Misleading Claims / False Advertising
Any advertisement or
promotion through Television, Radio, or any other electronic media, Newspapers,
Banners, Posters, Handbills, wall-writing etc. to misrepresent the nature,
characteristics, qualities or geographic origin of goods, services or
commercial activities so as to mislead the consumer could be broadly defined as
a misleading advertisement.
Advertising is a very powerful tool that
companies use to persuade consumers to purchase property, goods or services.
Companies are required to follow strict
state and federal guidelines when advertising their products and services, and
advertisements that are designed to deceive or mislead consumers are prohibited
by law.
False advertising generally refers to misleading
or untrue marketing claims that companies make about their products. Companies
usually make misrepresentations about their products to induce customers to pay
more or even purchase a product that they would not have considered otherwise.
Shortly after the proliferation of
advertising in the early 1900s, false advertising was made a crime in 44 states.
States followed with statutes addressing particular types of false advertising
that subject companies to fines and other penalties for violations. Consumers
have also used lawsuits, specifically class action lawsuits, to hold companies
responsible for false advertising.
There are several types of false advertising
generally. These include mislabelling, bait-and-switch, failure to disclose,
flawed research, and product disparagement or trademark infringement.
What
is False or Misleading Advertising?
State and federal laws define the
practice of false or misleading advertising as:
• The act of using deceptive, misleading,
or false statements about a product or service in an advertisement.
• Any advertising statements or claims
that are deceptive, misleading, or false about a product or service that’s
being sold.
False advertising laws stipulate that
consumers are entitled to know exactly what they are purchasing, along with the
specific amount they are being charged for a property, good or service.
Types
of False or Misleading Advertising
What follows are examples of the false or
misleading advertising tactics that are sometimes used:
Bait-and-Switch
This occurs when a company advertises a
product or service it never intends to provide. For example, Joe’s appliance
store advertises a dishwasher at an unbelievably low price, while mentioning in
the ad that supplies are “limited”. When customers arrive at the store, they’re
told that the advertised model is sold out and are shown more expensive dishwashers
instead.
Misleading Photos or
Illustrations
Sometimes images included within an ad
make an item look more attractive to consumers than it really is. For example,
grocery store chains sometimes use photo enhancement software to enhance the
actual appearance of food items so that you will buy them.
Price Deception
Price deception is when a company uses
false or misleading pricing in its ads for a product
or service. For example, a clothing store may advertise that a shirt is on sale
at half price when that advertised shirt was never sold at a higher price to
begin with.
Unsubstantiated Claims
This occurs when a company claims that
their product will provide specific benefits to end users that have never been
officially proven.
Here’s an example: A holistic health
company runs an online consumer advertising campaign that claims their
all-natural nutritional supplement helps cure cancer. However, no medical data
exist to validate that claim. As a result, a judge later orders them to stop
promoting their product based on unsubstantiated claims.
Comparison Inconsistencies
These happen when an advertisement
compares one company’s product to a competitor’s only in areas where it is
superior, leaving out the fact the other product is superior in other ways. By
doing so, one company gains an unfair marketing advantage over others. A good
example of comparison inconsistencies is the way auto manufacturers sometimes
market their vehicles against comparable makes and models.
Mislabeling
Mislabeling is a common form of false
advertising and includes situations where companies use false or misleading
information on product packaging or in related advertising materials such as
websites.
Companies can also make false claims
about a product’s price by claiming that the good is on sale based on a price
that it was never offered for sale at. Recently, a number of outlet stores have
come under fire for price deception, including Ann Taylor, Michael Kors, and
North Face.
Companies also engage in false
advertising if they make false or deceptive claims about the quality or origin
of their product. Recently, companies have been hit with false advertising lawsuits over “Made
in America” claims. While the product may have been assembled in America, the
company sourced the parts from foreign countries. According to the consumers in
the lawsuits, they felt deceived because they believed they were purchasing a
product solely from the United States and they often paid more for that
product.
