The term “false advertising” applies to any promotions or advertising that misrepresent the:
- Characteristics; and/or
- Origin of commercial activities, goods, and/or services.
A business who knowingly releases an advertisement that contains misleading, deceptive, and/or untrue statements in order to sell their product can be held liable for injuries resulting from false advertising.
The Federal Trade Commission (“FTC”) is the government agency that is responsible for enforcing regulations associated with unfair trade practices, which is how false advertising is legally classified. Depending on the relief that is being sought, an action for false advertising can be filed in either a civil or criminal court, because false advertising is considered to be both a tort and a crime.
Before states began implementing consumer protection and deceptive advertising laws, consumers could only submit complaints to the FTC, who would then notify or penalize the business itself. Now, people who have been injured by false advertising can pursue private lawsuits according to the statutes enacted by their state.
There are many different ways in which a business can engage in false advertising practices, including:
- Adding misleading information, such as claiming that a food contains no sugar, but it actually does;
- Making inconsistent or incomplete comparisons to competitors’ products and/or services;
- Using deceptive illustrations, such as a food item or product appears bigger than it is;
- Advertising a specific price, but leaving out the fact that there are extra fees;
- Claiming that a company is having a going out of business sale in order to raise prices; and
- Applying bait and switch tactics. An example of this would be advertising one product, substituting it with a similar more expensive product, and then claiming that the advertised product is sold out.
What Is Consumer Fraud?
Consumer fraud is considered to be criminal fraud under specific circumstances. In consumer fraud cases, the victim is the consumer, while the perpetrator can be either a seller or advertiser of merchandise. As long as the fraud is associated with some type of services or goods, it could be considered consumer fraud.
Consumer fraud could also refer to deceptive business practices which cause consumers to suffer financial or other similar losses. The victims of consumer fraud are led to believe that they are involved in a legal and valid business transaction, when they are actually being defrauded in some way. While fraud against consumers is generally associated with false promises and/or inaccurate claims made to consumers, it also includes practices that directly cause consumers to be cheated out of their money.
The Federal Trade Commission, or FTC, is responsible for accepting complaints against businesses that have committed consumer fraud. They work with law enforcement in order to investigate consumer fraud, as well as unfair business practices against consumers.
Some of the most common examples of consumer fraud include, but are not limited to:
- Sellers failing to provide merchandise in an adequate manner, such as a car dealer who sells lemon cars;
- Sending merchandise to people without their knowledge or consent, and then forcing them to pay for it by threatening to bring legal action against them or ruin their credit score;
- Sweepstakes and lotteries offering a prize if you pay a fee, and then failing to deliver the prize; and
- Charities or representatives who ask for a donation, that is then pocketed or distributed somewhere other than where they originally claimed it would be distributed.
What Is Puffery?
“Puffery” is an exaggerated or extravagant statement that is made for the purpose of attracting buyers to a particular product or service. It is commonly associated with advertising and promotional sales testimonials. More specifically, the Federal Trade Commission defines puffery as a term referring to exaggerations of the quality of a product.
Puffery is often employed by businesses in order to “puff up” the image of their product. Statements or terms of puffery are generally considered to be subjective opinions, rather than objective representations of facts.
It is generally assumed that most consumers would recognize puffery as an opinion that cannot be verified, meaning that most reasonable people would not take puffery literally. The difference between puffery and factual representations would be the degree of specificity of the claim. An example of this would be how puffery contains broad, general claims, as in the motto “The Best Chicken in the West.”
Puffery is allowed to a degree, and is not prohibited by most advertising laws. Generally speaking, a business or seller cannot be held liable for misrepresentation if they issue a statement that amounts to mere puffery, or “puffing.” Additionally, statements of puffery cannot be considered as creating an express guarantee or warranty.
The reason why puffery is not prohibited is that most courts consider puffing to be so immaterial and unreliable that it cannot form the basis for liability. However, if the statement does contain a specific misrepresentation or an outright lie, the consumer may hold the seller liable for violations such as false advertising or fraudulent representation.
What Is The Difference Between Puffery And False Advertising?
To reiterate, puffery is allowed to a limited degree by most trade and commerce laws. Alternatively, false advertising is a crime, and may be punishable according to both civil and criminal laws.
In order to prove false advertising, it must be shown that the statement or representation was deceptive. False advertisement is motivated by a desire to deceive or mislead the public, while puffery is generally a matter of opinion rather than a factual representation. Puffery is generally intended to simply attract more consumers, rather than to purposely deceive.
However, the line between puffery and false advertisement can be considerably thin. As such, businesses that are making representations about their goods or services should avoid statements that are false, deceptive, and/or misleading.
Suing for false advertising will depend on many factors, such as:
- The type of law that applies, meaning federal versus state; and
- The cause of action, such as unfair competition, false advertising, fraud, etc.
Cases involving federal matters must first be filed with the appropriate government agency, and the agency responsible for overseeing the matter will sue on behalf of wronged consumers. However, when a claim for false advertising is based on state law, the statutes in the jurisdiction that is hearing the case will control the process. Class action false advertising lawsuits that affect many individuals or involve businesses from more than one state are generally governed by the Uniform Deceptive Trade Practices Act (“UDTPA”).
The penalties for false advertising can range from civil to criminal. If a plaintiff successfully sues a company for false advertising, they may recover monetary damages awards and can request that the court issue an injunction against the company. This would prohibit false advertising practices in the future.
If the business is charged and convicted of committing false advertising in a criminal court, they may face criminal fines, serve some amount of jail time, and/or be required to change their business practices.
Do I Need A Lawyer For Problems With Puffery Laws?
A business attorney can help you determine whether a specific representation is mere puffery, or a serious misrepresentation. If you are a business entity or a seller of products, you should also contact fraud lawyers who handle consumer protection cases. An attorney will be able to represent you in court, as needed, should your issue require legal resolution.