Deceptive Advertising
When a reasonable consumer would be misled by the advertising claim
Cruz v Anheuser-Busch Companies, LLC
Lime-A-Rita
Shelia Cruz and other sued for advertising as “light” claimed it was misleading because they had more calories than Bud Light
FTC: NOT DECEPTIVE (compare margaritas to margaritas, not margaritas to beer)
FTC v Medlab, Inc.
“New Skinny Pill” claim is to lose 18lbs a week
Just a lie and not factual at all
FTC: Misleading (Permanent Injunction)
Claims Based on Half-Truths
Deceptive because of what the ad fails to tell us (makes us draw a false conclusion)
Bait-and-Switch Advertising
Advertising a very low price for a particular item that will likely be unavailable to the consumer, who will then be encouraged to purchase a more expensive item
Online Deceptive Advertising (Ads must be…)
- Truthful and not misleading
- Substantiated (evidence to buy)
- Cannot be unfair
- Disclose relevant limitations and qualifying information
- Disclosures must be clear and conspicuous
Formal Complaint
What was done wrong is sent to the alleged offender
FTC Orders and Remedies
- Cease and Desist Orders
- Counter Advertising
- Multiple Product Orders
- Damages
- Restitution
Cease and Desist Order
(most common)
Injunction to stop the ad from running
Counter Advertising
(big slap in the face)
Advertiser is told that they have to correct the ad that they have been running
Multiple Product Orders
An order requiring a firm that has engaged in deceptive advertising to cease and desist from false advertising in regard to ALL the firm’s products
Damages
Damages go to the FTC (they filed the lawsuit)
Restitution
Consumers are paid back
Warner-Lambert Co. v FTC
Listerine claims that they can prevent colds (no evidence that there is any affect on colds) They have been lying to the public for a decade
Had to spend $10 million in advertising
TX Deceptive Trade Practices Act (DTPA)
Texas consumer law that has a long list of deceptive and unfair practices for which a merchant/seller of goods can be liable:
Remedies:
1. Treble DAS
2. Attorney’s fees
3. Costs of court
Telephone Consumer Protection Act of 1991
Prohibits telephone solicitation using automatic dialing or a prerecorded voice
Prohibits ads via fax without first obtaining the recipients consent
Who enforces the Telephone Consumer Protection Act?
FCC (Federal Communications Commision)
What are the violations for telecommuting?
$11,000/day
Telephone Consumer Protection Act of 1991 Private Lawsuits
- Consumer can recover actual monetary loss
- $500 for each violation, whichever is greater
- If willful or knowing violation of the Act, court can triple the damages
Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994
- Before making a sales pitch, telemarketer must inform the recipient that the call is a sales call and to identify the seller and the product
- Telemarketers must inform recipients of the total cost of the goods, any restrictions in obtaining or using the goods, and whether a sale will be considered final and nonrefundable
- Telemarketer must remove a consumer’s name from its list of potential contacts if the consumer requests
Cooling-Off Laws
Consumers can cancel transactions within 3 days of purchase
1. Trade show sales
2. Home equity loan
3. Internet purchase contracts
4. Door-to-door sales
FTC Mail, Internet or Telephone Order Merchandise Rule
Rules that control orders (how long they have to ship)
Labeling and Packaging Laws
- Labels must be accurate and use words that are easily understood by the ordinary consumer
- Labels must specify the raw materials used
- A warning label is required
Auto Fuel Economy Labels
Energy Policy and Conservation Act
Car manufacturers need to attach labels on every NEW car that shows fuel estimates (range)