False environmental claims can also be
considered false advertising. These include using terms like “biodegradable,
“recyclable,” and “environmentally friendly” on product packaging. Certain
customers say that they pay more for products with environmental claims on the
packaging. However, if these terms are not based on reliable scientific
evidence, then they can be considered false advertising.
Bait-and-Switch
If a company uses claims about the price
or quality of a particular product or service with no plans to sell or provide
that service at the price offered, they may be engaging in “bait-and-switch”
false advertising.
Sometimes advertisers attempt to lure
customers in by offering incredible deals but change the deal after the
customer has already invested a substantial amount of time and energy into
negotiating with the advertiser. In addition to being frustrating, any
bait-and-switch advertising is illegal under Federal Trade Commission
regulations.
Failure to Disclose
A company that does not include material
information about its product or only partially discloses information can also
be considered to be engaging in false advertising. This information is
especially important when it comes to side effects of prescription and
over-the-counter drugs, but it can also apply to cleaning products and other
items.
Many products are subject to additional
risk disclosures depending on the type of product sold. Consumers need to be
aware of the dangers of items they purchase and how to avoid them. Failing to
disclose this information can lead to personal injury or property damage as
well.
Flawed Research
If a product’s labelling or related
advertising makes claims based on flawed research, it is considered false
advertising. Under federal law, flawed research includes “representations found
to be unsupported by accepted authority or research or which are contradicted
by prevailing authority or research.”
Product Disparagement and
Trademark Infringement
Companies can also get into trouble for
false advertising if they falsely disparage a competitor’s product as a part of
their marketing. Similarly, if a company uses another company’s trademark to
imply some type of relationship, it can be considered false advertising.
Duped by False Advertising
Practices
These types of false advertising confuse
consumers and generally lead them to spend more on a product then they would
have. False marketing can
also induce consumers to purchase a product that they would not have otherwise.
There
are a number of remedies for false advertising, including injunctive relief,
corrective advertising, and paying damages. If you have been duped by false
advertising, you should know that you and other consumers have rights under
consumer protection laws.
Examples of False Advertising
·
Hidden
fees - These are extra fees not specified in the advertised price, such as
activation fees for cell phones or pre-delivery inspection charges on a new
car.
·
"Going
out of business" sales - This entails raising the prices from merchandise
that was already on sale and then marking them down.
·
Misusing
the word "free" - When the sale is "Buy one. Get one free,"
the second item is not really free because you have to buy the first one.
·
Changing
the measurement units and standards - An example is changing from pounds and
ounces to metric to hide the fact that the product was downsized.
·
Fillers
- Food often has fillers to increase its weight, like meat injected with broth
or brine.
·
Misuse
of terms - This includes the terms "light" and "natural"
·
Incomplete
comparison - An example is saying a product is better than another but not
explaining in what way it is better.
·
Inconsistent
comparison - This includes comparing a product to only the competitors it can
beat.
·
Misleading
illustrations - An example is showing the product in a picture as being bigger
than it actually is.
·
Coloring
- This would include putting yellow oranges in a red mesh bag to make them
appear riper than they are.
·
Angel
dusting - This is adding a very small amount of something beneficial so it can
be labeled as such, like a cereal that contains 10 essential vitamins and the
actual amount of them is less than one percent of the Recommended Dietary
Allowance.
·
Bait
and switch - This is advertising one product and substituting a similar product
at a higher price, claiming the advertised product is unavailable or sold out. Eg.
Base model of car.
·
Acceptance
by default - This refers to a contract where the consumer must opt out of a
service or feature and if they don't, they will be charged for it.
Companies Found Guilty of
False Advertising
Airtel
4G
Maggi
Noodles
Idea
– Best network
Dabur
Chawanprash – more immunity
Horlicks – stronger, taller
& sharper
Dettol – 10X protection
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