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What Constitutes False Advertising?

Advertisements that contain representations that are false, misleading, or deceptive are an unfair trade practice and illegal under state and federal laws. To be found guilty of false advertising, it must be shown that the advertisement was deceptive in nature. Proof that the ad actually harmed anyone is not important. Moreover, the intentions of the advertiser are irrelevant, including if the false or deceptive advertisement was a mistake.

Protections against False Advertising - Federal Law

The Federal Trade Commission (FTC) is the main federal agency that monitors false advertising practices. The FTC relies on consumers and competitors to report unlawful advertising. If FTC investigators find that an ad violates the law, there are several ways in which the agency can act:

  • They may try to bring the violator into voluntary compliance through informal means
  • The FTC can issue a cease-and-desist order and bring a civil lawsuit on behalf of people who have been harmed
  • The FTC may seek a court injunction to stop a false advertisement
  • The FTC may require an advertiser to run corrective adertisements that state the correct facts and admit that an earlier advertisement was deceptive

Protections against False Advertising - State Law

The majority of states have consumer fraud or deceptive practices statutes that regulate advertising. Under these laws, state or local officials can seek injunctions against unlawful advertisers to stop the ads and collect damages for injured consumers or businesses. Additionally, state consumer protection laws usually allow consumers or businesses to directly sue advertisers for any monetary damages stemming from the false advertisements. Some laws even provide for criminal penalties if fraud is involved.

Federal Unfair Competition Laws

Under federal law, a business practice is unfair "when it offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers." Unfortunately, this standard for defining what constitutes "unfair competition" is extremely vague.

The Lanham Act

The Lanham Act is a federal statute that gives parties a private remedy for false advertising claims. To prevail on a false advertising claim under the Latham act, the injured party must prove that the advertisement is either literally false or that the ad is likely to mislead and confuse customers. Evidence of consumer confusion in the marketplace is a prerequisite for recovery under the act. Parties with successful Latham Act claims are usually awarded monetary damages and an injunction to stop the advertiser.

How Can I Keep My Advertisements Lawful?

Although there is no established, guaranteed formula, there are seven generally accepted rules for legal advertising:

  • Be accurate in your representations
  • Get permission from outside sources used in your advertisements
  • Treat competitors fairly
  • Keep sufficient quantities on hand
  • Be careful when using the word "free"
  • Be truthful in all claims about pricing
  • Do not overextend offers of credit

Do I Need an Attorney?

If you feel that you have been defrauded by a false advertisement, you should first contact the consumer protection agency in the state you live. Depending on what you wish to accomplish, consultation with a business attorney may be unnecessary. If, however, the false advertising had serious effects on your business or person, speaking with a lawyer is essential. An experienced attorney can evaluate your case and inform you of your rights. If you have been accused of false advertising, you should speak to a lawyer immediately.

Vea esta página en español: Publicidad Falsa/Engañadora o visita para más información legal.

Photo of page author Peter Clarke

, LegalMatch Content Manager

Last Modified: 03-05-2018 07:46 PM PST

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