words but with bleaching or ambiguous meaning like “stronger” or “better,” without considering locate them in the proper context.
Guarantee or Warranty
Businesses may offer a guarantee or warranty for their services that do not specify a remedy. If there are troubles with the products, they will refuse to provide the solution based on blurry clauses in the guarantee or warranty. More specifically, the ad says the providers will offer a new product if there is a problem, but in terms of a long list of conditions, and lastly, you will not obtain the perk.
Is false advertising illegal?
United States
In the United States, the federal government classifies advertising through the Federal Trade Commission[52] (FTC) with truth-in-advertising laws. Additionally, it enables private litigation through various statutes, most significantly the Lanham Act (trademark and unfair competition.)
The States’ authorities are focusing more on prevention rather than punishment, reflecting civil law’s purpose in setting things right rather than that of criminal law. You can take a look and consider many cases is false advertising illegal or not. The typical penalty is to prevent advertisers from continuing such illegal acts or to include exposure of additional information to eliminate the chance of deception. Remedial advertising may be required to replace the existed one, but there are still no fines or prison time for ad-makers, except for the instances, they reject the order.
State governments have a various unfair competition laws, which govern fraudulent commerce, labels, and similar problems. The significant similar regulations to FTC can be seen, and in many cases, drawn closely that people even call them “Little FTC Acts.” These laws also follow the terminology “Unfair, Deceptive, or Abusive Acts and Practices” Laws (UDAAP or UDAP Laws) and can range extensively in the level of strength they provide to consumers, according to the National Consumer Law Center.
United Kingdom
All ads in the UK are controlled under the power of the Consumer Protection from Unfair Trading Regulations 2008 (CPR), inherit complete what the Trade Descriptions Act 1968 got. It is planned to perform 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 concentrate on quite large business targets to the most detailed element, which is consumer interactions. They are formed to measure the unfairness according to a table of the universal standard based on the process of conducting four tests that indicate deception in advertising and clearly answer you is false advertising illegal, in case you unintentionally made it:
- Contrary to the requirements of professional diligence
- False or deceptive practice in relation to a specific list of key factors
- The omission of material information (unclear or untimely information)
- Aggressive practice by harassment, coercion, or undue influence
Experts and studies have critically examined these factors of deception in advertising as it may crucially diminish the process of making an informed choice of customers, therefore narrowing the freedom of selection.
This system ran by the Uk administration shows several equivalents to American FTC in terms of banning false and deception content in promoting product, the prohibition of unfair and unethical commercial acts, and neglecting important information. On the other hand, there are differences in monitoring aggressive sales practices (regulation seven), which included high-pressure sales practices beyond persuasion. The regulation does not mention or defined harassment and coercion cases, but it can be interpreted as any undue physical and psychological pressure (in advertising).
Even revealed false advertising cases do not necessarily lead to the result in civil or criminal consequences: the Office of Fair Trading states in the specific cases of false advertising, companies are not always in charge of civil and criminal repercussions, the final way to deal with the situation will be based on the level of seriousness of the violation, and each of case is analyzed individually, and the standards authority will have chances to promote compliance within their enforcement policies, preferences, and available resources. Another area that distinguishes from American practice associates to prohibition on the use of competitors’ logotypes, trademarks, or similar duplication to that used by another when making a comparison.
8Under CPR legislation, there are different standards authorities for each country:
- In England and Wales, standards offenses are managed by the Local Authority Trading Standards Services (TSS)
- In Northern Ireland, the Department of Enterprise, Trade, and Investment valid the content.
- In Scotland, offenses are evaluated by and potentially prosecuted through the Crown Office and the Procurator Fiscal Service on behalf of the Lord Advocate.
Australia
In this Oceania country, the Australian Competition and Consumer Commission (ACCC) are in charge of warranting all selling and buying act in line with the Australian Competition & Consumer Act 2010 and fair trade and consumer protection laws (ACCC, 2016).
