Lying about services or products to scam money off of people is as old as the hills. It cheats people out of their hard earned money and generally drives the cost of living up. Consequently, most states have had some type of regulations against false advertising since the 1910’s, and the FTC has national jurisdiction over them. As a consumer, though, you want to know what to look for.
What Is False Advertising
It’s straight-forward: customers should know what they are buying and how much it really costs. False advertising are advertising statements that deceive or mislead potential customers about products and services.
Types of False Advertising
The Lantham Act of 1946 is the law that is generally used here. It divides false advertisements into 3 groups.
- Failure to Disclose
A company has to include all the material facts in their representations, although it doesn’t require complete disclosure and judges have a lot of wiggle room when deciding how much disclosure is enough. Failure to disclose covers both misstatements and statements that are somewhat true, but misleading because of what they leave out.
- Flawed and Insignificant Research
Businesses are not allowed to use flimsy research in their advertisements. They can’t make claims that are “contradicted by prevailing authority or research” or are “unsupported by research.”
- Product Disparagement
Competitors are not allowed to misrepresent or discredit each other’s product. In fact, the Lantham Act was expanded in 1988 to include other people’s product.
At a practical level, false advertising crops up in a bunch of forms.
- – Inconsistent Comparison
This is where advertisements compare their products to competitors in a misleading way. They choose to compare their product to another one only in the areas where their product is superior and leave out areas where they aren’t.
- – Pricing Based Deception
This is the dreaded ‘add-on’ fee. Companies bury additional fees on to services and products in the fine print, sometimes in separate pages, where the customer won’t see them. This makes the product much more expensive than advertised.
- – Bait and Switch
Companies can sometimes claim to sell a service or product in order to get people in their doors, and then ‘switch’ to selling what they actually sell. This can take the form of advertising a thing which they are always mysteriously ‘out’ of or offering a product that then turns out to be inferior.
- – Misleading Illustrations
This is the children’s cereal trick: the company presents a picture of a product along with other items that are not part of the package. They manipulate the pictures to make their products look better than they are and package them to hide their real appearance.
- – Price Reduction Deception
Companies have gotten in trouble for claiming that a product is on sale or marked down, when the product is actually being sold at full price. They can claim to sell 2 products for the price of one, and then include the price of the second item. It’s lying about the price of a thing.
- – Quality or Origin Deception
Companies sometimes claim their stuff is ‘made in America,’ when it is more like ‘assembled in America after all the parts were made in China.’ And sometimes they just straight up lie, claiming a product is ‘high quality,’ when such a statement is completely unsubstantiated. They fail to mention defects that they know their product has, too.
Examples of False Advertising
Corinthian Colleges and its subsidiaries, Wyotech, Heald, and Everest
Between 2009 and 2013, the colleges misrepresented the likelihood of their graduates getting jobs with degrees from them. They inflated the rate of job placement in their advertisements to convince desperate people to take out loans for a college degree they couldn’t use.
They advertised that they offered x-ray, radiology, dialysis, and ultrasound technician programs when, in fact, they didn’t offer these programs in California. The executives at Corinthian Colleges knew that people would enroll in their school because of those advertisements.
The Attorney General’s Office got a $1.1 billion judgement from Corinthian in March of 2016.
Ralston claimed that their food was good for dogs with hip dysplasia. The company cited tests that were flawed, rigged, and skewed, and yet still only got statistically insignificant results.
Purina sued them and they lost to them. They had to take the advertisements down.
What You Can Do About It
Most states have laws against false advertising that rely on standards set by the FTC. You can file a complaint with the FTC and your state. The state of California has forms you can fill out at oag.gov and the California Department of Business Oversight takes complaints against businesses.
You can also sue, but you will have to prove a couple of things. You will have to prove that a false statement was made about a product, it deceived people in a way that would influence their purchasing decisions, and that the deception hurts people. If you manage that prove all that, you can get injunctive relief and damages, and the judge may make the offending company take out corrective advertising.
If you have been cheated by false advertising, contact Aiman-Smith & Marcy, a boutique law firm in California that specializes in consumer protection and employment cases, as well as class action lawsuits.
