(Newswire.net — September 24, 2020) — Can advertising be trusted? H.G. Wells once said that “advertising is legalized lying.” To many, that remains true—the exact numbers vary depending on the source, but at a minimum, upwards of 50% agree with Wells’ assertion.
Advertising may once have been legalized lying, but modern law has taken a firm stance against false advertising. Although companies are permitted to associate their products with unrealistic aspirations, the law imposes strict requirements regarding the product claims that they can make. Because advertising is expected to comply with the law, it no longer deserves its bad reputation.
In this article, we seek insight into false advertising law from Jeffrey Gitchel, a business lawyer who has extensive experience reviewing and assessing advertising. He also provides guidance on how to comply with the law’s requirements.
What is Advertising?
It is necessary to define advertising—what advertising law applies to—before discussing what makes advertising false. The definition may seem obvious. Television or radio commercials, internet ads, and print ads immediately come to mind. But examples are not a definition, and advertising encompasses a lot more, according to Mr. Gitchel. He says that a business should consider an advertisement to be any communication used in the promotion or distribution of its products or services and that is likely or intended to influence consumer decisions.
Focusing on a “communication” clarifies that advertising can include newsletters, brochures, pamphlets, emails, and other materials. Also, that it covers all media, such as telephone, billboards, and electronic media. And that it covers statements that are only made orally, like a DJ endorsement on the radio.
As this discussion shows, advertising (and therefore advertising law) covers a broad array of statements and materials, beyond communications typically labeled as commercials or ads.
What Does Advertising Law Prohibit?
Mr. Gitchel emphasized one rule of advertising law as a critical starting point—advertisers may not make false or misleading statements, whether actual statements or omissions. Because advertising laws exist at both the federal and state level, however, there is no single definition of false advertising.
The Federal Trade Commission, for instance, says that an advertisement is deceptive if it contains a misrepresentation or omission that is likely to mislead a consumer acting reasonably under the circumstances. The FTC will only take action against a deceptive statement that it deems “material” to consumer decisions to buy or use the product.
Other federal laws, as well as state laws, have different definitions of false advertising. Most notably, not all laws require that a misrepresentation or omission be material.
Despite the variations, false advertising law is consistently broad in its application. Indeed, even a literally true statement can violate advertising law if the statement leads to a false or misleading conclusion. A claim that a razor was six times smoother was found to be misleading even though the truth of the claim had been tested with regard to the lubricating strip because the claim left open the implication that it also applied to the resulting shave. False advertising does not even need to involve words. For instance, it could be false advertising for an anti-wrinkle cream to use a retouched photo.
In contrast, so-called “puffery” is not false advertising. Generally speaking, puffery is a statement that is subjective and non-quantifiable and that no reasonable person would take literally or rely on to make a purchasing decision. Puffery can also be thought of as a statement that is not objectively provable. Examples of puffery are empty superlatives (such as “favorite”), subjective qualitative descriptions (such as “high quality,” “perfect,” and “best”), and exaggerated statements of bluster or boast (such as a pillow that makes you feel like you’re “sleeping on clouds”). Puffery is permitted because it is expected that consumers would not rely on such vague, empty statements when making a purchasing decision. It can be seen as advertising law’s concession to Wells—lies that are sufficiently empty and obvious are allowed.
And yet, that concession only goes so far. Even puffery can be attacked as false advertising under certain circumstances. For example, the Papa John’s slogan “Better Ingredients. Better Pizza.” is merely puffery. However, it could have been false advertising when used as part of a comparative advertising campaign against Pizza Hut, had Pizza Hut provided the court that evidence.
Mr. Gitchel notes advertising law is broader than just false advertising. For example, the FTC also prohibits “unfair advertising,” which is different than false advertising. A business concerned with ethical business practices should consult an attorney to ensure that it is complying with all legal advertising requirements.
Enforcement and Penalties for Violating False Advertising Laws
False advertising violations can be enforced by a number of federal and state agencies, as well as by private parties, such as competitors or consumers. In other words, Mr. Gitchel warned, every advertisement is under siege, surrounded on all sides by potential threats and litigation.
When advertising is found to be false, an injunction ordering removal of the ad or corrective advertising may be imposed. Businesses can also be fined or required to pay damages, or even treble damages. Additional potential penalties include being required to pay the opposing party’s attorney fees and costs of litigation.
In some cases, particularly in situations that rise to the level of fraud, false advertising can even be a criminal violation.
Complying with False Advertising Law
Mr. Gitchel suggested two principles that would help a business navigate the dangerous waters of false advertising and also discussed two areas of risk that can be effectively managed.
Support and Transparency—Guiding Principles
The first principle Mr. Gitchel mentioned is that a business should not make a claim about its product that does not have adequate support. He emphasized that the substantiation for an advertising claim should exist at the time the claim is made; it is not sufficient to wait to substantiate a claim until after it is challenged. Indeed, without this expectation, consumers would be exposed to false claims on a regular basis. Advertisers could say anything, hope the data eventually backs up the claim, and if not, defend that it made the claim in good faith. Consumers, along with competitors and agencies, would be taking legal action constantly.
Second, a business should be transparent about the scope and meaning of its claims. Transparency can prevent a claim—the core of the razor smoothness case was a lack of transparency. And effective transparency has even proven sufficient to resolve a false advertising lawsuit. About ten years ago, Taco Bell was sued for false advertising because its “seasoned beef” allegedly did not legally qualify as beef. The lawsuit was withdrawn “after Taco Bell changed its marketing practices and disclosed more information about the beef product it uses.”
Mr. Gitchel notes that false claims or a lack of transparency cannot be cured with a footnote or fine print. Disclosures have to be made in a meaningful manner, and information that is needed to prevent an ad from being deceptive has to be presented in a clear and conspicuous manner.
Foreseeable Risk Areas
Mr. Gitchel also highlighted two areas where a business should tread carefully.
First, he said that comparative claims raise special concerns because they virtually demand that competitors review the claims closely. Even a small error can invite an allegation of false advertising, which a competitor might characterize as “lying to consumers.” To prevent and rebut such allegations, it is especially important that comparative claims be truthful and clear, measurable, and supported by up-to-date data. A useful tool in assessing a comparative claim is to ask whether the claim would seem fair and valid if the roles were reversed, and the claim was being made against your product.
Second, he noted that wording matters, that poor wording can convert a legitimate, good faith claim into false advertising. An absolute statement, like always or never, can often be contradicted easily, while an open-ended claim that a product is “superior” or “the ultimate” invites manufacturers of all possible comparable products to challenge the claim. Careful wording can allow strong advertising to remain legally compliant.
If H.G. Wells could travel to the present in his time machine, he would find a legal environment that no longer tolerates false statements in advertising. For this reason, Wells is not as relevant as Dr. Charles Edwards, who said “The more facts you tell, the more you sell.” The former dean of the Graduate School of Retailing at New York University continued by noting that an “advertisement’s chance for success invariably increases as the number of pertinent merchandise facts included in the advertisement increases.” Regardless of whether his business advice leads to more effective advertising, keeping advertising factual certainly leads to more compliant advertising.