Each state and territory have their own agency to protect consumers and ensure the equitability (ACCC 2016).
- ACT - Office of Fair Trading (OFT)
- NSW - Fair Trading
- Office of Fair Trading - Queensland
- SA - Office of Consumer and Business Services (CBS)
- Tasmanian - Consumer Affairs & Fair Trading
- Consumer Affairs - Victoria (CAV)
- WA - Department of Commerce
The ACCC is designed to support both consumers, businesses, industries, and infrastructure domestically. With available the rights, regulations, obligations, and procedures the ACCC assists the consumers; for a refund and return, complaints, faulty products, and guarantees of products and services. They also conduct clear laws concerning unfair practices and misleading or deceptive conduct aim at preserving the right for businesses.
The structure of the US, UK, and Australia policies share several similarities that are to support fair trade and competition. Moreover, these policies ensure what consumers are informed via media or ads. This may reduce the risk of deception and false practices. Whereby, the policy is not only about that nation only; governments are now putting effort into generating an international trading net and agreements granted and accepted with the International Consumer Protection and Enforcement Network or ICPEN.
False advertising scandals you can learn from
VW, eco-friendly diesel cars
On March 29, 2016, the Federal Trade Commission (FTC) registered a prosecution against Volkswagen, with the action of misleading consumers with the advertising campaign about “Clean Diesel” vehicles that the car company declared to the press.
The VW is also exposed to the cheating in emissions tests for a long period on its diesel cars in 2015.
“Volkswagen deceived consumers by selling or leasing more than 550,000 diesel cars based on false claims that the cars were low-emission, environmentally friendly” claimed by the FTC.
As a result, the car company had to pay billions of dollars for violating the Clean Air Act besides the fine for false advertising. We strongly believe you now know is false advertising illegal or not.
Activia yogurt, “special bacterial ingredients”
The class lawsuit of $45 million against Dannon-owner of popular Activia brand yogurt is triggered by the company’s ad campaign. The yogurts were promoted as being “clinically” and “scientifically” proven to strengthen your immune system and able to help to regulate digestion. The provider said their product was sold at 30% higher prices than others because of the extraordinary bacterial ingredients. According to the Cleveland judge, these claims were not proved by any scientific proofs.
As Dannon’s refusal of any actions related with the purpose to settle the lawsuit and to “avoid the cost and distraction of litigation” based on phrases similar to “clinical studies show” were deemed permissible, we hardly conclude is false advertising illegal.
New Balance, burning calories shoe
New Balance released a new product and said there was a hidden board burning calories that activated the glutes, quads, hamstrings, and calves. Studies found that the ad was not true and the shoes did not provide any health benefits to the wearer.
Wal-mart, the price of Coke in New York
Wal-mart has long been a cheap price grocery chain to everyone. However, this big brand faced big trouble that costs more than $66.000 in fines with the efford to promotion cheap price coca-cola nationwide.
This seller public the price of a dozen pack of the soft drink at $3.00. However, New York State customers were charged $3.50 with the reason explained was price-hike because of “sugar-tax”, according to Corporate Crime Reporter.
There was investigation conducted and New York Attorney General Eric Schneiderman claimed that the price violated New York State’s General Business Law 349 and 350.
Extenze, extend the penis length
In notorious late-night TV commercials, Extenze had claimed its pills were “scientifically proven to increase the size of a certain part of the male body”. This seems ridiculous and not that harmful to anyone and nobody ever doubt is false advertising illegal in this funny case. However, Extenze agreed to pay $6 million to settle a class-action lawsuit in 2010, according to CBS.
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Final thoughts
In conclusion, the acts of misleading and provide wrong information in false advertising are not a good way to attract customers in long term, you should consider and create a sustainable plan. We have gone through the most basic knowledge about this type of ads that you need to avoid. Moreover, the cases of big brand may help you answer the question “Is false advertising illegal?” and from that the last outcome can be seen and warn you to stay away from it.
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