False advertising
From Wikipedia, the free encyclopedia
False advertising (or more mildly, deceptive advertising) is an act of deliberately misleading a potential client about a product, service or a company in general by reporting false or misrepresenting information or data in advertising or other promotional materials. False advertising is a type of fraud, and may also be considered a hoax.
False advertising is often a crime. In some countries advertising practices (including "truth in advertising") are regulated by a government authority (FTC in the USA), in others the advertising industry is self-regulated and professional associations combat false advertising.
To decrease their legal liability for deceptive marketing, many companies cover their tracks using small print. In radio, the equivalent is fast talk, which likewise is nearly impossible to hear or understand. In either case, this often allows false advertisers to continue their tactics without prosecution.
[edit] Pricing-based methods
In the UK most price based methods of false advertising are prohibited and strictly regulated. Hence the methods detailed below are rarely encountered and used only by the most disreputable operators.
[edit] Hidden fees and surcharges
Service providers often tack-on fees and surcharges that are not disclosed to the customer in the advertised price. One of the most common is for activation of services such as mobile phones, but is also common in broadband and telephony. Other fees are pilfered from gift cards and bank accounts. In most cases, the fees are hidden in fine print, though in a few cases they are so confused and obfuscated by ambiguous terminology that they are essentially undisclosed.
This may also occur with the bait-and-switch tactic. BellSouth, for example, often advertises DSL service at low prices and with no installation charges, but in many of the same areas offers only FITL/FTTC service, which requires installation of separate Ethernet wiring into the home at significant cost.
Cable and telephone customers in the U.S. are often hit with a "regulatory cost recovery fee" (among other names), which sounds like it is mandated by the government, but which is actually the provider charging the customer for having to abide by the law. These are allegedly for local number portability and the Universal Service Fund, however consumer advocates allege that, because these fees are totally unregulated and are often well above what the companies are required to contribute, these fees are simply being used to skim extra profit from subscribers.
[edit] Rebates
Rebates were originally intended to pass savings directly from the manufacturer to the consumer. However in the U.S. they have become probably the biggest way to trick shoppers into paying more than the advertised price. Stores advertise a "sale" price and note only in the fine print that it is not the price at which it is actually sold for, but instead an "after rebate" price, which also fails to include sales tax. Many rebate fulfillment companies have been labelled as trying not to return money to the customers. However, this usually occurs because customers forget to actually read the rebate form and mail it in properly.
[edit] "Going out of business" sales
By utilizing advertisement with titles such as "going out of business", "store closing", "liquidation sale" or "bankruptcy sale" a message of urgency and "dumped" prices is conveyed - where in reality the business has no plans on closing its store or going out of business. Some cities in the U.S. now require permits for these types of advertisements to combat the false advertising. A few stores have done a "going out for business" sale, perhaps hoping that the small word substitution will go unnoticed.
[edit] Inflated price comparison
By comparing a sale price to a "regular" price for the same product, advertisers can inflate the "regular" price in order to create the impression that the sale price is very low. The intent is to mislead consumers into thinking that they are saving money by purchasing the "on-sale" item or service. Some clothing stores in particular have essentially every item on "sale", and some grocery stores advertise "savings" over their regular prices for those using loyalty cards.
[edit] Perpetual "sales"
Another closely-related trick is the "sale" which becomes more or less permanent, though the actual price or percent off may fluctuate, or even briefly go back to the inflated regular price. In the U.S. this is often seen in craft and home décor stores such as Michaels and Jo-Ann, and to a lesser extent Hobby Lobby and Garden Ridge. Because these stores carry a high proportion of seasonal merchandise (Christmas, Halloween, summer, etc.), those products are constantly on "sale" from the time it is all stocked on the salesfloor until the time it is all gone at closeout. This defies the definition of a sale event.
[edit] Psychological pricing
Psychological pricing "lowers" the price of item, usually by one cent (or local equivalent), to fool customers into thinking the price is somehow "less" than the price point the seller has set. This works because people tend to pay attention only to the most significant digit in the price.
Another similar trick is to hide the cents in small print. Gas stations in the U.S. almost always tack-on nearly an extra cent per gallon, by advertising as 2.859, for example. This is also done by other retailers, such as 199.99 for an item that is, for all intents and purposes, 200 dollars.
[edit] Cost-plus pricing
Some U.S. stores advertise one price on the signs for each item throughout the store, but add the small print "plus 10% at register" at the bottom. This makes real-price comparisons more difficult. In addition, the "cost" to which the 10% is added is not the real wholesale cost as it implies, but also shipping and overhead, thus making it more like "cost plus more costs plus 10%". This is common at some lesser grocery stores such as Food Depot, which end up being nearly the price of regular stores, and often more compared to the other stores' sale prices.
