Business Law 101 /FALSE ADVERTISING

By Albert L. Kelley

When advertising is done over the airwaves, either through radio or television, it is governed by the Federal Trade Commission. Print advertising and local advertising is usually governed by state statute. These laws protect consumers against false advertising. False advertising includes misrepresenting the goods being sold and intentionally misleading consumers. It also covers what is known as a “bait and switch”.

In a “bait and switch” scheme, a store offers an extremely low price on an item, but has an insufficient amount of the items meet the expected demand. The store then offers to sell the customer a similar item at a higher price. Since the customer is already in a buying mood, the sale is not difficult to make.

Many of the false advertising cases are filed under section 43(a) of the federal Lanham Act. That statute provides in part that: “Any person who, on or in connection with any goods or services … uses in commerce any … false or misleading description of fact, or false or misleading representation of fact, which … in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.”

The question in false advertising isn’t whether there was fraud, but rather was there deception. Even if there isn’t an intent to defraud, if the ultimate result is a deception of consumers, there is a violation. This means that if a businessman makes claims about his product that he believes are true, and they turn out not to be, there may still be a violation.

If a company is going to make a claim about a product, the FTC requires that the data used as the basis for the claim be maintained in a file for inspection. If the FTC investigates a claim of false advertising, all the material they inspect may be made public, except for trade secrets. This allows consumers to know the safety aspects of the products they are using.

If the advertiser makes a false claim, the FTC can require among other things that they make corrective advertising to contradict the improper statements. This is called retroactive advertising. This happened with Listerine in 1976. Listerine’s ads claimed that Listerine prevented, cured or alleviated the common cold. Because there was no proof of this claim, the FTC required Listerine to issue $10 million in advertisements stating “Listerine will not help prevent colds or sore throats or lessen their severity.” (Apparently they didn’t learn their lesson in 2005 they had to pull ads that stated Listerine was as effective as flossing in preventing tooth and gum decay).

Not all false advertising is illegal. When the seller is boasting about his product, or slightly exaggerating its qualities, it is referred to as “puffing” and is generally allowed. This works best when the claim is “Our product is the best in its field,” or a more specific example, “This medicine has the longest lasting ingredient available in an over the counter brand.”         It may be that other medicines last equally as long. Therefore, it is not false advertising.

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University. He is also the author of “Basics of Business Law” and “Basics of Florida’s Small Claims Court” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice. If you have any questions about legal issues, you should confer with a licensed Florida attorney.

 

[livemarket market_name="KONK Life LiveMarket" limit=3 category=“” show_signup=0 show_more=0]