False advertising
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False advertising is the use of deliberately false statements or deception in advertising, in order to gain a commercial advantage. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or misleading advertising.
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[edit] False advertising regulations in the United States
Advertising is regulated by the authority of the Federal Trade Commission, a United States administrative agency, to prohibit "unfair and deceptive acts or practices in commerce."[1] While it makes laymen's sense to assume that being deceptive is being unfair, deceptiveness in practice has been treated separately by the FTC, leaving unfairness to refer only to other types.[2]All commercial acts may be deceptive, not just advertising, but noncommercial activity such as advertising for political candidates is not subject to prosecution under the FTC Act. The 50 states have similar statutes, which generally are very similar to that of the FTC and in many cases copied so closely that they are known as "Little FTC Acts." While the terms "false" and "deceptive" are essentially the same for most purposes, the use of "deceptive" in the statute is useful in reminding parties that an explicitly true claim may produce a violation by implying an additional false claim. Thus "deceptive" is the broader term.[3]
Being deceptive is not the same as producing deception. What is illegal is the potential to deceive, which is interpreted to occur when consumers see the advertising to be stating to them, explicitly or impliedly, a claim that they may not realize is false and material. The latter means that the claim if relied on for making a purchasing decision is likely to be harmful by adversely affecting that decision. Evidence must be obtained for what consumers saw the ad saying, and for the materiality of that, and for the true facts about the advertised item, but no evidence is required that actual deception occurred, or that reliance occurred, or that the advertiser intended to deceive or knew that the claim was false.
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, but there are no fines or prison time except for the infrequent instances when an advertiser ordered to stop refuses to do so.[4]
[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] 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.
[edit] Inflated price comparison
By comparing a sale price to a "regular" price for the same product, advertisers can inflate the "regular" price in the order to create the impression that the sale price is very low. The intent is obviously 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.
In the United Kingdom, under the Sale of Goods Act, any item in a sale must have been sold at the non-sale price for at least 28 consecutive days. Many companies sidestep this requirement by selling items at very high prices in a single store (often in expensive parts of London) for 28 days, before selling them items at the "sale" price in their other stores.
[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] 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] 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] 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] References
- ^ 15 U.S.C. ยง45 (United States Code, chapter 15, section 45).
- ^ Richards, Jef I., Deceptive Advertising, Erlbaum (1990), at p. 20.
- ^ Preston, Ivan L., The Federal Trade Commission's Identification of Implications as Constituting Deceptive Advertising, 57 Univ. Cincinnati Law Rev. 1243 (1989).
- ^ 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 (Oct. 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, Univ. of Wisconsin Press, revised ed. (1996), at Ch. 8.