[edit] Buy x, get y free
This type of false advertising concludes that more is better. By increasing the price of a firecracker, for example, to five times its original marginal profit-based price, a 5-for-1 "special" sale is offered while still keeping the same profit line. In other cases the free product is of lower quality than the originally-purchased item.
Often, buy-one-get-one "deals" are simply an excuse to use the word "FREE" in advertising. The item may simply be "50% off" or "half price", or the shopper may actually be forced to buy at least two, or even in multiples of two. Because the shopper must buy something first, the "free" item is not truly gratis.
[edit] Bait and switch
A bait-and-switch is an offer of a service or product at a very low price (often a loss leader), with little or no intention to sell said service or product as advertised. If available at all, this low price is accomplished by lowering standards on the advertised product, such as guarantees, credit terms, or quality, thereby making it undesirable.
Another method is to offer a "limited quantity" deal, with only a few of the advertised product[s] per store. Once the consumer is in the store, sales personnel will try to coax him or her to purchase a different and more expensive product. This is more common, as it is often legal if there is a disclosure of the limited quantity available.
[edit] Introductory offers
An introductory offer is an offer for an ongoing service which is only valid for a certain introduction period. After this period, the price or terms of the agreement change, often without further notice to any consumers which have accepted the initial offer. This differs from bait and switch because the terms or "bait" are in fact actually delivered (making it only deceptive rather than inherently false), but the switch still occurs later on.
The most common form of this is credit cards, which offer low interest rates to start and then rise greatly afterward. Enormous increases in rates are often triggered by a single late or overdraft, in addition to the enormous fees for the late or overdraft. Credit card companies have been criticized in the U.S. for luring college and university students with these offers and then making huge profits from the fees and rates after the students get themselves into debt.
Introductory offers are also very common for cable TV, satellite TV, VoIP, and Internet services, especially those with bundling. The intent is to get the consumer used to receiving the service before the price goes up, so that they will continue on as customers with a much higher profit margin for the service provider.
[edit] Units of sale and pricing
Another trick is to make the unit of pricing smaller than the unit of sale. One example is airlines, where a one-way price is quoted, even though it is impossible to get a one-way ticket for that price, and the flyer is instead forced to pay for a two-way ticket. Similarly, loudspeakers are often quoted as single units, even though the buyer is forced to buy two.
In grocery stores, Kroger (and potentially others) advertise box of cookies for ten cents, using a giant fluorescent red-orange sticker. However, under the enormous "10¢", there is tiny fine print, less than the size of the large "1", which says "per cookie". This is further reinforced by the fact that the box is clear plastic, allowing the shopper to actually see the cookies.
[edit] Non-sale advertisements
Some stores will send out ads which show products that are not even on sale at all. Since the great majority of advertising is for sales, this often misleads the consumer into thinking that the items are at a special price, when in fact they are not. Wal-Mart and others are known for engaging in this, especially during the Christmas rush.
[edit] Other deceptive methods
[edit] Misrepresentations
Utilizing words such as descriptive terms or location terms to increase the perceived value of a product. An example would be advertising "Maine lobsters" when in fact the lobster are from the Pacific ocean, or Vidalia onions which are from Texas instead of near Vidalia, Georgia. These can also be considered infringement of trademarks in many cases. Another example is the United Egg Producers' "Animal Care Certified" logo on egg cartons which misled consumers by conveying a higher level of animal care than was actually the case. Both the Better Business Bureau and the Federal Trade Commission found the logo to be deceptive and it can no longer be used.
[edit] Meaningless terms
Manufacturers and sellers often use terms that sound advanced or deluxe to the average consumer, but really mean nothing at all. The most-abused term of the 2000s is "digital", often applied to things which are not digital in any way. Headphones are often labeled as "digital" or "digital ready", when in fact they are inherently and entirely analog. The term has also been applied to amplified radio antennas used to receive over-the-air television, even though digital TV signals are radio waves just as with analog television.
[edit] Advertising the Maximum
Internet service providers may advertise their service as offering "up to 256 kbps", whereas on average use it could be just 20 kbps. The use of "up to" in the description protects them legally, while raising false hopes in the customers. Further, in the fine print it is mentioned that this includes both the download and upload speeds, deteriorating the customer's usage experience even more.
[edit] Manipulation of standards
Sellers may manipulate standards to mean something different than their widely-understood meaning. One example is with personal computer hard drives. While a megabyte has always meant 220 (1,048,576) bytes in computer science, disk manufacturers began using the irrelevant metric system (SI) prefix meaning of 106 (1,000,000) bytes, thereby overstating capacity by nearly 5%. With gigabytes, the error increases to over 7% (1,073,741,824 instead of 1,000,000,000).
Another such issue is with antennas, where dBi is used instead of dBd. In this instance, dBd refers to the gain (and therefore the ability to receive radio waves) an antenna has compared to a standard dipole antenna. However, dBi refers to an imaginary isotropic antenna that radiates equally in every direction, which could never be built. This makes the labeled antenna appear to have more gain than it actually does.
A different use of this tactic is in refinancing of mortgages, where a U.S. radio ad in June 2006 advertised an "apparent" interest rate of just "1¼%" several times, but slipped-in the real rate of over 6% just once in the ad. (See interest-only mortgage.)
[edit] False labelling
The use of labels with statements concerning quality, identity, quantity, manufacture or origin that are misrepresented or false. Another method of false labelling is hiding or destroying a label indicating the product's origin (e.g. "Made in Taiwan" or "Made in Botswana").
For foods, the expiry date may be changed, which in meats can cause dangerous levels of salmonella or other bacteria to grow. For other foods, they may simply become stale while still being safe to eat.
Tobacco companies, used for many years, terms like low tar light, ultra light, mild or natural, but in recent years it was proved that those terms were considered misleading.
Other offenses include failing to notify consumers of something they have the right to know, such as whether the food is genetically engineered, or whether meats have been treated with carbon monoxide (which displaces the oxygen that causes browning of raw beef).
[edit] Branding
Many well-known companies simply rent their names out to other lesser-known companies. This misleads the consumer to believe that he or she is getting a quality product, which will be backed-up by the company, when in reality this may not be the case. General Electric, for example, no longer makes its own Christmas lights, and never made USB hubs at all, though its logo appears on both. Another example is the IBM PCs which are now made by the Lenovo Group.
[edit] 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 what he or she is buying. Food is an example of this, where chicken meat is injected with broth or even brine, or TV dinners are filled with gravy or other sauce instead of meat. Canned tuna may also be labeled with a weight that includes the water or vegetable oil, though these are almost always drained off and are therefore useless.
In other cases, packages are under-filled, simply leaving empty space at the top, in products such as coffee cans which cannot be seen into until being purchased and opened at home. Particularly deceptive is when the same size of packaging is used for less product than it used to. This deceives consumers into continuing to buy the product, which they expect to have the same amount it always has. To evade legal problems, the label is changed to reflect the actual new amount, but this is essentially fine print which anyone is unlikely to notice.
A similar problem in Christmas lights and other light strings is that the length of each set seems to get shorter each year, despite containing the same number of lights. The length of the set is given in small print while the number of lights is in large print.
[edit] False credentials
An advertiser may have a false "expert" testify that a product is genuine and effective, when in fact it is not. An example of this practice is having actors dressed as doctors or wearing lab coats, lulling potential buyers into believing that the product is backed by the faith of knowledgeable experts. Another example of this is scripted witness testimony. An actor is hired to claim that he or she was satisfied by a product or service, when in fact the actor never used it. Buyers may interpret the endorsement to mean that if another "customer" was satisfied, then they will be too. Some companies use celebrities to do this.
[edit] Real-estate fraud
Although creative wording and other creative footwork can make a tenement sound like a charming house, there are some points that can be considered real estate fraud. Listing a new condo building that has been open for 4 years as "brand new" is fraudulent and in some states in the United States can be grounds for ethics charges from the realty board or state regulatory board.
With the advent of the internet, fraudulent advertising in the real estate community has become a daily problem. With posting sites such as Craig's listthat allow brokers the benefit of anonymity, it is becoming more and more difficult for the consumer to navigate the choppy waters of real estate advertising. Some real estate brokers are even taking aggressive steps to separate themselves from other firms who allow for fraudulent practices. For instance in New York City, where the lack of a true MLS (Multiple Listing Service) only adds to the problem, firms like The Real Estate Group NYhave come out publicly on their website to guarantee that all the properties they list "are accurate and currently available according to the information provided to us by the property owners".
[edit] Misleading analogy
Advertisements often employ a analogies which both simplify the subject matter and may allow for a type of straw man argument. For example, a series of advertisements run by Apple Computer represent the new Mac as a young man in casual clothing who discusses his features with "PC", an older man who wears a business suit and spectacles. The implication of the advertisement is that the Mac is made for "fun" and contemporary youth while the PC is geared primarily towards "boring" office and business work.
